Lawyers say a recent Ontario Court of Appeal decision in a legal malpractice case serves as a reminder that the duty of care lawyers owe to their clients can extend past a limited-scope retainer.
In
Meehan v. Good, the court overturned a motion judge’s decision, which had dismissed a claim by a client against his former lawyer, John Cardill.
The plaintiffs — Michael and Anne Meehan among others — had retained Cardill with respect to the assessment of the accounts of another lawyer, who had represented them in a personal injury claim.
The Meehans then brought a claim against Cardill, contending he had owed them a duty of care to advise them about the limitation period of a possible negligence action against the other lawyer.
The judge, however, granted Cardill’s summary judgment motion, saying that he did not owe a duty of care to provide the plaintiffs legal advice regarding a possible negligence action, as the Meehans had retained Cardill only in relation to the assessment of the other lawyer’s accounts.
The Court of Appeal overturned that finding, saying the matter should proceed to trial. The decision, and others like it, has led some lawyers to question the point of having a clearly defined retainer if the courts can find that their duty of care to the client can extend beyond that.
“The fact that the courts are giving a more expansive interpretation to the duties owed to clients means that, in some respects, written retainer agreements would be essentially rendered obsolete or nothing more than a single factor in the analysis,” says Nadia Campion, a partner with Polley Faith LLP, who was not involved in the case.
Campion says that, over the last 20 years, there has been a trend of decisions that have substantially expanded lawyers’ potential liabilities to clients and even non-clients.
She says the concern that arises with decisions such as Meehan is that it expands the liability exposure of lawyers at a time when the use of unbundled services and limited-scope retainers is on the rise.
“Even though the retainer may be very limited in its scope, a client may still see the lawyer as being responsible for all aspects of the case,” she says.
“The question becomes what is the duty that is owed by the lawyer to the client in those circumstances.”
Campion says she expects to see a lot of limited-scope retainers become the subject of similar cases in the future.
Bryan Rumble, the lawyer who represented the Meehans in the decision, says for lawyers working on limited retainers there will always be risks of issues arising outside of that retainer. He said there have even been decisions in which lawyers were found to have owed a duty of care even to non-clients in instances when they give advice that was relied on.
“You have a duty to advise of the acts that you take within the retainer, what effects those acts are going to have on other potential cases, even if you are not retained to deal with those other potential cases,” he says.
Rumble successfully argued in the appeal that no matter how narrow the retainer was, Cardill owed a duty of care to his client.
The Court of Appeal agreed and said the issue should go to trial.
“To determine whether a lawyer owes a duty of care to a client or non-client requires the court to examine all of the surrounding circumstances that define the relationship between the lawyer and the person to whom the duty of care may be owed,” said an endorsement on behalf of Justices Janet Simmons, David Brown and Lois Roberts.
“. . . However, it is not the end of the analysis where, as here, it is alleged that the lawyer’s duty of care arises out of and extends beyond the retainer.”
The court went on to say that the court must “meticulously examine all the relevant surrounding circumstances,” including the client’s instructions. The court found the motion judge’s analysis was in error as it was “focused narrowly” on just the retainer and did not consider advice Cardill had given to the Meehans.
“In the present case, the motion judge did not state whether the record gave her the confidence to find that Cardill had told the appellants about the applicable limitation period,” the court said.
John Polyzogopoulos, a partner with Blaney McMurtry LLP, says the decision serves as a reminder that lawyers should be extremely careful about giving advice to clients about things that fall outside of a retainer agreement.
“We should always be mindful of whether issues arise that potentially fall outside of the scope of our understanding of what our assignment is so that you can make the client aware that these issues exist,” says Polyzogopoulos, who was not involved in the case.
“And at the very least provide them advice that they need to go get advice on that issue elsewhere if you can’t be of assistance to them.
“If you can, make sure you put something like that in writing so that there is no dispute about you having raised the issue.”
Joseph Obagi, who represented Cardill in the matter, did not respond to a request for comment.
