Lawyer out $44K in dispute over pro bono retainer

To anyone who may have had doubts, a Superior Court judge has issued a clear statement on the difference between pro bono and contingency-fee arrangements in a case that underlines the need for written retainer agreements.

In a decision earlier this month, Justice Mario Faieta ruled in favour of a man who took his former lawyer to court after he presented him with numerous invoices for what the client said he thought was pro bono work. The lawyer, Andrew MacDonald of the Barristers Group, will have to pay $43,991.19 to the man plus costs of $1,684.57.

The decision refers to the man only as John Doe in order to keep secret the terms of the settlement he won while represented by MacDonald. According to the decision, Doe first met MacDonald in 2006 through mutual friends. Doe’s dog, Ben, had died in the care of a veterinarian, and he believed the death was traceable to an excessive amount of sedative negligently given to him. He wanted to sue the veterinarian for malpractice but couldn’t afford a lawyer.

According to Doe, MacDonald agreed to take the case on a pro bono basis. MacDonald, the ruling noted, said he told Doe: “I would get paid for my time if we received money from the other side and that my hourly rate was $350.00 plus GST. I told him I would be paid out of the proceeds of any settlement or judgment based on my time and hourly rate plus disbursements.”

Doe launched an action against his veterinarian in 2008. Soon thereafter, according to the Aug. 10 decision in John v. MacDonald, the lawyer told Doe he was running up a number of expenses and the client “agreed that he would try to reimburse Andrew [MacDonald] for his out of pocket fees because John [Doe] was grateful that Andrew was providing his services on a pro bono basis and felt that Andrew should not have to pay for the expenses associated with the lawsuit.”

Over the next few years, MacDonald began to invoice the client for his disbursements, and Doe made numerous payments after receiving money donated by his family and friends as well as funds raised from a benefit concert. In February 2014, the parties settled the suit for a sum not disclosed in Faieta’s decision. Doe then received a “pre-bill” from MacDonald totalling $65,978.98 “for fees and disbursements,” the ruling noted. In April, MacDonald presented Doe with a reduced figure of $34,000, saying he had given him a discount “based on actual time spent on the file.”

In May of last year, Doe got an order of assessment of all of the bills MacDonald had sent him, but the assessment process was adjourned when the client decided to file an application against the lawyer. In his application, Doe sought declarations that MacDonald had done the work on a pro bono basis; that he wasn’t liable to pay his account to MacDonald other than unpaid disbursements; that he was entitled to repayment of $9,991.19 he had paid to MacDonald; and that he also should also get $34,000 from the settlement money that MacDonald had held in his trust account.

In considering the issue, Faieta concluded that in cases where there’s no written retainer agreement and a dispute about the terms arises between a lawyer and a client, there’s a “heavy onus” on the lawyer to prove his or her version. But MacDonald, Faieta concluded, wasn’t able to prove that the agreement he had with Doe was a contingency-fee agreement rather than a pro bono arrangement.
MacDonald admitted at one point, according to Faieta, that he was taking on the case pro bono but stated that he meant, among other things, that “he would not get paid if no damages were awarded.”

“Implicit in his statement is the proposition that Andrew would get paid if damages were awarded to John,” wrote Faieta. “Andrew’s suggested meaning of ‘pro bono’ bears no resemblance to its normal meaning — namely, to provide services gratuitously to a client regardless of the outcome.

“Misunderstandings about the terms of a retainer not only have consequences for the solicitor and his client, but also reflect poorly on the legal profession,” Faieta continued. “Such a misunderstanding in this case was entirely avoidable had Andrew followed the Law Society’s guidance and reduced the terms of the retainer to writing.”

MacDonald says he’s “very disappointed” with the ruling, especially after the settlement he won for Doe.

“This is a case where the client was very, very pleased with the services, had no complaint with the representation, and had no complaint with the result that was achieved,” says MacDonald. “The client here got a windfall on the back of 8-1/2 years of litigation services that I supplied to him.”

He also says the decision doesn’t reflect the way the relationship between him and Doe changed as the client was able to secure more funds, especially after he reached a settlement with his veterinarian.

“The issue on pro bono, it seems to me, is that if an individual comes to you without means to pay, if the means to pay changes at some point, does that change the nature of the relationship?” he asks.

“In this case, he was successful in getting some financing, and the financing it seems to me changes the game plan to a certain extent. But certainly, once there’s been a settlement, that changes the game plan as well, especially if that settlement was built upon the legal costs incurred to date.”

Asked why he never committed the terms of the arrangement to writing, MacDonald says trust was a key factor. “It’s just sort of the nature of the client and the circumstances of the case. There’s an element of trust in the client-lawyer relationship, and this is one of those cases that evolved over 8-1/2 years. . . . There was an understanding, as I saw it, that we had sort of a trusting relationship, that I was helping him out, and that there would be something for both of us at the end of the day if the other side paid.”

Lucas Lung, a partner at Lerners LLP, says unwritten retainer agreements aren’t uncommon in files where the work is relatively simple and very narrowly defined. But he suggests written retainers should be an essential part of any case that involves ongoing work.

“When you’re dealing with a pro bono file, it’s nice to have the scope of the matter fairly nicely defined,” says Lung, who at one point received permission from his firm to devote 40 per cent of his practice to pro bono cases. “I think that’s the case for any file. It’s good to define what you’re being retained to do because you could have a client with all kinds of different problems. . . . You’re not being hired to act as their general counsel and deal with everything in their life.”

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