Ottawa Lawyer must swallow fees…

Michael CarabashCassandra Drudi wrote an article entitled “Lawyer told to pay back $250,000 in fees to developers ” (Ottawa Citizen, 4 March 2009) that is worth discussing in some detail here.

In that article, Ms. Drudi talked about a situation involving Ottawa lawyer D. Kenneth Gibson (Gibson & Associates LLP), who had been ordered to repay some clients just over $250K in legal fees billed in respect of a condo development project. The clients had originally been given an estimate of about $50K by the Ottawa Lawyer, but the retainer letter had some special provisions in it saying that the total could change if extra work required special attention. As per the retainer agreement:

“We have provided you, in the paragraph above, an approximate estimate of legal fees. Should any matter arise on your file which requires special attention, our fee will vary according to the amount of time required to attend to these matters.”

The total bill ended up being just over $450K.

It’s unclear from the article whether those fees had already been paid. In any event, the clients sought an assessment and the assessment officer reduced the Ottawa lawyer’s fees to just under $180K.

The Ottawa lawyer brought a motion to challenge the assessment officer’s estimate. On appeal, the Ontario Court of Appeal reassessed the legal fees and held that the client owed about $223K.

Overall, this public episode involving legal fees highlights some of the issues and difficulties both lawyers and clients have in estimating and swallowing the bill. As a lawyer, I can understand the incentive lawyers generally have to provide reasonable estimates of fees up front. By providing certainty and predictability to their clients, lawyers can help their clients to plan and budget. Doing so also makes lawyers accountable by forcing them to try their best to stick with their estimates (which could be based on past experiences) in order to save face and their future reputation. However, lawyers have been known to get their estimates wrong (for factors outside of their control) and, as such, are advised to include provisions in their retainer agreements explaining that initial estimates may be completely wrong if there are complications, additional issues, etc. that arise in the course of providing legal services.

I guess, at the end of the day, the battle between trying to predict the unknown (i.e. how long and how many people will be involved on the law firm’s part in providing legal services) can be won by constant and effective two-way communication so that there are little or no surprises when the bill finally arrives. Also, more intermittent billing may be needed so that the final bill isn’t as large as it could have been.

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