Law Times

Page 10 February 13, 2017 • Law Times www.lawtimesnews.com Advertising and referral agreements front and centre BY SHANNON KARI For Law Times I ssues around advertising and referral agreements for personal injury lawyers con- tinue to be in the spotlight as the Law Society of Upper Canada has an ongoing study into the issue and a Florida- based law firm has entered the Ontario market in association with a medical and legal refer- ral business. As well, the Ontario Court of Appeal is going to hear argu- ments next month in a closely watched class action over the legality of certain types of con- tingency fee agreements. The Florida company 1-800-ASK-GARY describes itself as a medical and legal re- ferral service for automobile ac- cident victims. Its advertisements are now running on local television sta- tions in southern Ontario. Merricks Law Group, a firm based in Lutz, Fla., has the ex- clusive rights to ASK-GARY in Canada, says its founder How- ard Merricks. "It is a business generation device," says Merricks, in ref- erence to the association with ASK-GARY. The Merricks firm opened an office in Mississauga last year and has one lawyer so far, who is licensed to practice in Ontario, as well as three paralegals. "We are selective" about the cases it takes so far in Ontario, says Merricks. It has plans to expand though and he stresses that the firm's Ontario operations are not a re- ferral service. "We are a law firm. We do everything in-house," he says. Adam Wagman, president of the Ontario Trial Lawyers Association and senior partner at Howie Sacks & Henry LLP, says the association is aware of the Merricks firm and its association with 1-800-ASK- GARY. He declined to comment specifically about its operations, but he says the rules are clear for lawyers in Ontario that pay- ing or receiving fees from non- licensees such as medical clinics is not permitted. "It is against the rules to pay a referral fee to a chiropractor," Wagman explains. That view is echoed by Mer- ricks, who says there are no re- ferral fees involved in its deal- ings with non-licensees in On- tario. "There is no quid pro quo. That is unethical and illegal," says Merricks. In response to an in- quiry from Law Times on 1-800-ASK-GARY, the Law Society says it does not speak to specific firms or the services that are provided. A spokesperson for the regu- lator declined to say whether or not a United States-based firm with lawyers in Ontario is sub- ject to the same referral fee re- strictions for non-licensees. The LSUC established a working group in February 2016 to look at advertising and referral fees issues. It is expected to produce a report with its findings "in the coming months," says the spokesperson. The trial lawyers association has responded to requests from the LSUC for submissions re- lated to advertising and referral fees, and Wagman says it wants the existing Rules of Profession- al Conduct in this area to be act- ively enforced. "We are also suggesting to the law society that the rules need to be clarified and strengthened," he says. In the meantime, the struc- ture of contingency fee agree- ments that also provide for law- yers to receive any of the costs awarded in the litigation will be front and centre next month at the Ontario Court of Appeal. Neinstein & Associates LLP is appealing a majority Div- isional Court decision that cer- tified a class action against the firm as a result of the standard contingency fee agreements it entered into with clients. The main ruling in Hodge v. Neinstein found that the stan- dard agreement was in breach of the Solicitors Act. The court heard that the re- tainer agreement for clients re- quired them to pay 25 per cent of any damages recovered to the firm. As well, the firm would re- ceive partial indemnity costs, up to 40 per cent of the amount recovered, and be compensated for disbursements. Section 28.1 (8) of the So- licitors Act states that a contin- gency fee agreement "shall not" include an award of costs or costs obtained in a settlement, in addition to the agreed fee. The only exception in the Act is if both the client and law- yer apply to the Superior Court to include costs because of ex- ceptional circumstances. In the majority decision, cer- tification as a class action will serve as a warning to all lawyers in Ontario, wrote Justice Anne Molloy. "The fundamental require- ments for contingency fee agreements must be followed and those who ignore them do so at their peril," said Molloy. The Ontario Trial Lawyers Association is an intervener in the Court of Appeal hearing, which will be heard over two days, beginning on March 8. The Divisional Court deci- sion issued by Molloy is based on an "unfair and inaccurate" portrayal of the plaintiff-side personal injury bar, states law- yer Paul Pape in written argu- ments filed with the court on behalf of the association. LT FOCUS Adam Wagman says it is clear lawyers can't pay referral fees to non-licensees, like a chiropractor. INFORMATION TECHNOLOGY LAW SPRING FORUM CHAIRED BY Kirsten Thompson, McCarthy Tétrault LLP Ian Thorburn, Solicitor, City of Toronto St. Andrew's Club & Conference Centre 150 King Street West 16th Floor, Toronto ON, M5H 1J9 MAY 18, 2017 | WWW.IT-CONFERENCE.CA 2017 JOIN US FOR THE SAVE 10% Register before April 3, 2017 Powered by Untitled-7 1 2017-02-07 4:44 PM HOSTED IN PARTNERSHIP WITH BRONZE SPONSOR PLATINUM SPONSOR SILVER SPONSOR NOMINATE AN INDIVIDUAL OR TEAM IN THE FOLLOWING CATEGORIES: Accepting nominations from large, small and public sector/non-profit legal departments. 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