LawPro can breathe a sigh of relief – a recent decision suggest that clients are unlikely to succeed in certifying class actions against their former lawyers based on the terms of their retainer agreements. Just as contracts contain individual issues, retainer agreements between lawyers and their clients are fundamentally individual in nature. In Hodge v. Neinstein, Justice Perell refused to certify a class proceeding challenging a law firm’s contingency fee agreements because of the lack of common issues (and abundance of individual issues) present when analyzing multiple retainer agreements.
The plaintiff, Cassie Hodge, retained a lawyer to pursue her personal injury claims following a motor vehicle accident. Under their contingency fee agreement, the legal fees would be 25% of the damages recovered plus partial indemnity costs and disbursements. The plaintiff settled her tort claim for $150,000, which her lawyer apportioned $50,000 to costs and $49,000 was used to pay disbursements. The remaining damages were split between the plaintiff and her lawyer according to the 25% contingency fee agreement.
The Proposed Class Action
The plaintiff sought to certify a proposed class proceeding on behalf of clients of her lawyer’s firm who entered into contingency fee agreements over a ten year period. The nub of the plaintiff’s complaint was the firm’s contingency fee agreements included costs awards, contrary to the provisions of the Solicitors Act governing contingency fees. The plaintiffs sought to have the allegedly improper costs disgorged and returned to class members on the basis of an alleged strict liability on lawyers to comply with the Solicitors Act.
Individual Issues Dominate
Justice Perell dismissed the plaintiff’s motion for certification because the claim lacked common issues and a class action was not the preferable procedure for resolving the class member’s fundamentally individual complaints. According to Justice Perell, the only commonality between the proposed class members was the allegation that they were harmed by the same villain. Although the alleged harmful conduct was similar in nature, there was no single harmful action or process linking the class members.
In contrast, the circumstances surrounding each class member’s retainer were unique, even if the retainer agreements were in a standard form. Some of the individual issues in this case included:
- whether a particular retainer was breached,
- the extent of the breach,
- the significance of multiple accounts and claims,
- the impact of settling claims in stages,
- and, assuming Justice Perell correctly rejected the plaintiff’s strict liability theory, whether the fees paid were fair and reasonable in each case.
Can A Class Action Against A Lawyer Ever Be Certified?
It is not clear whether a class action against former counsel may be certified in the future. Even if the class members’ claims arise from a single incident or repeated identical incidents, the common issues may not be sufficient to trump the unwieldy individual issues facing each class member.