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

Case Summary

The Plaintiff law firm represented the Defendant, West, in highly contested divorce proceedings. A standard retainer agreement was executed on August 21, 2013. The Plaintiff firm sent periodic accounts to West for three years, until the Plaintiff terminated the retainer agreement and served West with a Notice of Withdrawal of Lawyer of Record. The final bill totalled $309,668.47; of that, West had paid $305,032.98.

Soon after, West sought a review of all accounts alleging that his instructions were not followed, that there were trust accounting discrepancies, and that he was overbilled. On September 22, 2016, a Master granted a Fiat to extend the time available to review the accounts, pursuant to Rules 10.10 and 13.5. The Plaintiff (who did not receive notice of West’s Application for a Fiat) appealed.

Sullivan, J. noted that, pursuant to Rule 10.9 the reasonableness of a retainer agreement entered into with a lawyer is subject to review, but, pursuant to Rule 10.10, the review must occur within 6 months of the termination of the retainer agreement. His Lordship also noted Rule 13.5(2) permits the Court to shorten or extend the period for review, and that Rule 13.38 allows a Master to grant a Fiat authorizing the review of an account notwithstanding the fact that the account is more than 6 months old.

His Lordship considered the six non-exhaustive factors set out in Attila Dogan Construction and Installation Co Inc v Bennett Jones LLP, 2015 ABQB 407 (CanLII) (“Attila”), in order to assess whether to extend the time period regarding taxation of a lawyer’s file. Justice Sullivan considered each: delay; prejudice; timing of the “first intent to tax”; evidence of overcharging; agreement as to amount; and the client and lawyer’s relationship. Sullivan J. also considered whether the client was sophisticated, and whether the law firm in question “voluntarily reduced a number of accounts for an overall fee reduction”.

Sullivan J. observed that allowing for taxation of a lawyer’s account benefits both the client, and the lawyer as it allows clients to independently confirm that the fees they must pay make sense, and provide lawyers the ability to justify the fees charged. His Lordship also noted that the relationship between lawyer and client when it comes to fee payment, is one of trust and dependence. As such, Sullivan J. held that the threshold for Courts to extend the time period to review a lawyer’s file is low: the discretion to extend the period should be exercised where there is “some evidence” that the account should be reviewed. Since the Respondent was less sophisticated, did not have counsel to help him negotiate legal fees, and his bill for a three-week trial was over twice as much as the estimate represented to him, Sullivan J. held that the time period for review should be extended.

View CanLII Details