O'Dwyer & Co. v. Socha

2004 BCSC 822 O'Dwyer&Co. v. Socha IN THE SUPREME COURT OF BRITISH COLUMBIA RE: The Legal Profession Act Citation: O'Dwyer & Co. v. Socha, 2004 BCSC 822 Date: 20040618 Docket: S084570 Registry: New Westminster Between: O'Dwyer & Company Solicitors And Eve Socha Client Before: District Registrar Sainty Reasons for Decision Appearing in person M.J. O'Dwyer Appearing in person Eve Socha Date and Place of Trial/Hearing: May 20, 2004 New Westminster, B.C. [1] This matter came before me as a review, brought by the client, under the Legal Profession Act, S.B.C. 1998, c.9 of two accounts rendered by the solicitor to the client totalling $6,542.59. The accounts in question are dated December 1, 2003 and December 8, 2003 (the "Accounts") and are in the amounts of $5,555.48 ($4,760.00 in fees, $98.39 in disbursements and $697.09 in taxes on such fees and disbursements) and $1,137.11 ($940.00 in fees, $55.40 in disbursements and $141.71 in taxes) respectively. The Facts [2] The client initially contacted the solicitor on or about October 14, 2003 in respect of the breakdown of her lengthy common-law relationship. The parties entered into a retainer agreement on or about October 23, 2003 which provided, inter alia, as follows: Retainer and Instructions 1. I, EVE SOCHA, retain and instruct M. JOY O'DWYER to advise me and to act on my behalf with respect to all aspects of my matrimonial and family affairs, including the following: (a) negotiation of a property settlement agreement; (b) instituting, opposing, or responding to an application under the Family Relations Act; (c) instituting, opposing, or responding to proceedings in the Supreme Court of British Columbia. Fees and Accounting 2. In understand that: (a) M. JOY O'DWYER will send me interim and final accounts. The accounts will be based solely on the time spent on my affairs on my behalf, however that time may be spent and regardless of the results obtained. Time spent in telephone calls will be included. (b) The fees charged will be based on M. JOY O'DWYER's hourly rate of $200.00. (c) The fees referred to in paragraph 2(b) do not include disbursements. I agree to pay for all disbursements made by M. JOY O'DWYER on my behalf. (d) The fees referred to in paragraph 2(b) and the disbursements referred to in paragraph 2(c) do not include GST or PST. GST and PST will be added to each account. . . . Payment of Retainer 3. I agree that I have paid the sum of $150.00 to be held in a trust account. This sum is for payment of ongoing disbursements connected with the file. I further agree that I will pay fees and other disbursements as outlined in this retainer agreement from proceeds of either the sale of the matrimonial home located at..., or by monies paid into my solicitor's trust account by my husband Daniel Brenner in satisfaction of my interest in the matrimonial property. . . . [3] The solicitor testified that she negotiated the settlement of property matters (essentially the only thing at issue) on the client's behalf. She dealt with Mr. Brenner (the client's spouse) exclusively in that regard as Mr. Brenner was unrepresented. She confirmed that Mr. Brenner was difficult to deal with. He did not see why he should pay debt in the client's personal name (although acquired during the period of cohabitation). Nor was he prepared to pay any spousal support. Further, he remained in the family home long after the parties' separation and he had no impetus to sell the property, contrary to the client's needs as she was attempting to keep creditors at bay on little or no income. [4] Ms O'Dwyer also testified (which testimony was not disputed) that, prior to retaining her, Ms Socha had retained Mr. Schwarz. She filed (Exhibit 1) a copy of a letter dated June 16, 2003 from Mr. Schwarz directed to Mr. Brenner which letter set out a settlement proposal. The settlement negotiated by Ms O'Dwyer was more favourable to the client as it provided the client with some additional $50,000 than the proposal put forward by Mr. Schwarz. [5] During the negotiations with Mr. Brenner the family home was sold and the sale proceeds were deposited in the solicitor's trust account. [6] The solicitor paid the Accounts from the proceeds of sale. She was to pay the client's debts from those proceeds, as well. [7] Ms Socha testified that, while she was reasonably content with the settlement reached, she had essentially three complaints relating to the retainer and the Accounts: 1. The solicitor quoted her the sum of $3,000 as an amount she might expect to pay for a reasonably straightforward separation agreement. The Accounts totalled significantly more than that amount despite the client's opinion that the matter was relatively straightforward; 2. The solicitor made a number of errors (mostly typographical) in the drafts of the agreement. She had continual computer problems which delayed matters and for which she claimed she was billed. The solicitor spent a considerable amount of time discussing personal matters with the client which had nothing to do with the client's matters, for which she believes she has been charged; and 3. The day before the solicitor received the signed separation agreement, she was suspended from the practice of law and a custodian was appointed to oversee her practice. This caused considerable hardship for the client as she was unable to provide herself with basic living expenses and the creditors to whom she had promised payment from the house sale proceeds remained unpaid for a considerable length of time as monies were not able to be released. In fact, Ms Socha testified that some monies remain in the hands of the Law Society of British Columbia to this day. The Review [8] A review of a solicitor's account is conducted pursuant to the provisions of s. 71(4) of the Legal Profession Act, S.B.C. 1998, c.9. That section provides as follows: (4) At a review of a lawyer's bill, the registrar must consider all of the circumstances, including (a) the complexity, difficulty or novelty of the issues involved, (b) the skill, specialized knowledge and responsibility required of the lawyer, (c) the lawyer's character and standing in the profession, (d) the amount involved, (e) the time reasonably spent, (f) if there has been an agreement that sets a fee rate that is based on an amount per unit of time spent by the lawyer, whether the rate was reasonable, (g) the importance of the matter to the client whose bill is being reviewed, and (h) the result obtained. Analysis [9] In my view, this matter was not particularly complex or difficult save for the fact that Mr. Brenner was unrepresented and somewhat challenging to deal with. Ms O'Dwyer testified that she prepared some five drafts of the separation agreement, each of which required changes because of matters brought up by Mr. Brenner. Ms Socha testified that only one or two drafts were sent to Mr. Brenner, to her knowledge and that many of the errors in the agreement were errors made by Ms O'Dwyer: typing and spelling errors which did not seem to be rectified quickly or correctly. [10] Further, according to Ms O'Dwyer there was a fair amount of work required to review the client's documents to determine the outstanding debts. Although the family home was the major asset, Ms O'Dwyer confirmed that the debt situation was complicated. [11] Ms O'Dwyer testified that she was called to the Bar of Nova Scotia in 1989 and subsequently (1993) to the Bar of British Columbia. She has extensive experience in the field of family law and it has been a significant part (40%) of her practice in latter years. As to her suspension from practice, she acknowledged that it stemmed from a number of factors, including the loss of her law partner, moving her practice from one municipality to another and health related issues. [12] Two citations were issued against the solicitor - one dated October 28, 2003 and a second dated December 18, 2003. At a discipline hearing held February 2, 2004, the solicitor essentially admitted to her professional misconduct in failing to advise the Law Society of British Columbia of judgments registered against her, failure to respond promptly to correspondence from the Law Society and failure to file the required Form 47 Accountant's Report within the time specified. [13] The panel found the solicitor guilty of professional misconduct. The "Decision of the Hearing Panel on Facts and Verdict" noted that the penalty phase of the hearing was adjourned to April 8, 2004. Ms O'Dwyer noted at the hearing before me that she is now able to be reinstated provided she works under a practice supervisor or finds an employer. [14] The parties agreed that the solicitor would bill at the hourly rate set out in the retainer agreement. Although the client testified that Ms O'Dwyer had "quoted" a fee of $3,000 for a simple agreement, Ms O'Dwyer stated that she makes it a practice not to provide firm quotes for legal work as she is unable to tell at the time of the retainer the amount of work that may be required. The provisions of the retainer letter support this. Ms O'Dwyer did admit that she might have told the client that, if matters were simple and straightforward, a fee of around $3,000 might result. [15] The solicitor spent some 28.58 hours on the client's matters. She testified that she did not include in the time recorded time expended on rectifying computer problems, nor time spent discussing personal matters. [16] Ms O'Dwyer expressed her remorse that Ms Socha had, unfortunately, been caught in the middle of her difficulties. She submitted however that the work performed was good and the results achieved were excellent in that she negotiated a settlement whereby the client received approximately $50,000 more than had been offered in the settlement proposal prepared by Mr. Schwarz. In addition, she noted that the work was done in a very tight time frame - essentially between October 14 and Decembers 7, 2003. [17] In my view, the work performed was reasonable in the circumstances as was the time expended, for the most part, although I agree with the client that some time may have been recorded to the file during appointments where unrelated matters were discussed or when the solicitor had computer difficulties. In my view it is almost impossible to ensure that time devoted to such matters is not included in time recorded. Some discount might have been taken from the time recorded to account for this. [18] The solicitor's hourly rate is within the range of solicitors having the same experience, practicing in similar locations. [19] The results achieved were based on the client's instructions and the matter was completed (at least the agreement was concluded) in a relatively short time frame. [20] In my view, the most troubling factor in this review is the solicitor's suspension from practice prior to completing the terms of the retainer. Virtually all of the work was completed prior to the suspension. The only remaining matter, based on the evidence before me, was payment of the debts by the solicitor from the house sale proceeds. That did not occur until at least one month following the receipt of the signed agreement and only then through a plea by the client to the Law Society for release of some of the funds which appear to have been frozen upon Ms O'Dwyer's suspension and the appointment of a custodian of her practice. [21] In McVeigh v. Ewachniuk, [2003] B.C.J. No. 2022 (S.C. - Registrar), in considering the effect of a solicitor's disbarment on his right to bill a client for services rendered before the disbarment, Registrar Blok reviewed the law relating to a solicitor's right to be paid for work performed when the solicitor terminates the retainer. He confirmed, at para. 56: [56] I therefore conclude that the law remains as stated by Southin J. (as she then was) in Ladner Downs v. Crowley [(1987), 14 B.C.L.R. 357 (S.C.)], that is to say, a solicitor terminating an entire contract without cause is not entitled to be paid for his or her services on the basis of quantum meruit. [22] He continued: [57] I am satisfied that the disbarment of a solicitor is a sufficiently voluntary or culpable event that it cannot amount to good or proper cause for terminating a retainer agreement... [23] At the hearing, I raised the issue as to what affect Ms O'Dwyer's suspension might have on her ability to bill the client. I specifically referred to the proposition noted by Registrar Blok: that disbarment terminates a retainer. Ms O'Dwyer noted that she was not disbarred, merely suspended. She further argued that the retainer was, essentially terminated (concluded) prior to her suspension: the negotiations were concluded; the terms of the separation agreement had been agreed; the house was sold; the funds were in trust - essentially the only matter to be attended to was payment of the debts as agreed between the parties and set out in the separation agreement. [24] While I disagree with Ms O'Dwyer that her suspension is markedly different from disbarment (in that she was rendered incapable of concluding the retainer), I do believe that, in this instance, as the retainer had been substantially concluded - the essential legal work had been performed - Ms O'Dwyer is not prevented from billing the client for the work performed. Further, the completion of the retainer was carried out by the custodian in that only payouts were required. This differs, in my view, from cases in which the solicitor's ability to complete a retainer has been fully compromised by his/her disbarment (or suspension). [25] That being said however, in my view, the solicitor's suspension is a factor that I, as registrar, must consider in determining the reasonable legal fees payable by the client to the solicitor. In fact the solicitor's character and standing in the legal profession is a factor enumerated in s. 71(4) of the Legal Profession Act and which a registrar must consider in reviewing a solicitor's accounts. [26] The client was compromised by the solicitor's suspension - she had to wait some time before the payouts required to be made under the separation agreement could be made. I did not hear any specific evidence as to the actual cost to Ms Socha (in additional interest) although she testified that her credit rating was further compromised by the delay in payment. As well, creditors who had been promised payment at a specific time were not paid until much later, a fact that Ms Socha advised caused her some considerable embarrassment and hardship. Conclusion [27] Taking all of the factors set out in the Legal Profession Act into account and considering the facts and issues raised by each of the solicitor and the client in this review, it is my opinion that the reasonable fees payable by the client to the solicitor for the work performed is the sum of $4,000.00, plus GST and PST for a total of ($4,580.00). [28] No complaint was made with respect to the disbursements charged by the solicitor which totalled $153.79, plus GST for a total of $164.56. I note that the Account dated December 8, 2003 shows disbursements of $55.40 and GST of $5.41 on them - clearly an error which I have corrected in my totals. [29] Accordingly, the total amount payable by the client for the solicitor's work is $4,744.56. Costs [30] In respect of costs, ss. 72(1) and (2) of the Legal Profession Act provides as follows: 72 (1) Costs of a review of a lawyer's bill must be paid by the following: (a) the lawyer whose bill is reviewed, if 1/6 or more of the total amount of the bill is subtracted from it; (b) the person charged, if less than 1/6 of the total amount of the bill is subtracted from it; (c) a person who applies for a review of a bill and then withdraws the application for a review. (2) Despite subsection (1), the registrar has the discretion, in special circumstances, to order the payment of costs other than as provided in that subsection. [31] The total amount billed to the client was $6,692.59. One-sixth of that amount is $1,115.43. The amount awarded is $4,744.56, a reduction of $1,948.03. It follows therefore that the client is entitled to her costs of the review. [32] Section 72(2) of the Legal Profession Act, supra, provides: (2) On a review under this Part, the registrar may ... (b) summarily determine the amount of the costs of the review and add it to or subtract it from the amount shown on the certificate. [33] In order to assist with the final resolution of this matter and to avoid an additional court appearance to assess costs, I am summarily fixing the client's costs of this review at the sum of $500.00, inclusive of disbursements. [34] As the client has paid the Accounts, it follows that the solicitor must refund to the client the sum of $2,448.03 ($1,948.03, being the reduction in the accounts, plus $500 in costs). "District Registrar K. Sainty"