Law Times

Law Times • November 29, 2010 NEWS Lawyers worked from bedrooms after split Continued from page 1 money and move on." But Little says his fi rm has no obligation to advance money to Loreto and calls his 192 separate actions a "scorched-earth ap- proach." In his view, it would be impractical to hold money in trust until the parties resolve the dispute because Loreto has to be paid out of client funds. "We cannot hold client money in trust indefi nitely for some imprecise or indeterminate claim," he says. "It's a messy situ- ation, and our goal all the way through this has been to keep the clients out of it. Two-and-a-half years later, it's still hanging out there. We want to move on." Th e dispute goes all the way back to the night of June 11, 2008, when the four defendant lawyers approached Loreto with Tapping new files Continued from page 1 created not because the fi rm is a remarkably good litiga- tion fi rm but because it has a member of a diverse commu- nity who is able to tap into that." Closer to home, Esi Cod- joe, a union-side labour law practitioner, said lawyers from diverse backgrounds are particularly useful for fi rms that serve a client base with a large minority population. She's currently in-house counsel at the On- tario Nurses' Association, whose members' countries of origin commonly include places like India, the Philip- pines, and several African nations. In her experience, it was easier for her to gain the trust of many grievers she represented because she, too, was a racialized person. "I can see the look when racialized folk see someone like them, and it's one of relief," she said. "Th ere's a comfort level when you feel it's someone who will fun- damentally understand your issue and you don't have to do a lot of background ex- planation." Several of the panellists said they were uncomfort- able with the notion that they should "tick the diver- sity box" in applications for law schools and jobs given fears of the implication that they were simply there to fi ll a quota. Douglas Sanderson, a professor at the University of Toronto Faculty of Law, said he understood that fear but repeated the advice Jus- tice Murray Sinclair, Mani- toba's fi rst aboriginal judge, had given him. "In your life, people may give you things simply because you are an Indian," he said. "You will get opportunities others might not. Take them." LT a partnership agreement. Al- though Loreto Little Morello had been a general partnership since 1997, there was no profi t- sharing and the lawyers were es- sentially Loreto's employees. Loreto felt angry and am- bushed by the proposed agree- ment, which he says would have entitled the partners to 40 per cent of fees paid. As a result, the situation quickly escalated. In Belobaba's judgment issued in February of this year, he found that two of the lawyers, Vettese and Segreto, were fi red as the situation boiled over in the fi rm's boardroom. Loreto construc- tively dismissed the other two — Little and Morello — Belobaba ruled. In a recording of part of the explosive meeting, Loreto can be heard inviting the lawyers to leave and start their own fi rm, according to the ruling. Th at's exactly what they did a week later after meeting to de- cide how to go forward. In the meantime, they approached the Law Society of Upper Canada for advice on how to solicit old clients. It advised them to give clients three options: stay with Loreto, come to the new fi rm or fi nd another lawyer. Loreto claims the new fi rm cherry-picked the lucrative fi les, leaving him with "all the dog's breakfasts." He believes the four lawyers were motivated by "am- bition and greed" when they pre- sented him with the partnership agreement and says he would have been happy to give them even more fi les if they had asked to leave for business reasons. "We used to be a family here," he laments. According to Little, he and his colleagues entered the night of the blow-up with an air of opti- mism. "We were sitting down to present an agreement on moving the fi rm forward as a partnership and we walked out the door be- ing constructively dismissed and fi red," he says. "We were out on the street." Belobaba also found that the terms of Loreto Little Morello's retainer agreements limited the amount Loreto can claim to time spent on matters before termina- tion "and not on the amount of any eventual fi nancial recovery." Loreto disputes that, saying some of the older fi les had much more open-ended retainers that could link his fees to fi nal settlements. Loreto appealed Belobaba's judgment partly, he says, because he couldn't aff ord the $70,000 costs award made against him. He notes he has had to borrow $1.4 million to keep his practice going while pawning off expen- sive watches bought in happier times to help make the rent for his offi ce in Toronto's west end. In the meantime, the defen- dants have brought a motion to have all of the assessments stayed, while Loreto has asked for all of the proceedings to be consoli- dated and allowed to proceed. Th e defendants again won that motion when Superior Court Justice Th omas Lederer stayed the assessments pending a deci- sion on Loreto's now-abandoned appeal of Belobaba's ruling. Lederer compared the situa- tion to Hamlet, with Loreto tak- ing on the role of the king, al- though he admitted he still wasn't sure who was playing Hamlet in seeking revenge for his attempted removal from the kingdom. It could be any one or all of the de- fendant lawyers, he wrote. Nevertheless, Lederer raised the spectre of Hamlet's bloody fi - nal scene in which everyone dies as a warning to all parties about potential twists in the next act of this tragic drama. "Th is is an un- happy situation," he wrote. "It cannot help, or refl ect well, on any of those involved. If a reso- lution is not found, all of them will be hurt by it. It often seems easier to fi ght on. No good can come of this." Lederer later returned to Shakespeare as he made his costs endorsement for the motion, this time using a quote from Th e Merchant of Venice to character- ize the actions of the defendant lawyers: "And if you wrong us, do we not revenge? If we are like you in the rest, we will resemble you in that." Loreto may have brought many of his problems on him- self, Lederer wrote, but "the problems continue, in part, be- cause the defendants seem more intent on revenge than fi nding a reasonable solution." At the same time, he rejected the defendants' claims that the public perception for the admin- istration of justice was the prima- ry concern behind the motion as "more than a bit disingenuous." "Th e parties on these mo- tions were concerned with their own interests and driven by the acrimony between them," Lederer wrote. Between Lederer's hearing of the motions and the release of his judgment, Loreto launched his unjust enrichment claim, which included new allegations that the four lawyers had held off on settling claims so they could cash in after the split and that they had used his law clerks to trick him into accepting small fees for transferred fi les that eventually resulted in large windfalls for Little Morello Vet- tese Segreto. Little denies those allegations, none of which have been proven in court. He says it's common for lawyers to transmit off ers to clients without fi nalizing settle- ments and claims there could be no premeditation because the events of that summer night had caught all of the defendant law- yers off guard. "We worked out of a freaking mailbox for a while, in our bedrooms, with a little ther- mal fax machine that someone found in their basement. If we were going to do something, we would have at least had an offi ce on standby or something." Along with a motion for di- rection on how to proceed with the assessments that's scheduled to be heard today, the defendant lawyers have also asked the court to dismiss Loreto's new lawsuit as "frivolous, vexatious, and an abuse of process." In yet another twist, Little says Loreto served the materials himself, which prompted the four lawyers to pay a trip to a Newmarket, Ont., justice of the peace to seek an application for a peace bond against their former boss for threatening behaviour. Loreto, on the other hand, thinks he has a case for malicious prosecution. "Th ey're obviously trying to outlast me," he says. "Th ey're so pissed off because I'm still going. Guess what, Frank Loreto's loud and he's a survivor. I'll be fi ne." LT PAGE 5 caseAlert Get case summaries by topic with links to full-text decisions delivered via email to keep you up to date! 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