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regional wrap-up Appeal court rules against Springer in bonus battle with former firm I n a case between law firm Aird & Berlis LLP and former partner Harold Springer, the Ontario Court of Appeal ruled law firms have no duty to warn partners about a prospective change in their compensation structure. Last year, Ontario Superior Court Justice Frank Newbould awarded Aird & Berlis nearly $500,000 in costs in rejecting Springer's claims, an amount that goes up by $30,000 as a result of the latest judgment. Springer's appeal of Newbould's ruling relied "on undertakings by the firm's executive com- mittee that the managing partner would meet with each partner to review that partner's like- ly level of income under the new compensation system," the April judg- ment noted. The judges, however, disagreed that such a scenario created a fiduciary duty. "Further, not every legal claim arising out of a fiduciary relationship will give rise to a claim for breach of fiduciary duty. . . . In our view, the statements or undertakings relied on by the appel- lant amounted to nothing more than ordinary administrative steps taken by the firm's executive committee in the manage- ment of the partnership." Springer's lawyer Thomas Dunne of Gowling Lafleur To read the Ontario Court of Appeal's rul- ing in Springer v. Aird & Berlis LLP visit ontariocourts. on.ca/decisions/2010/ april/2010ONCA0287.pdf Henderson LLP says, "I'm disappointed and my client is dis- appointed," adding he feels the case raised a key concern for the legal profession. "I also think this issue of owing a duty to warn your partners is an important issue for all law firms or professional associations in Canada. And for the court to say, as they did, that this was not a duty that needed to be fulfilled, is disappointing." The dispute dates back to 2002, when Springer left the firm. That year, Aird & Berlis introduced a new compensa- tion system that reduced Springer's pay, the appeal court judges noted. But in launching his original claim, Springer argued he should have received more money through the firm's compensation scheme based on his performance. Springer argued that had he known of his pay cut in advance, he would have with- drawn from the partnership earlier and received a higher payout based on his 2001 allocation. Nevertheless, the appeal court ruled that even if Aird & Berlis owed Springer a fiduciary duty in this case, there was evidence that he knew of the eventual pay cut anyway. "The changes in the method of allocation of partnership units among partners were well-publicized and well-known to the appellant well in advance of the actual allocation made for 2002," they wrote. Linda Rothstein, the Paliare Roland Rosenberg Rothstein LLP managing partner who represented Aird & Berlis, says: "My client is very pleased with the court's decision and the end of this unfortunate episode in the firm's business." She adds the ruling fits with existing jurisprudence. "The Court of Appeal is saying that in these circumstances, there was no fiduciary duty to advise or warn a partner about what their prospective units may be. I don't think it's new law. It's completely consistent with what the Court of Appeal and the Supreme Court of Canada have been saying about fiduciary duties." Dunne says it's possible they will request leave to appeal to the Supreme Court. — GLENN KAUTH gkauth@clbmedia.ca 10 JUNE 2010 www. C ANADIAN Law ye rmag.com sgoode_CL_June_10.indd 1 5/14/10 10:55:22 AM