The issue of costs and legal fees is one that often comes up in litigation. A party’s legal fees, and who should pay, is often what drives a settlement. It simply becomes too expensive to litigate so parties quickly settle once the reality of how expensive litigation can be becomes apparent. This is true even in estate litigation where parties often mistakenly believe (at first) that the estate will pay the parties’ costs. The days when an estate paid the costs of all the parties are long gone and the loser-pays principle now applies equally to estate litigation as it does to any other civil litigation commenced in Ontario.
I recently came across an interesting case in the Ontario Court of Appeal. The issue under appeal was whether clients, having represented to a court for the purpose of fixing the costs of an injunction application that the accounts rendered by its former solicitors, Bennett Jones LLP, were reasonable, could later apply to another court for an order permitting assessment of those accounts.
Bennett Jones LLP presented five accounts totaling over $300,000 for work done in the approximately three months that it was retained by the clients. The clients eventually transferred the litigation to another law firm, as they had become increasingly concerned over the amounts charged by Bennett Jones LLP in such a short period of time.
Through their new lawyers, the clients successfully obtained a Mareva injunction to prevent corporate and individual defendants from dissipating funds. Having won the motion, the clients sought their costs (pursuant to the loser-pays principle). In written submissions, the clients filed Bennett Jones LLP’s accounts with the court. They claimed before the application judge that the accounts were “fair and reasonable, and are supported by the general principles and relevant factors governing such awards” and the proceedings were “difficult, lengthy and expensive.” The application judge who granted the injunction awarded the clients a portion of their costs payable by the defendants.
After obtaining the court order awarding them part of their costs, the clients then started a separate proceeding to assess Bennett Jones LLP’s accounts (a process whereby an assessment officer of the Ontario Superior Court of Justice reviews a lawyer’s bill to ensure it is fair). Bennett Jones LLP objected to the assessment on a number of grounds, including the fact that the clients had maintained before the applications judge that the fees were fair and reasonable. Ultimately, Justice Moore, who considered Bennett Jones LLP’s objections, allowed the assessment to proceed, but severely limited the scope of the assessment. The clients appealed Justice Moore’s decision.
The Court of Appeal stated that public confidence in the administration of justice required that courts intervene to protect the client’s rights to a fair procedure in respect of assessments of accounts. The court held that a client’s submission that the lawyer’s account was reasonable and fair for the purpose of fixing costs to be paid by the losing party is not a concession that the account was reasonable in the different context of an assessment between a lawyer and his/her client. Not only do the two contexts engage unique interests and considerations, the amounts in question invariably differ (the amount fixed by a court for costs rarely reaches the amounts a client must pay his lawyer). The court therefore allowed the appeal and ordered that the five Bennett Jones LLP accounts be assessed in their entirety.
What is the lesson to be drawn from this decision? Certainly, that litigation is expensive and that a lawyer must deliver value for money. It also demonstrates that the court will accommodate a client’s right to assess his/her lawyer’s account if the client does not believe it is fair and reasonable (even if the client took a prior inconsistent position in a different proceeding). However, in the end, a client must realize that litigation comes with both a financial and emotional price. While the client may be able to demonstrate that the lawyer charged too much (hindsight is 20/20), there are no guarantees of success in litigation and a client may be left unsatisfied whatever the result. As I said in the introduction, the costs of litigation often drive a client to settle.
Happy (prudent) Litigating!