Retainer agreements signed after client's accident not compliant with legislation: Ontario court

The respondent’s retainer agreements failed to comply with Regulation 195/04, which was in place at the time they were signed and which aimed to protect the public, the Ontario Superior Court of Justice said in a recent case.

In Shay v. Saron Legal Professional Corporation, 2022 ONSC 5557, the applicant was riding a bus when a truck rear-ended it. According to the record, he experienced serious and permanent injuries including neck pain, shoulder pain, back pain, headaches, reduced cognitive functioning, anxiety, depression, and impaired memory. He could not return to work after the accident.

The applicant met with a lawyer, who was the principal of the respondent Saron Legal Professional Corporation. He signed two contingency fee retainer agreements, one for his tort claim and another for his accident benefits claim. The principal issued a statement of claim for the applicant’s tort action.

Later, the applicant became dissatisfied with the principal’s work on his file so he retained his current counsel to proceed with his claims. Upon his new counsel’s request, the respondent provided a copy of its account for $51,748.35, representing 150 hours of time at $300 per hour plus harmonized sales tax.

The applicant’s claims were settled at mediation. The respondent delivered a motion record, which sought a first charge for its fees and included the retainers as exhibits. His current counsel reviewed the retainers and considered them non-compliant.

The applicant brought the present proceeding, asking for a declaration that his retainer agreements with the respondent failed to comply with the requirements of the Solicitor’s Act, R.S.O. 1990, c. S.15 and Regulation 195/04, Contingency Fee Agreements. He also sought an order to disgorge from the respondent all the legal fees and HST charged to him, or alternatively an order to assess the respondent’s account.

Retainer agreements void: court

The Ontario Superior Court of Justice deemed it appropriate to declare the retainer agreements void for being non-compliant with Regulation 195/04. The court ordered an assessment of the respondent’s account in the ordinary manner before an assessment officer.

It was not fair or reasonable to bind the applicant to retainer agreements that substantially failed to comply with the regulation, the court ruled. The retainer agreements had too many deficiencies, too many of which were significant, the court said. Specifically, the retainers:

• lacked a statement that the client retained the right to make all critical decisions regarding the conduct of the matter as s. 2(10) of the regulation required
• gave the solicitor the discretion to decide how the fee would be calculated if the retainer was terminated though s. 2(9) of the regulation, which required the agreement to set out how the solicitor’s fee should be determined
• had no example showing how the contingency fee would be calculated as s. 2(6) of the regulation required
• failed to explain whether the fees would exclude amounts awarded as costs, although s. 2(5) of the regulation required this and s. 28.1(4) of the Solicitors’ Act provided that a contingency fee agreement should generally not include in the fee payable amounts arising from cost awards or costs obtained via settlement
• failed to inform the applicant that he had the right to ask the Superior Court to review and to approve the solicitor’s bill or the relevant timelines as s. 2(8) of the regulation required.