In Jean Estate v. Wires Jolley LLP 2008 CanLII 14538, an estate trustee and sole beneficiary of an estate entered into a retainer agreement with counsel that provided for a “success fee” of 10% of the value of the estate. The retainer agreement also provided that any dispute relating to the success fee was to be determined by an arbitrator. 

A dispute arose, and the solicitors sought to have the dispute resolved through arbitration. The client applied to the court to have the notice of arbitration struck out, and to have the dispute resolved by the court.

Madam Justice Low granted the application. She held that the provisions of the Solicitors Act applied prima facie. She went on to conclude that even though the parties had previously agreed to an arbitration provision, and could agree to keep private commercial disputes private, the relationship between lawyers and clients is “one which transcends a mere commercial transaction. The profession has a monopoly over the provision of legal services and the occasions upon which lawyers interact with members of the public occur often when the latter are in the most vulnerable of circumstances. There is therefore an overarching public interest to be served in the court’s supervision of the profession’s monopoly.”

As the arbitration provision was a derogation of the client’s statutory right to have the court scrutinize the propriety of the fees, it was not upheld.

Thank you for reading.

Paul Trudelle

Regardless of this apparent unease, on issues of the validity of a Will or a person’s interest in or claim against an Estate, some clients are increasingly tending to favour contingency arrangements. 

Where the legal issue at stake is the validity or otherwise of a Will, then a litigation result will often be an all-or-nothing proposition. Such an issue is well-suited to contingency fees. 

Some of the practical issues raised by the arrival of contingency fees at this early stage are:

1. These cases are not immediately profitable, so any law firm wanting to explore contingency opportunities ought to be prepared to wait a few years to see substantial return;

2.  Lawyers must allow the client to make all major decisions, knowing that some of those decisions may be unreasonable or risky, thereby lessening the possibility or value after costs of recovery, thereby lessening what the lawyer will be paid in case of success, and this business frustration cannot be allowed to interfere in the lawyer’s function as advocate and legal service provider. The lawyer is still restricted to giving advice, taking instructions and fulfilling them even if those instructions impact on the chances of getting paid;

3.  Lawyers ought to be very clear with clients at the outset that they may obtain a windfall in case of early settlement, even to the extent of putting those very words to the client in writing.

Early indications are that contingency fees in litigation offer a further avenue for lawyers to take on otherwise marginal cases from a business perspective, and an avenue for access to justice for clients of lesser means, albeit lawyers must take care not to allow the fee arrangement to interfere with their fundamental role as advocating, advising and fulfilling the client’s legitimate instructions, however that may impact on the chances of getting paid.

Thanks for reading.

Sean