Judge rips lawyers over excessive fees
TheGlobeandMail.com – national – Judge rips lawyers over excessive fees
November 3, 2008. KIRK MAKIN
An Ontario judge has blasted the legal profession for running up excessive, unjustified bills that cause the ruination of ordinary people.
Ruling on a long-running matrimonial case, Mr. Justice Donald S. Ferguson of the Ontario Superior Court said it illustrated much of what ails the court system – foolishly litigious clients and gouging lawyers and experts.
“It is now commonplace for counsel to ask for what I consider to be excessive fees when costs are fixed at all stages of litigation,” Judge Ferguson said.
“In my view, the courts have an obligation to reject such claims,” he said. “To award costs in extravagant amounts will simply encourage counsel and experts to charge excessive fees. This will not only ruin clients, but will also make litigation even more inaccessible to the average litigant.”
The case that prompted Judge Ferguson’s outburst involved a Toronto couple – Bibi Khan and Feroze Yakub – who separated in 1998 and reached a consent order in 2000 governing support payments.
The only outstanding issue was whether Mr. Yakub, whose income came through two corporations, had accurately reported his annual income: $72,000. Ms. Khan claimed that he didn’t, and embarked on an application to ascertain his true income to change the child support.
After six years of litigation and probing by an accountant, it turned out that Mr. Yakub’s income was more like $120,000. He agreed to pay retroactive child support of $50,000 as well as a monthly support increase of $64.
As the loser in the litigation, Mr. Yakub was stuck paying costs of $182,000: $79,016 in legal fees, and $103,098 in disbursements. Almost $100,000 were fees for a single accountant, whose account was so “perfunctory” that it didn’t even supply an estimate of the hours he spent on the case, Judge Ferguson observed.
He said that, in total, the costs of litigation so outstripped the results that it would be “unthinkable” for a court to legitimize them.
Judge Ferguson also noted that, had Ms. Khan lost her application and been saddled with her own fees, a woman with an annual income of $57,600 would have been on the hook for three times that amount.
“The astonishing feature of the matter is that the lawyers and expert spent six years running up these costs when the only significant issue was the respondent’s income,” Judge Ferguson said.
“The file now fills the better part of three file boxes. My overall impression of the whole litigation is that the parties have litigated extravagantly, and the lawyers and expert for the applicant have failed to exercise any professional judgment as to what the litigation was worth.”
Judge Ferguson noted that, since the youngest of the couple’s four children was nine when the litigation began and is now 15, the usefulness of the enhanced payments has receded considerably.
Even considering the unreasonable attitude Mr. Yakub showed toward the question of his income, Judge Ferguson said, the bill for legal services of $79,000 was excessive. He reduced it to $50,000.
He slashed the accountant’s bill even more sharply – from $98,000 to $12,000.
“In my view, counsel and experts have a professional obligation to provide advice to their client, not just on the merits of a claim but also about the potential costs of pursuing it – about what is a reasonable sum to invest in the case, and about what might reasonably be expected to be the outcome on costs,” Judge Ferguson said.