Dilts j

10.10: Time limitation on reviewing retainer agreements and charges
10.9: Reasonableness of retainer agreements and charges subject to review
13.5: Variation of time periods

Case Summary

The Respondent had retained the Applicant law firm to represent it in a complex and fast-paced lawsuit, pursuant to a retainer agreement (the “Retainer”). The terms of the Retainer included that legal fees would be charged based on time incurred, and that accounts would be paid in a timely manner as a condition for continued legal service.

The Applicant issued 23 accounts to the Respondent over a period of approximately 1.5 years, all of which were paid. The Respondent later appointed new counsel and entered into without prejudice discussions with the Applicant taking issue with certain of its accounts. When those discussions ended, the Respondent applied to extend the 6-month time limit imposed by Rule 10.10(2) to review 15 of the Applicant’s accounts.

Justice Dilts first noted that pursuant to Rules 10.9 and 10.10, the reasonableness of a lawyer’s account may be reviewed by a Review Officer within 6 months from the date the account was issued. While Rule 10.10(2) creates a time limit for such a review, it is not a limitation period and may be extended by the Court pursuant to Rule 13.5(2). Her Ladyship explained that the right of review promotes public confidence in the administration of justice, but the time limit ensures that requests for review are made promptly and that finality may be expected after a reasonable period of time. The review process allows for disputes to be resolved efficiently, encourages clients to raise concerns quickly, and allows lawyers to assess whether a receivable will or will not be collected in a timely manner.

Justice Dilts explained that the decision to extend the 6 month deadline pursuant to Rule 13.5(2) is discretionary. The Court should consider the policy and principles underlying the Rule along with the interests of justice, and may consider a non-exhaustive list of factors in doing so, including the extent of the delay, prejudice, whether there is evidence of over-charging, the relationship between the lawyer and client, the first intent to tax, and whether there was agreement to any amount. These factors may be inter-related and should be weighed together.

In this case, Justice Dilts found that the Respondent had put the Applicant on notice that it had concerns about legal fees early on, even though it waited to initiate a formal review process. However, the Respondent was a sophisticated client and had provided no reason for the delay. The potential prejudice from the delay included inconvenience to the Applicant, but that prejudice was not quantifiable or inordinate. Her Ladyship also noted that the Applicant’s fees were significantly higher than the estimate that it had provided, and held that the Respondent’s payment of disputed fees during the litigation should not be held against it. Further, Her Ladyship noted that despite the Applicant being a “sophisticated law firm with a robust accounting system”, its accounts were not transparent or consistent, which weighed in favour of extending time for review. As such, Justice Dilts extended the time limit imposed by Rule 10.10(2) for the accounts to be reviewed.

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