ARBITRATION OF LEGAL ACCOUNTS
Recently, the Ontario Superior Court of Justice struck down an arbitration clause in a retainer agreement.
In Jean Estate v. Wires Jolley LLP 2008 CanLII 14538, an estate trustee and sole beneficiary of an estate entered into a retainer agreement with counsel that provided for a “success fee” of 10% of the value of the estate. The retainer agreement also provided that any dispute relating to the success fee was to be determined by an arbitrator.
A dispute arose, and the solicitors sought to have the dispute resolved through arbitration. The client applied to the court to have the notice of arbitration struck out, and to have the dispute resolved by the court.
Madam Justice Low granted the application. She held that the provisions of the Solicitors Act applied prima facie. She went on to conclude that even though the parties had previously agreed to an arbitration provision, and could agree to keep private commercial disputes private, the relationship between lawyers and clients is “one which transcends a mere commercial transaction. The profession has a monopoly over the provision of legal services and the occasions upon which lawyers interact with members of the public occur often when the latter are in the most vulnerable of circumstances. There is therefore an overarching public interest to be served in the court’s supervision of the profession’s monopoly.”
As the arbitration provision was a derogation of the client’s statutory right to have the court scrutinize the propriety of the fees, it was not upheld.
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