‘Lawyers are expected to follow laws’
Court hears personal injury contracts called ‘illegal’
A lawyer for the accident victim in a case of alleged double-dipping by a Toronto law firm says the firm’s contracts are “illegal” and former clients should get money back.
Lawyer Peter Waldmann told an Ontario Court of Appeal panel that the contingency fee agreements signed by former clients of Gary Neinstein and his firm, Neinstein Personal Injury Lawyers, were flawed and the firm owes clients money for taking more fees than Ontario law allows.
“Lawyers are expected to follow the laws of the province,” Waldmann told the three-judge panel.
“Our concern is that the contracts are illegal. We are asking for the costs to be disgorged.”
In simple terms, lawyers working on contingency — “you don’t pay unless we win” — cannot take a sum of money called “costs” in addition to a percentage of the settlement, according to the Solicitors Act, legislation governing Ontario lawyers.
Waldmann told the court that plaintiff Cassie Hodge, 45, is only one of “many, many” former Neinstein clients who should be eligible to get money back, including a man named Ryszard Kolbuc of Mississauga, a Polish immigrant who became paraplegic after he was bitten by a mosquito carrying West Nile virus.
Waldmann also said that Hodge, who alleges she received a fraction of her insurance settlement, worried about losing her home if she got her lawyer’s bill reviewed.
The three Court of Appeal judges have been asked to determine whether Hodge’s case should be certified as a class action lawsuit, which would potentially involve up to 6,000 former clients of the Neinstein firm.
An ongoing Star investigation found personal injury lawyers in Ontario routinely take the second payment for “costs,” which critics call “double dipping.”
Originally, a Superior Court judge refused to certify the Neinstein case as a class action. Then a Divisional Court reversed that decision.
If the Court of Appeal panel decides to keep the class certification, it will proceed to trial or a settlement, barring any further appeal. The case, which wrapped up Thursday afternoon after two days, could have wide-ranging ramifications for other personal injury cases in Ontario.
In court Thursday, Waldmann disputed claims made the previous day by lawyers for Neinstein and the Ontario Trial Lawyers Association, which represents about 1,600 personal injury lawyers, clerks and staff, who argued that the firm’s contingency fee agreements were enforceable even if they stipulated that the lawyer would take “costs” in addition to a percentage of damages. Waldmann said that doubledipping is what makes the contracts “illegal” and therefore “unenforceable.”
At the end of the day, Waldmann said, the costs were taken and the clients “never found out” about it.
Kolbuc was one of those clients, Waldmann said.
He signed a contingency fee agreement with Neinstein in 2005. The agreement said the firm would take 30 per cent of damages plus costs, Waldmann said. Kolbuc lost at trial against the insurance company and appealed. Kolbuc wasn’t told at the time that Neinstein hired Chris Paliare of Paliare Roland to fight the appeal in court, Waldmann said.
Kolbuc’s case was eventually settled for $195,995. After legal fees, costs and disbursements, Kolbuc ended up with $93,141— less than half of the total.
When Kolbuc received his bill, it showed that Neinstein took $12,000 in “costs” and Paliare took $16,737.64.
Odette Soriano, arguing for Neinstein, said that even though Kolbuc’s account includes a portion for fees and costs, “when you look at the actual dollar amount, it’s less than the percentage fee in the agreement” if you don’t count Paliare’s share.
In addition to Kolbuc’s case, Waldmann produced 10 other contingency fee retainer agreements from Neinstein and said they were all the same “standard form boilerplate retainers.”
Clients unhappy with their legal bills can have them reviewed by a Superior Court assessment officer, who will decide if the fees the lawyer charged are fair and reasonable.
When the question was raised of assessing Neinstein’s bill in Hodge’s case, Waldmann said that Neinstein threatened to give her a revised, larger bill and Hodge was afraid she might lose her house.
Soriano, Neinstein’s lawyer, told court “that was in relation to an adverse cost award if she didn’t settle.”