HomeCase CommentaryCourt Slashes Lawyer’s Contingency Fee in Favour of Minor Plaintiff
St. Michael's Hospital in Toronto where the minor plaintiff was born with numerous cognitive deficits. The plaintiffs alleged that St. Michael's employees were negligent in delivering the minor plaintiff.

Court Slashes Lawyer’s Contingency Fee in Favour of Minor Plaintiff

In Batalla v. St. Michael’s Hospital,  the plaintiffs alleged that the physician and nurses who delivered the minor plaintiff did so negligently and caused the minor plaintiff to suffer severe brain damage. He was born with very limited cognitive functioning, impaired motor skills and visual impairments.

The parties settled the matter following a mediation in April 2014 for the all-inclusive sum of $6,625,000. Pursuant to Rule 7 of the Rules of Civil Procedurethe plaintiffs brought a motion to have the settlement approved. As is standard practice in cases involving a minor or incompetent plaintiff with extensive injuries, the Court closely scrutinized the motion material.  Madame Justice Darla Wilson had a number of concerns with the proposed settlement, perhaps most notably the proposed solicitor fee of $1,537,223 plus disbursements of $69,840, and sought a report from the Office of the Children’s Lawyer (“OCL”).

The OCL’s report concluded, and the Court agreed, that the lawyer’s contingency fee agreement (“CFA”) did not comply with the Solicitors Act, as it stipulated that the lawyer would be entitled to 30% of any fees awarded to the plaintiffs in addition to the contingency fee provided for in the CFA. Justice Wilson found that the plaintiffs’ lawyer had given inconsistent evidence with respect to whether he in fact enforced this provision of the CFA.

The Court held that the fee proposed by the plaintiffs’ lawyer was excessive and reduced the fee to $1,000,000 plus HST and disbursements. Justice Wilson correctly applied the Court of Appeal’s decision in Raphael Partners v. Lamassessing the fees based on 1) the complexity of the lawsuit, 2) the results achieved, 3) the risk assumed, and 4) the time expended, and concluded that a fee of $1,537,223 was simply not reasonable. While the lawsuit was fairly complex, the result achieved was far from “remarkable” as plaintiff’s counsel had contended, and was actually on the lower end of an acceptable settlement for the type of injuries the minor plaintiff had sustained. Plaintiff’s counsel certainly assumed a financial risk in proceeding, but the case was less risky than most medical malpractice cases, since the negligence of the doctor and nurses was not hotly contested (and indeed, the Canadian Medical Protective Association (“CMPA”), which insures physicians in Canada against medical malpractice claims, is well-known for taking a hard-line approach where liability is in issue and the damages are significant. That the CMPA was prepared to settle the case following a mediation suggests, in my view, that the case was not especially risky from the plaintiff’s perspective). Finally, counsel’s docketed time inclusive of HST was only $101,837 and the matter was still far from trial.

In our view, Justice Wilson’s decision properly balances the (often competing) considerations of liberty of contract, access to justice, the protection of vulnerable children, and the integrity of the justice system. Her Honour correctly recognized that “CFA’s provide important access to justice for people such as the Batallas who have a meritorious claim but do not have the financial resources to pay the costs of litigation on an ongoing basis.” To this end, courts should generally be prepared to bless a contingency fee agreement, provided it complies with the Solicitors Act, even where the fee far exceeds what the lawyer would have earned on an hourly basis.  At the same time, however, the courts must be prepared to scrutinize these agreements. As I have previously argued, “[a] court that allows any fee agreement to stand on the basis of freedom of contract will only undermine the very judicial system that provides for the formation and adjudication of contracts in the first place.” This is especially true where the plaintiff is a minor or is otherwise mentally incompetent. While there was no suggestion in this case that the plaintiff’s mother who acted as his litigation guardian had anything but his best interests at heart, the Court must always take a good hard look at the CFA to ensure that the substantive legal rights of the child are placed front and centre and reduce the fee where appropriate. 

Justice Wilson balanced these competing interests by reducing the proposed fee by over $400,000, thereby ensuring greater compensation for the injured child. This reduction still left the plaintiff’s lawyer with a hefty fee that worked out to roughly $6,450 per hour. Such a result is not likely to discourage even the most enterprising plaintiff’s lawyer. On the contrary, far from dis-incentivizing the plaintiff’s bar to take on risky medical malpractice or personal injury cases on a contingency fee basis, the decision in Batalla should reassure counsel that the prospect for reward is well worth the risks assumed.