In Klein Lyons v. Aduna, Registrar Kathryn Sainty criticized Klein Lyons for allowing its client Tito Aduna to sign a retainer agreement without having a lawyer review it with him first.
“In my opinion, the [retainer and contingency fee agreement] was flawed from the moment Mr. Aduna signed it as he signed it without the benefit of speaking to a lawyer at the law firm,” wrote Sainty.
“Further, I am of the view that the fact that no lawyer met with Mr. Aduna to review the CFA, explain its terms to him and provide him with some advice as to how the law firm’s fees would be calculated, produced a serious flaw in the formation of the CFA and a mistake was made at the time it was signed. As such, the CFA must fail.”
The case stems from a car accident on June 13, 2005 in which Aduna was injured. Bojan Petrovic, a case manager with Klein Lyons, witnessed the accident and advised Aduna he was prepared to be a witness on his behalf if need be. Aduna took Petrovic up on his offer and later retained the firm to launch a claim.
The matter was settled for $334,734 through mediation on April 21, 2011. Klein Lyons sent Aduna a bill for $111,139. Aduna then filed a motion to assess the bill of costs, review the firm’s bill, and examine the agreement.
Aduna claimed he was incapable of contracting with the firm when he signed the agreement due to the medication he was taking for his injuries, his level of pain, and therefore his inability to function, which Aduna argued Petrovic ought to have known.
Petrovic testified that he had no concerns about Aduna’s mental state or his ability to understand what it meant to hire a lawyer at the time.
The court also concluded that Aduna did not lack the capacity to enter into the agreement.
“Mr. Aduna himself is a businessman who has worked in a variety of capacities, including as a self-employed graphic designer. He must have known when he approached the law firm about representing him in respect of his injury claim that he would be required to contract with them to carry out those services. If he had concerns about it, he could have taken it away to consider or seek advice from his wife, for example, before signing it,” wrote Sainty.
However, the court did find that the circumstances surrounding the agreement were unfair and therefore cancelled it.
“While it was not required that the solicitors advise Mr. Aduna that he ought to get independent legal advice before entering into the CFA, they ought to have advised him ‘fully and fairly concerning the terms of that contract’ (per Roberts & Muir (Re)), something they did not do,” wrote Sainty.
“As the solicitors were entering into a bargain with the client (to pay them a fee based on a percentage of the recovery), they had a duty to ensure that the terms of the CFA were explained to Mr. Aduna by a lawyer. It was not sufficient that there was a lawyer on ‘stand-by’ to be called into the room to discuss the CFA with Mr. Aduna if he had questions about it.”
The fact that Aduna was under some duress from the medication and pain when he met with Petrovic, it was “even more pressing” for the firm to ensure he “fully grasped the consequences of the retainer agreement and took no unfair advantage given his distress,” she wrote.
The court has given Klein Lyons 30 days to either issue a new bill to Aduna, in which case both parties will have 30 days to apply to the court to make additional submissions, or confirm its use of the original bill issued to Aduna and then the court will review the bill based on evidence cited at the hearing.