Arbitrations for Assessments Not Binding

An assessment is a distressing and time consuming process for counsel. The process is (no blame to the assessment officers!) slow, costly and uncertain.

It would be a good thing if counsel and clients could agree, early in their relationship, to arbitrate any fee disputes.

That aside, today's decision in Jean Estate v. Wires Jolley LLP, 2008 CanLII 14538 (ON S.C.) makes it clear that such an arbitration is not binding even if agreed to by a well advised and sophisticated client. The Court's duty to supervise the profession forbids opting out of the process.

The Court writes:

[28] Private commercial disputes may be well left to private and consensually chosen dispute resolvers particularly where the parties have a wish not to create a precedent. The relationship between members of the legal profession and the members of the public that they serve however, 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.

[29] One may be entirely confident that the chosen arbitrator in this case, or indeed any consensually chosen arbitrator, would act judicially and skillfully in deciding the issues between the parties. There is, however, a residual institutional duty imposed on the court to have regard to the public interest and the broader ramifications of the decision it is to make that is not owed by a private arbitrator resolving a dispute privately.

[30] The freedom of parties to contract is not without limit; there are circumstances where that freedom is tempered by competing values. Because of the profession's monopoly and the imbalance in bargaining power that so often works in the solicitor's favour, it is in the public interest that the court retain a supervisory role to ensure that fee agreements are fair and reasonable and it is for that purpose that the Solicitors Act confers access to the court and establishes a mechanism or protocol for the determination of the reasonableness of a solicitor's fees (see Plazavest Financial Corp. v. National Bank of Canada 2000 CanLII 5704 (ON C.A.), (2000), 47 O.R. (3d) 641 at 646). Similarly, in Price v. Sonsini 2002 CanLII 41996 (ON C.A.), (2002), 60 O.R. (3d) 257, the Court of Appeal observed, at page 263,

Public confidence in the administration of justice requires the court to intervene where necessary to protect the client's right to a fair procedure for the assessment of a solicitor's bill. As a general matter, if a client objects to a solicitor's account, the solicitor should facilitate the assessment process, rather than frustrating the process. See Orkin, The Law of Costs, 2nd ed. . In my view, the courts should interpret legislation and procedural rules relating to the assessment of solicitors' accounts in a similar spirit. As Orkin argues, if the courts permit lawyers to avoid the scrutiny of their accounts for fairness and reasonableness, the administration of justice will be brought into disrepute. The court has an inherent jurisdiction to control the conduct of solicitors and its own procedures. This inherent jurisdiction may be applied to ensure that a client's request for an assessment is dealt with fairly and equitably despite procedural gaps or irregularities.

[31] In my view, although the statute does not express a prohibition against contracting out of the right to an assessment, an agreement to arbitrate is in effect an agreement by the client to relinquish his recourse to the court and ought not to be enforced.

James Morton
1100 - 5255 Yonge Street
Toronto, Ontario
M2N 6P4