When clients change lawyers mid-stream, outstanding legal fees can become a tricky ethical issue for the incoming lawyer. The 2012 Ontario decision of Thomas Gold Pettinghill LLP (“TGP“) v. Ani-Wall Concrete Forming Inc., 2012 ONSC 2182 sheds important light on what successor lawyers must—and must not—do when taking over files involving unpaid fees.

In this case, Cassels Brock had unpaid legal fees after Ani-Wall transferred its litigation file to TGP. More particularly, the lawyer with carriage moved from Cassels Brock to TGP and gave a personal undertaking to ensure his former firm’s fees would be paid from anticipated settlement proceeds. When Ani-Wall later instructed him not to pay those fees, the lawyer faced an ethical conflict.

Justice Perell clarified that while successor lawyers do not have a general obligation to personally ensure prior lawyers are paid, they do have important responsibilities:

“The Rules of Professional Conduct do not mandate any specific actions…when a solicitor gives an undertaking… However, the undertaking will include a continuing obligation of the solicitor to refrain from actions that would frustrate the performance of the undertaking.”

The judge further emphasized that successor counsel, once having given such an undertaking, must actively avoid assisting the client in evading payment and carefully manage potential conflicts:

“The undertaking requires the lawyer to cease acting on behalf of the client from the time when the lawyer learns that the client proposes to take actions that would frustrate the undertaking. Whether the obligation to withdraw conflicts with the solicitor’s professional responsibilities to the client will depend upon the particular circumstances of a case.”

Justice Perell also addressed the potential ethical conflicts clearly:

“A solicitor who gives an undertaking and does not take some course of action at the time of doing so to avoid the potential for a conflict of interest runs the risk of a contravention of the Rules of Professional Conduct.”

While lawyers are not obligated to personally guarantee payment, Justice Perell strongly indicated that successor lawyers should encourage clients to resolve outstanding fees and avoid taking steps that could undermine previous counsel’s right to payment.

Ultimately, the court ruled Cassels Brock was entitled to payment through a charging lien, reinforcing the principle that although lawyers may change firms, their ethical obligations regarding unpaid accounts remain critical and continuous.

Thanks for reading!