Law Times

Law Times • November 18, 2013 Page 3 NEWS Séguin v. Van Dyke Ruling 'a reminder' about contingency fee pitfalls BY YAMRI TADDESE Law Times I n what one lawyer is calling "a reminder" to fellow counsel, a judge has deemed a contingency fee agreement not preapproved by the court to be "void and unenforceable." After getting into a car accident in 2006, Donna Séguin retained lawyer Frank Van Dyke, who charged her a 33.3-per-cent contingency on cost. In a recent motion, she took her former lawyer to task for the fee arrangement. The Solicitors Act prohibits lawyers from charging contingency on cost unless a judge preapproves the agreement in "exceptional circumstances" and deems it to be fair. "I grant the application and declare the contingency fee agreement void and unenforceable," wrote Superior Court Justice Paul Lalonde, who noted "the breach here is fundamenNew editioN tal." Peter Waldmann is representing the plaintiff in a class Consolidated Customs statutes William Sammon, who represent- action over contingency fees. and Regulations 2014 ed Séguin, says the judge's decision is an important one. "If the lawyers draft Cassie Hodge of the Town of BrookWhere do you turn for the latest legislation you need their contingency fee agreements where lin, Ont., is spearheading a class action to advise importers on new developments in customs they include these kinds of clauses where against her former counsel. As part of law? Help your clients maintain efficient import/export they are seeking contingency on the the allegations, Hodge claimed she had operations and avoid costly fees and penalties with costs and don't get it approved, then their signed an agreement that said she'd pay Consolidated Customs Statutes and Regulations 2014. agreement is going to be declared void. her counsel 25 per cent of the damages That simple, really," he says. recovered in addition to partial indemniNew iN the 2014 editioN "They have to be very careful. And ty costs and disbursements. She's seeking The Consolidated Customs Statutes and Regulations if they're going to draft it that way, they $1 million in punitive damages. None 2014 contains the latest legislation to advise importers should bring an application for approval of the allegations have been proven in on new developments in customs law and help their and show there are exceptional circum- court. clients maintain efficient import/export operations and stances and get a judge to agree that there Hodge's lawyer, Peter Waldmann, tells avoid costly fees and penalties. are exceptional circumstances." Law Times a date for the certification Charging a contingency on cost motion has been set for January 2014. Updated features in the 2014 Edition would be unfair without the approval Earlier this year, he alleged the contin• CustomsAct of a judge, Sammon adds, noting judges gency agreement in that case was illegal. • CustomsTariff must first weigh the risk for the lawyer "We have a law in force which says • ExciseTaxAct before they can deem such agreements that contingency agreements can't in• ImportationofIntoxicatingLiquorsAct to be acceptable. clude costs," he said. • ExportPermitsRegulations, SOR/97-204 "The amount of the contingency fee, "A lawyer can't take any part of the • SpecialImportMeasuresRegulations, SOR/84-927 the percentage, has to bear some rela- costs unless a judge approves it and if tionship to the risk," he says. you look at s. 28 [of the Solicitors Act], • Table of Canada Border Services Agency Forms "So if you're charging a fairly signifi- a judge is only to approve it if there are The following documents have been added to cant contingency on what the results extraordinary circumstances." the publication: might be — here it was 33 per cent — if Clients are often unaware of the re• Information Circular 98-1R4, TaxCollectionPolicies you're charging that kind of contingen- strictions when it comes to contingency • Information Circular IC00-1R3, Voluntary cy, there has to be some risk involved to agreements, which is why lawyers have an the lawyer." obligation to explain them, says Sammon. DisclosuresProgram The risk involved for the lawyer of"There's an obligation on the lawyer to ten relates to how difficult it is to prove explain the agreement, which presumes liability. "So if you're charging a huge the lawyer knows about some of these oRdeR # 985260-65203 $101 contingency plus you're getting a cost requirements. The obligation is on you as Softcover October 2013 or you're charging a contingency on the a counsel. You also have to explain that approx. 2160 pages 978-0-7798-5260-4 cost, it's even more unfair in the sense of ultimately the fee generated under the you're getting that payment on top of the contingency has to be fair and reasonAnnual volumes supplied on standing order subscription contingency, especially if the risk doesn't able," he notes. Shippingandhandlingareextra.Pricesubjecttochange warrant that," says Sammon. Although there are no official numwithoutnoticeandsubjecttoapplicabletaxes. When deciding to approve a bers that show how often these incidents contingency agreement, judges also occur, "if this is a general practice — and look at the complexity of the case, the it appears to be — there are possibly time spent by counsel, and the results thousands" of litigants who have unachieved. lawfully paid costs to their lawyers, said order online: www.carswell.com "The basic rule is that the fee generat- Waldmann. Call toll-Free: 1-800-387-5164 in toronto: 416-609-3800 ed, either on contingency or time-spent For Sammon, Lalonde's decision is basis, has to be fair and reasonable," ac- helpful to both clients and lawyers. cording to Sammon. "When they look at this case, they'll John Cannings, counsel for Van Dyke, go, 'Well, we have to make sure that we didn't respond to a request for comment. have to cross our t's and dot our i's here, AUTHORITATIVE. INNOVATIVE. TRUSTED. There have been other recent cases look at the Solicitors Act, look at the obin which the issue of contingency agree- ligations,'" he says. "It's a reminder, and I ments has arisen. In Hodge v. Neinstein, think it's an important one." LT AvAilAble RiSk-FRee FoR 30 dAyS www.lawtimesnews.com

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