STUBBARD v HAJDUK GIBBS LLP, 2014 ABQB 632
10.18: Reference to Court
10.19: Review officer’s decision
10.2: Payment for lawyer’s services and contents of lawyer’s account
10.41: Assessment officer’s decision
10.9: Reasonableness of retainer agreements and charges subject to review
The Plaintiff applied for a review of her legal fees incurred with respect to a matrimonial dispute, but after the Review Officer felt there were serious questions of fact and law raised by the retainer agreement, the Review Officer directed a reference to the Court under Rule 10.18(1)(a). The law firm was retained in 2005. In 2010, the firm discovered they did not have a signed copy of the original retainer, so took steps to switch the agreement to a lower fee agreement and contingency, making it retroactive to 2005. The new agreement purported to oust the consumer protection provision in old Rule 613 (new Rule 10.2(1)) regarding payment for improper or wasted work. The parties did not execute an agreement setting out a contingency arrangement in compliance with the Rules of Court.
The Plaintiff submitted that the proposed fee agreement was harsh and unconscionable, contrary to the public protection contained in old Rule 613 (new Rules 10.2 and 10.9), as she was billed $71,000 despite receiving no forward momentum or benefit. She further argued that the attempt by the law firm to turn the arrangement into a contingency agreement failed because it would not be enforceable under old Rule 616(2). The Defendant law firm argued that the time spent on the file was productive and the husband’s aggressive response to the Plaintiff’s claim was primarily to blame for lack of forward progress. It further argued that the 2010 retainer was valid and enforceable, or alternatively, the original retainer applied.
Justice Germain noted that Rule 10.2(1) concords with former Rule 613, but includes the ability to contract out of its impact. However, this does not include the ability to contract out of consumer protection provisions or ethical rules of the profession. The new Rules imply that there should be resistance to law firms running up large legal fees with no oversight.
It was clear that the parties intended to enter into a new contingency agreement in 2010 and that the old agreement would no longer be in force. However, at the time of this arrangement, the technical formalities in the old Rules governed and those were not complied with. As such, the new agreement was unenforceable. Therefore, Germain J. directed the Review Officer to ignore both the original retainer and the 2010 agreement, and to tax the account based on the criteria set out in former Rule 613.View CanLII Details