Ontario lawyers have urged the provincial government to invest in the Solicitors Act assessment process after a superior court judge labelled wait times for hearings “unacceptably long.”
Ontario Superior Court Justice Sean Dunphy made the comments as he dismissed requests by Toronto intellectual property law firm Gilbert’s LLP for an order that two clients pay outstanding bills arising from undisputed retainers.
Calling the applications an “attempt to circumvent the assessment procedure,” Dunphy nevertheless expressed sympathy for the firm’s predicament in the case of Gilbert’s LLP v. Dixon Inc.
“I fully recognize that the profession is currently experiencing a degree of frustration with the delays cropping up in the assessment process under the Solicitors Act,” he wrote in his Jan. 29 decision. “The delay required to obtain a hearing is, by all accounts, unacceptably long. However, the answer to a shortage of resources devoted to one part of the justice system cannot be to overload those devoted to another that has not been designed or staffed to deal with it.”
James Morton, a former president of the Ontario Bar Association, says the sheer volume of cases assigned to assessment officers has always threatened to overwhelm the system, with many clients using the process to protest the result of their case, rather than their bill.
However, the situation was exacerbated by a 2014 decision in which the Divisional Court barred lawyers from taking legal fee disputes to the Small Claims Court where a written retainer agreement existed between the parties, and lawyers are now reporting waits of up to two years for hearings from the date an account was rendered.
“The assessment process has been problematic for at least two decades,” says Morton, a partner with Morton Karrass LLP in Toronto, pinning the blame on a lack of resources from the provincial government.
“If we want to keep the assessment process we have, we need to have more assessment officers, and we need more courtroom space to hear them. I wish there was a way to do that without cost, but that’s not the reality, unfortunately.”
Stephen Thiele, a partner at Gardiner Roberts LLP, warns the situation is becoming more urgent for law firms seeking outstanding payment as judges cut off alternative routes for fee disputes, funnelling cases into the already clogged assessment process.
“I think we’re all getting frustrated, whether you’re at a big firm, a medium-sized one, or you’re a sole practitioner. Law firms are businesses, and they depend on cash flow, just like any other. There has to be a process that is quick and simple for the collection of fees,” he says. “As these processes become more delayed, complicated, or time-consuming, it’s going to have a serious impact on the practice of law.”
Ben Hanuka, principal lawyer at Law Works PC in Toronto, says more assessment officers are the simplest answer to the long delays in the process.
“These people have developed significant expertise, and other than the waiting time, it’s a process that works very efficiently,” says Hanuka. “We need to lobby the government to make sure the resources are there. Hiring assessment officers is going to cost a fraction of what it would for a federally appointed judge.
“You can’t start substituting judges for assessment officers, because that would screw up the system and make things worse.”
Rather than moving for traditional assessments under s. 3 of the Solicitor’s Act, Gilbert’s applied instead to the Superior Court under s. 23, which is normally used in the determination of disputes over contingency fee agreements. The firm asked Dunphy for a declaration that the agreement between Gilbert’s and its clients were “fair and reasonable,” and, crucially, “for an order that the respondent pay” the outstanding accounts, which were $5,000 and $9,000, respectively.
Despite the firm’s success with previous similar applications, Dunphy ruled that s. 23 was not intended to permit applications whose primary purpose is fee collection and concluded there must be “evidence of a bona fide dispute between the solicitor and the client as to validity or effect of the written agreement” in order to confer jurisdiction under the section.
“The mere fact of an unpaid account is not sufficient,” Dunphy wrote.
The judge observed that as the assessments process has become more bogged down, lawyers have sought “imaginative means of avoiding” the assessments process instead of “seeking to reform it or obtain from the government the allocation of additional resources” needed to bring it up to scratch.
“I do not wish to sound alarmist, but applications such as this can start as a trickle and soon develop into a flood,” Dunphy’s decision reads. “In my view, the mandate of the Superior Court does not extend to being an all-purpose alternative to assessment where the solicitor or the client find the current state of the assessment system no longer works to their liking.”
Thiele says his firm has begun looking into inserting arbitration clauses into its retainer agreements as an alternative to the increasingly unavoidable assessment process. “There are pros and cons to that because, although it may be quicker, someone still has to pay for the arbitrator. And if the legal bill is relatively small, as it was in this case, it may not be worth the cost.”
Mick Hassell, a lawyer and arbitrator who settles legal fee disputes at Hassell Arbitration in Toronto, says the state of the assessment process has contributed to the growth of arbitration in the area and the potential of a two-week turnaround is attractive compared with the two-year alternative, as well as the privacy afforded by arbitration process.
“Arbitration is widely under-utilized, but I think decisions like this, which push more cases into the already broken assessment system, are going to cause the number [of arbitrations] to spike up even more,” he says.