FROM ADVOCATEDAILY: Unbundled legal services and retainer creep

Ottawa Lawyer Timothy Sullivan article

From AdvocateDaily this week, by our own Timothy Sullivan:

Lawyers offering unbundled legal services should beware of retainer creep, Ottawa family lawyer Timothy N. Sullivan tells

Sullivan, principal of SullivanLaw, says it’s easy to take on more than you intend when unbundling, which involves splitting legal matters into discrete tasks so that self-represented litigants can get professional help from lawyers on parts of their case.

While he does not advertise these kinds of services, Sullivan says he has conducted some work on limited scope retainers, often for people who have split with a previous representative.

“In my experience, it doesn’t save the client any money, and it exposes the lawyer to more work than they bargained for and more liability than they contracted for,” Sullivan says. “The Law Society of Ontario (LSO) is encouraging unbundling, but I think it’s practically difficult to give one part as opposed to a full service.”

Even detailed and strictly worded retainer agreements are likely to have their boundaries tested by confused clients, Sullivan says.

“There’s almost always a followup. If you draft a pleading, it’s going to lead to questions about what happens next, which is where retainer creep comes in,” he notes.

“Unbundling doesn’t do much except reduce the legal account of a particular client on a specific matter,” Sullivan adds. “If a lawyer takes on a file and has to answer two or three calls that aren’t charged for, someone else will end up paying for it. Expenses that aren’t properly reflected in the price get passed on to others, one way or the other.”

If unbundling does become more popular with the public, Sullivan says he expects limited scope retainers to feature in more negligence claims.

“I’m not hoping for the fallout, but I am expecting it,” he says. “It’s likely the legal indemnity insurance companies are approaching these partial retainers with some trepidation because it opens people up to claims when a client alleges they weren’t told about a limitations deadline or some other issue.”

The plaintiffs in one recent case — which some commentators have suggested could apply to unbundled service providers — sued their former lawyer after missing the limitation deadline for a negligence action against a previous representative.

A Superior Court judge dismissed the claim, ruling that because the lawyer was hired for an assessment of the legal accounts, the negligence limitation period issue fell outside the scope of his retainer, meaning he owed no duty of care to his clients on that matter. However, the province’s top court overturned that judgment, directing the case to proceed to trial.

“To determine whether a lawyer owes a duty of care to a client or non-client requires the court to examine all of the surrounding circumstances that define the relationship between the lawyer and the person to whom the duty of care may be owed. Defining the scope of the lawyer’s retainer is an essential element of this analysis,” reads the decision by the unanimous three-judge appeal court panel.

“However, it is not the end of the analysis where, as here, it is alleged that the lawyer’s duty of care arises out of, and extends beyond, the retainer. Where such an allegation is made, the court must meticulously examine all of the relevant surrounding circumstances, including, but not limited to, the form and nature of the client’s instructions and the sophistication of the client, to determine whether a duty is owed beyond the four corners of the retainer,” they added.