This post was written prior to our January 2017 merger, under our previous firm name, MacPherson Leslie & Tyerman LLP.
On September 24, 2014, the Saskatchewan Court of Queen’s Bench released its decision in Maurice Law v. The Sakimay First Nation, 2014 SKQB 310 which confirmed that the onus is on the solicitor to show that a contingency agreement was fairly obtained and that its terms were reasonable at the time of execution.
In this case, Maurice Law (“the Solicitor”) had previously represented Sakimay First Nation on an unrelated TLE claim under a written retainer agreement, the terms of which expressly applied to other matters. The First Nation subsequently retained the Solicitor to represent it in the negotiation of a specific claim, known as the QVIDA claim, where liability had already been determined. The Solicitor sent multiple drafts of a contingency agreement to Sakimay over a number of years, each of which went unsigned. In the meantime, negotiations proceeded and a framework deal was reached in which Sakimay First Nation would receive a multi-million dollar settlement.
After the framework settlement had been reached, the Solicitor made a further push to have the contingency agreement signed and incorrectly told Sakimay that another lawyer acting on a related QVIDA claim was being paid a 10% bonus. At the same time, the Solicitor sought a contingency agreement on the TLE file. In making its case for the bonus, the Solicitor failed to advise Sakimay that the terms of the TLE Retainer also applied to the QVIDA specific claim at the centre of the lawsuit. The Solicitor also never encouraged Sakimay to seek independent legal advice. Nearly two years after the framework agreement had been reached, the Chief and Council voted narrowly in favour of signing the QVIDA agreement, but elected not to execute a bonus on the TLE agreement because they already had a signed agreement.
The Court found that the retainer agreement was not fairly obtained.
Specifically, the Court found that the client would not have executed the contingency agreement but for the Solicitor’s inaccurate representation that counsel for another First Nation on a QVIDA claim was being paid a 10% bonus. The Court also found that Sakimay would not have entered into the contingency agreement if it had been advised that the terms of the TLE retainer also applied to the solicitors’ work on the QVIDA file. The Court ultimately held that while the First Nation consented, its consent was not informed consent, which imports into the law of taxation of legal bills many concepts which have existed for years in the medical field which could potentially impact how the “fairness” of contingency agreements is considered by the courts in the future.
The Court also found that the contingency agreement was unreasonable at the time it was executed.
When it was signed in 2009, the quantum of damages was known and the Solicitor therefore assumed no risk. The Court found that the Solicitor overstated their role in bringing about the settlement, which had been the culmination of years of effort by a number of First Nations and their legal counsel, all of whom were working simultaneously to resolve the claim.
In the end, the Court’s decision in Maurice Law stands as a reminder to both Counsel and clients that the relationship between a lawyer and his client is unique at law. The Court adopted the following statement of law from the Alberta Court of Appeal, which adequately summarizes the unique character of retainer agreements:
Retainer Agreements are obviously in a special category. The Client is negotiating an agreement with a person (the solicitor) that the client would usually look to for advice on such matters. In negotiating the agreement, the parties are adverse in interest, contrary to the normal state of affairs where the solicitor is bound to represent the clients’ interest. There is also an imbalance of information and knowledge because the solicitor will be more familiar with the terms and operations of the retained agreement than the client. It is undoubtedly for those reasons that solicitor-client contracts are reviewed by the Court, whereas the court will not conduct that sort of analysis in ordinary contracts. The courts will obviously not tolerate any sharp practice by the solicitor or any patent unfairness.
Note: This article is of a general nature only and is not exhaustive of all possible legal rights or remedies. In addition, laws may change over time and should be interpreted only in the context of particular circumstances such that these materials are not intended to be relied upon or taken as legal advice or opinion. Readers should consult a legal professional for specific advice in any particular situation.