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Legal Fee Disagreements

Lawyer-client retainer agreements are contracts and there are duties beyond the contract imposed upon the lawyer.

Most legal fee disagreements can be avoided or resolved through good communication.

This article touches upon four options to sort out legal fee disagreements that cannot be resolved.

1. Negotiation & Mediation

First, there is negotiation and mediation. This is optimal as it lets the parties work things out.

2. Arbitration

Second, there is arbitration. If there is an arbitration clause in the retainer agreement, the parties must arbitrate. If there is no arbitration clause in the retainer agreement, the parties can still agree to arbitration. Arbitration has many benefits in terms of swift justice and privacy where there is on-going litigation. Click here for an article on arbitrating legal fee disagreements.

3. Assessment

Third, parties can opt for an assessment under the Solicitors Act so long as the retainer agreement is not in dispute. Assessment is the correct procedure for contingency fee retainer agreements without an arbitration clause. An assessment typically considers the 9 factors outlined in Cohen v. Kealey & Blaney, a case from 1988:

  1. The time expended by the solicitor;
  2. The legal complexity of the matters to be dealt with;
  3. The degree of responsibility assumed by the solicitor;
  4. The monetary value of the matters in issue;
  5. The importance of the matter to the client;
  6. The degree of skill and competence demonstrated by the solicitor;
  7. The result achieved;
  8. The ability of the client to pay; and
  9. The client’s expectation as to the amount of the fee.

Clients can seek an assessment of all invoices within 1 month of the latest invoice (section 3 of the Solicitors Act), or between 1 month and 12 months with leave / Court permission (section 4 of the Solicitors Act) or more than 12 months with leave if “special circumstances” apply.  The general 2 year time limit in the Limitations Act, 2002 does not apply if there are special circumstances.

Lawyers can seek an assessment of their invoices after 1 month (section 3 of the Solicitors Act) and up to 2 years before the Limitations Act, 2002 is triggered.

4. Court Action

Fourth, where there is no arbitration clause and a non-contingency fee retainer agreement, then parties can proceed to Court, either Small Claims Court (claims up to $35,000 as of January 1, 2020) or Superior Court (claims over $35,000 as of January 1, 2020).

Negligence Claims

Legal fee disagreements can spark negligence claims by clients against lawyers. Most negligence claims are based on an alleged breach of the contract and/or negligence. A negligence claim is generally advanced on the basis that the lawyer’s conduct fell below the standard of care. In most cases, the client must retain an expert for an opinion on what the standard of care was and whether or not the lawyer’s conduct fell below the standard. Negligence claims are defended by LawPRO on behalf of lawyers.

Solicitor’s Liens, Charging Liens and Charging Orders

Solicitor’s liens enable the lawyer to hold back from releasing a client file where there is unpaid work and no prejudice will result. Charging liens are an assertion that the lawyer was instrumental in recovering money or property on behalf of the client and can act as a notice of an upcoming motion for a charging order. A charging order (section 34 of the Solicitors Act) is obtained on a motion to the Court for a formal order protecting the legal fees of a lawyer who was instrumental in recovering money or property. There is no limitation period for a charging lien or charging order.

This article is courtesy of the Ontario Civil Trial Manual

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This manual is trial information, not trial legal advice.

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