Firm wins bonus battle

Aird & Berlis LLP has been awarded nearly $500,000 in costs from a former partner who lost a lawsuit claiming the firm should have paid him a bigger bonus before his departure.

The parties in Springer v. Aird & Berlis LLP agreed before the trial that the quantum of damages in the matter was just under $586,000, although the plaintiff’s statement of claim sought $1 million.

Superior Court Justice Frank Newbould granted costs on a substantial indemnity basis after Jan. 25, 2009, when the law firm offered to settle the matter for $100,000. It offered $150,000 the following month.

“We’re really pleased with the result. We think it’s a further vindication of our client’s position throughout the trial,” says Paliare Roland Rosenberg Rothstein LLP managing partner Linda Rothstein, who represented Aird & Berlis. “Our client made an offer to settle because every sophisticated client knows that this kind of litigation is very expensive, as was borne out by the costs award.”

Harold Springer and his lawyer, Thomas Dunne of Gowling Lafleur Henderson LLP, did not respond to requests for comment.

Springer, a former partner at Aird & Berlis, alleged that he deserved a larger share of partnership units for 2001 and 2002 and that he should have gotten more money from a withdrawal payment. Newbould dismissed the action in April.

Aird & Berlis had sought about $524,000 on a partial indemnity scale until the settlement offer, while Springer suggested the proper amount would be about $262,000. The plaintiff did not oppose the disbursements of about $47,000.

Springer questioned the amount of time spent on the case by Aird & Berlis’ counsel on the case, including Rothstein and fellow  Paliare Roland lawyers Robert Centa, a partner at the firm, and associate Jean-Claude Killey, who began working on the case as a student.

Newbould took odds with Springer’s failure to submit information regarding time spent by his own lawyers on the case, while opposing submissions from the defence.

“It is difficult to be able to be sanguine regarding the correct number of hours to be included in any award of costs, particularly when the plaintiff has not produced any information about the hours spent by his solicitors,” the judge wrote.

“A judge does not have the luxury of knowing what all was required and the difficulties faced by counsel in preparing a case for trial and attending at the trial. This comment is relevant to all of the deductions which the plaintiff asserts should be made to the number of hours spent on behalf of the defendant.”

Newbould also said, “[I]t must be recognized that the attack in this case was on a group of professionals with whom the plaintiff had worked for some years and by whom the plaintiff had been handsomely rewarded.”

The judge added, “Mr. Springer had to realize that the defendant would take steps to strongly oppose the claim and that it would take considerable work to do so.”

Springer proposed substantial indemnity rates of $360 per hour for Rothstein, who was called to the bar in 1982, and $237 for Centa, who was called in 2001. The judge disagreed.

“In my view these rates would be wholly inadequate substantial indemnity rates for litigation in downtown Toronto conducted between major law firms,” wrote Newbould. “It would be far less than what Mr. Springer could be said to reasonably expect to pay if costs were awarded against him on a substantial indemnity basis.

Although the rates charged by his solicitors were not disclosed, those rates were no doubt far higher than the rates Mr. Springer suggests would be reasonable of Ms. Rothstein and Mr. Centa.”

Aird & Berlis claimed hourly rates for Rothstein from $315 to $350 on partial indemnity, and $525 on substantial indemnity. The firm sought $180 to $225 for Centa on partial indemnity and $338 on substantial indemnity. For Killey, the rates sought were $60 as a student, $175 to $200 on partial indemnity, and $300 on substantial indemnity.

“In reviewing the hourly rates claimed by the defendant, generally the rates appear reasonable,” wrote Newbould, although he added that the partial indemnity rates claimed for Centa “may be a little on the high side,” and the non-student rates for Killey “are somewhat high.”

The firm sought costs on a substantial indemnity basis throughout the trial based on a number of factors, such as allegations in the statement of claim that partners in the firm breached fiduciary duties, and that Springer sought costs on a substantial indemnity scale, which is only for cases “where there has been reprehensible, scandalous, or outrageous conduct.”

The request also was claimed on the basis of remarks by Dunne during the trial that Springer was “‘blindsided’ and he compared the defendant firm to Todd Bertuzzi who had blindsided Steve Moore during an NHL game,” wrote Newbould.

But the judge decided, “[T]he allegations in the pleadings in this case do not support an award of substantial indemnity costs.”

Springer was called to the Ontario bar in April 1986 and worked at the Outerbridge firm until November 1998, according to Newbould’s trial decision. He moved on to Aird & Berlis, where he specialized in insolvency litigation and restructuring. He became a partner in January 1990, which he remained until leaving in 2002 to run a start-up private equity restructuring company.

Springer argued he should have received more money through the firm’s compensation scheme based on his performance. In January 1999, he received 185 partnership units and 65 bonus units for “extraordinary results,” according to Newbould. The value of those units was not included in the decision.

In January 2000, he received 225 normal units and 200 bonus units, each worth $2,600. In January 2001, he got 400 normal units, each worth $2,895, and a cash bonus of $560,000. In January 2002, he was given 175 normal units, and on the same day advised the firm he was leaving. Springer felt he deserved 100 more units in 2001 and 325 more in 2002.

Springer had previously urged the executive committee to award him more partnership units to make him on par with partner Jack Bernstein, an international tax expert recognized as the firm’s top rainmaker who received the most partnership units.
The costs award is on hold pending Springer’s application for leave from the Ontario Court of Appeal.

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