Canadian Lawyer InHouse

7 canadianlawyermag.com/inhouse february 2015 a roundup of legal department news and trends Appeal court strikes at the heart of 'excessive' billable hours A precedent-setting decision at the Ontario Court of Appeal in De- cember strikes at the heart of client concerns over the abuse of billable hours, and provides a legal framework by which clients might be able to reject law firm fees considered excessive or unreasonable. The David-and-Goliath battle, Bank of Nova Scotia v. Diemer, pits an Ontario dairy farmer against a big bank and its expensive legal counsel. Diemer, who could not meet the financial obligations of his farm, decided to sell it under receivership. Scotiabank hired PricewaterhouseCoopers as receiver, which in turn hired Borden Ladner Gervais LLP as legal counsel. But when Diemer saw the final bill for receivership services — $328,000, including $255,955 for 397.60 hours of legal services — he was understandably shocked. The sale of the dairy farm was by all accounts a straightforward receivership that took about two months to complete. Diemer's modest means, however, didn't stop BLG from charging the rates it always charges corporate clients: an average hourly rate of $643.75, ranging from $195 per hour for a student, to $950 per hour for a senior lawyer, and $330 for a law clerk. Diemer balked at the bill and filed suit. At the Ontario Superior Court, Justice An- drew Goodman sided with Diemer, saying the legal fees "greatly exceed what I view as fair and reasonable." The court then or- dered the fees reduced to $157,500, less than half the original cost. The appeal court decision upholds the lower-court ruling, but it also goes some way to deal with the touchy subject at the heart of the dispute: the billable hour. ". . . there is something inherently troubling about a billing system that pits a lawyer's financial interest against that of its client and that has built in incentives for inefficiency," the decision states. "In my view, it is not for the court to tell lawyers and law firms how to bill. That said, in proceedings supervised by the court and particularly where the court is asked to give its imprimatur to the legal fees requested for counsel by its court officer, the court must ensure that the compensation sought is indeed fair and reasonable. In making this assessment, all the Belyea factors, in- cluding time spent, should be considered." The decision references a number of relevant cases, including the New Bruns- wick Court of Appeal's 1983 ruling in F ed- eral Business Development Bank v. Belyea, which lists factors that must be considered when analyzing the cost of receivership > continued on page 8 Chubb Creates Certainty. TM The legal landscape for publicly traded companies in Canada OHZJOHUNLK+PYLJ[VYZHUKVѝJLYZHYLTVYLH[YPZRVMILPUN embroiled in a shareholder class action than they were a decade ago. Consider the facts: the average D&O securities claim settles after `LHYZ+VLZ`V\YPUZ\YHUJLJHYYPLYOH]L[OLÄUHUJPHSZ[YLUN[O [VZ\Y]P]LHTHYRL[J`JSL&*O\IIOHZILLUHSLHKPUNWYV]PKLY VMKPYLJ[VYZHUKVѝJLYZSPHIPSP[`PUZ\YHUJLMVY`LHYZ+PYLJ[VY HUKVѝJLYSPHIPSP[`JSHPTZJHUILJVTWSL_"P[NVLZIL`VUKQ\Z[ [OLPUZ\YHUJLJVU[YHJ[*O\IIOHZL_WLYPLUJL^OLUP[JVTLZ[V JSHPTZ^LOH]LWHY[ULYLK^P[OJSPLU[Z[VKLMLUKHSTVZ[VM [OLZLJVUKHY`THYRL[JP]PSSPHIPSP[`JSHPTZIYV\NO[PU*HUHKH Contact Chubb Insurance Company of Canada for your customized solution today. Chubbinsurance.com Chubb refers to member insurers of the Chubb Group of Insurance Companies. Insurance customized to protect public board directors and their personal assets. Untitled-1 1 2015-01-08 4:12 PM

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