Law Times

Law Times • November 1, 2010 Amato never a client, firm says Continued from page 1 scheme as he never advised Mander on investment activities. Welsh also claims he only found out about Mander's fi- nancial difficulties when Sbaraglia's wife told him she was owed money in January. "It's hard, if not well nigh impossible, to advise people about something you know nothing about," Welsh says. "I know what sort of money Robert Mander said he was making in the mar- ketplace. I never saw financial statements or tax returns or tax ac- counts. If a client of mine says to me they earn $100,000 a year, do I ask them for a statement from their accountant to verify it? It doesn't happen. Everyone may think I should have been the protector doing investigations into the credibility of any one of these people, but it's not my job. It's never been my job." According to Welsh, when the two men first came to his office in 2008, they had problems with their business names. The periods hadn't been recorded properly when they were registered, so it looked as though the businesses didn't exist when people performed searches on them. "That's how mun- dane it was," Welsh says. By that stage, Welsh says they already had pre-existing re- lationships with Mander. In his defence to Sbaraglia's claim, Welsh says he couldn't have reasonably relied on him for "in- formation respecting the investing acumen and trustworthi- ness of Mander." Aylesworth also pleaded ignorance in a statement of de- fence to the Sbaraglia claim filed on July 19. "Mander made explicit representations that he was a per- son of substantial net worth," the firm says in its defence. It was in June 2009 when Sbaraglia says he got the first signs something was amiss as the OSC began investigating C.O. Capital Growth. That's when Mander suggested he and Sbaraglia hire Michael Miller and Julia Dublin, both law- yers at Aylesworth, according to the statement of claim. That placed the firm in "a hopeless conflict of interest" between Mander and Sbaraglia, he alleges in his lawsuit. Sbaraglia also says in his statement of claim that Miller and Dublin assured him his investments were fully secure and that he "should have no worries" about his business dealings with Mander. As well, a statutory declaration drawn up by the lawyers in which Mander swore that six properties were being held in trust to repay loans was done with a "view to keeping Mander and his business operating" when in fact counsel should have known it was security for nothing, according to the claim. But in its statement of defence, Aylesworth says Sbaraglia and Mander retained the firm jointly with the aim of heading off charges against them under the Securities Act. "Aylesworth, and in particular Dublin, had concerns about whether it would appear to the OSC investigators that Sbaraglia and Mander were involved in some sort of Ponzi scheme," the firm says in its statement of defence, which notes Sbaraglia re- peatedly advised that he was aware of Mander's business affairs and had no concerns about them. Aylesworth goes on to claim in its statement of defence that Sbaraglia presented himself as a sophisticated investor with a wealth of experience in the field. In Amato's lawsuit, he says Dublin's concerns should have been made known to him. He claims that in June 2009, in advance of her appearance before OSC investigators, Dublin was asked to determine whether the dealings of his company were within the law. According to his statement of claim, Amato is alleging she should have told him about the inves- tigation and says she denied the existence of her relationship with him before the OSC. Although Aylesworth hasn't yet filed its defence in that mat- ter, firm counsel Peter Wardle tells Law Times it's planning to have parts of Amato's claim struck. "The firm's position is that Amato was never a client of Aylesworth," Wardle says. Amato couldn't be reached for comment by press time. His lawyer Alan Merskey, a partner at Ogilvy Renault LLP, says he can't comment on the case. LT CORRECTION An Oct. 25 Law Times item incorrectly identi- fied the new Ontario Securities Commission chairman and CEO as Howard Weston. In fact, Howard Wetston is fill- ing the OSC role. Untitled-2 1www.lawtimesnews.com 10/28/10 11:50:44 AM NEWS PAGE 5 Firms too profitable, clients say Continued from page 1 jumped to 57 per cent when it asked lawyers the same question. Just 21 per cent of lawyers thought firms were too profitable, compared to 58 per cent of corporate counsel. "Your biggest goal should be to make sure these are equal responses," Cross said. "There is a difference of opinion on how one side is doing. Whether there is reality in that is not important. It's the difference that matters. You're out of sync with the clients. That's the biggest danger." According to Cross, the gulf in perceptions is a symptom of the frustration corporate clients feel in the search for predictability when purchasing legal services. For example, a small rise in hourly rates, which many firms consider an appropriate response to tough economic times, doesn't cut it for a company that may be in danger of going under, he said. "They're getting hammered, and we're cham- pioning ourselves because we only raised billing rates by three per cent instead of six per cent. You look at things year to year, and they aren't as good as they used to be. Corporations look right now and say things are terrible." But Cross also noted there's a relatively simple solution that can bridge the gap. "You need to go to your clients and ask them questions, as un- comfortable as they might be. They're probably going to say no, and that's your chance to say, 'What can we do to help?' That's a very simple conversation, but most law firms don't have it. They don't want to know." For his part, Remsen agrees that client feed- back is critical to companies' relationships with law firms. "Clients will tell you where you're screwing up, where you can enhance the rela- tionship," he said. "You'll be surprised at how positively received you are, as long as you leave the billing attorneys at home." In Remsen's view, law firms have nothing to lose because, whether or not they summon up the courage to ask for feedback, clients will make their own decisions. "I hear so many firms say, 'Well, they'll tell us when they're not happy.' That's a pretty risky strategy because there's a good chance they're going to drift away and find a law firm that does pay them more attention." The host of this year's TAGLaw conference was Blaney McMurtry LLP, the only Ontario member of the global alliance of 150 indepen- dent law firms. The TAGLaw network, which was established in 1998, mainly comprises mid- size firms. According to Remsen, firms will also need to put more focus on the business of law, as op- posed to the practice of it, in the future. As a result, they'll need to start preparing and, more importantly, using strategic plans, he said, adding that not enough managing partners and practice group leaders have formal job descriptions. "A lot of lawyers bristle at the notion of the business of law, but you're running a business. It is a profession, but the most successful law firms are bringing business practices to the practice of law." Cross, meanwhile, said firms will have to take the initiative to bring law students up to speed giv- en that his survey revealed that 65 per cent of them feel unprepared to do the business of law. "They're not taking courses in law school about how to bet- ter service clients, how to keep research costs low, how to create alternative fee arrangements, and use technology to do all these things." In response, he suggested law firms could farm out young associates to the legal departments of large companies or create a buddy system that pairs them with top clients. In that way, they would learn what clients really want while form- ing lasting relationships with them. In addition, Cross said the rise of social media will increase the importance of relationships with networks condensing to a small group of trusted friends and colleagues. "Instead of talking to mil- lions of people, we're just talking to 100 friends and clients, and they're talking about referrals. If I don't like the way they behave, I can stop pay- ing attention to them." LT Announcement Lawyers' Professional Indemnity Company LAWPRO announces the following changes and appointments in the Claims Department. Executive Vice-President Duncan Gosnell is now responsible for the Claims and Underwriting & Customer Service departments at LAWPRO. A member of the LAWPRO executive group since 1995, Mr. Gosnell has been instrumental in developing the underwriting and customer service functions at the company. For much of the past year, he had been acting Vice-President, Claims as well as overseeing the Underwriting and Customer Service Department as Executive Vice- President. The claims function at LAWPRO will consist of two departments, each headed by a vice-president. Jerzy Adamowicz is Vice-President of the new Specialty Claims department, responsible for a number of areas including, among others, TitlePLUS and Excess Insurance claims and claims involving coverage issues. Mr. Adamowicz holds LL.B and LL.M degrees from universities in Israel, and has extensive experience as a practitioner, counsel and claims examiner in both Israel and Canada. He has held several managerial positions in the LAWPRO Claims department since 1994, most recently as Claims Director. Jack Daiter is Vice-President of the new Primary Professional Liability Claims department, responsible for most of LAWPRO's primary professional liability claims. After obtaining his LL.B (Ottawa) and LL.M (Osgoode) degrees, Mr. Daiter gained extensive experience in private practice before joining LAWPRO as a claims examiner in 1997. He was appointed a Claims Manager in 2007 and Claims Director in 2009. As well, he has taught courses in ADR and has spoken on risk man- agement issues to a variety of student and professional audiences. LAWPRO provides malpractice insurance and risk and practice management programs to more than 22,400 Ontario lawyers, and title insurance in all Canadian jurisdictions. LAWPRO's TitlePLUS title insurance program is the only all-Canadian title insurance product on the market today.

• Cover
• Child Protection
• Final Chapter?
• Focus On Real Estate Law