IN THE SUPREME COURT OF BRITISH COLUMBIA

Date: 20151216

Docket: S153564

Registry:
Vancouver

Between:

Holness Law Group
Professional Law Corporation

and Renn A.
Holness

Solicitor

And

Robyn Deep Mann

Client

Before:
District Registrar Nielsen

Reasons for Decision

introduction

[1]            
This is an application by Holness Law Group (“HLG”) to have their bill
dated March 20, 2015 reviewed pursuant to the provisions of the Legal
Profession Act, S.B.C. 1998 c. 9 (“LPA”) and to obtain
the fees they allege are owed pursuant to a contingency fee agreement. HLG
claims they are entitled to a contingency fee of $33,075 before taxes, which
they say is fair in the circumstances and consistent with the contingency fee
agreement entered into by the client with the firm.

[2]            
The legal fee claimed by HLG is opposed by the client through her
counsel, Collette Parsons Harris (“CPH”), which was retained by the client
following her termination of HLG.

[3]            
The legal fee claimed by HLG is disputed by the client on three bases.
First, it is alleged that the contingency fee violates the maximum legal fee
chargeable on a contingency fee basis when combined with CPC’s legal fee.
Second, there ought not to be a legal fee claimable above and beyond the legal
fees attaching to the settlement funds already paid to CPH but instead, in
assessing a fair fee, any entitlement ought to be apportioned between the two
law firms. Finally, the client alleges the fees claimed by HLG are inequitable
and valued too high for the services performed and the results obtained.

background

[4]            
The client had the misfortune of being in four motor vehicle accidents
which occurred on May 26, 2008, September 25, 2010, November 10, 2011, and
March 8, 2012. In each accident the client was a passenger in the vehicle
driven by her common-law husband.

[5]            
The client first retained HLG on June 4, 2008 and signed a contingency
fee agreement on that date.

[6]            
The contingency fee agreement provides in part:

(a)        In the event I,
the Client, decide not to proceed with the claim, refuse to follow the lawyer’s
advice, refuse to cooperate in any reasonable request or should I provide
faulty information I shall pay fees of $250.00 per hour for all time spent by
lawyers. In the event I change lawyers and/or law firms or continue on my own
behalf, I shall pay a percentage of the applicable professional fees in Section
1 of this agreement on the settlement or judgment which reflects the
proportionate contribution and work competed by HLG. I agree to provide HLG
with the total breakdown of the settlement or judgment amount.

[7]            
The contingency fee agreement references the rules of the law society,
stating:

The Rules of the Law Society of
British Columbia provide that, subject to the Supreme Court approving a higher
fee, the maximum amount that a lawyer may charge in a claim for personal injury
or wrongful death arising out of the use or operation of a motor vehicle is 33
1/3% of the total amount recovered. Fees charged by different lawyers vary.

[8]            
HLG practices exclusively in personal injury law and only represent
plaintiffs. HLG had conduct of the client’s personal injury actions and the
Part 7 action for roughly four years, from June 4, 2008 to September 28, 2012,
when their retainer was terminated by the client. At the time HLG was
discharged, ICBC’s formal offer to settle was $20,000. This was the best offer
advanced by ICBC during the entire four years of HLG’s retainer.

[9]            
Immediately following the termination of HLG, CPH were retained by the
client. CPH paid HLG disbursements to date, being $9,219.59, and agreed to
protect HLG’s fee as agreed, or assessed, upon the conclusion of the client’s
claims.

[10]        
Upon being retained, CPH amended the Part 7 notice of civil claim to
include all the motor vehicle accidents and alleged bad faith on the part of
ICBC. Although HLG had originally filed the Part 7 claim, it had not been
served upon ICBC.

[11]        
On March 23, 2015, the client’s actions were settled for $252,000 plus
taxable costs and disbursements. The client’s taxable costs and disbursements
were settled on March 30, 2015, for a total of $53,000. The trial had been
scheduled to commence in relation to all four motor vehicle accidents on April
20, 2015, for 15 days.

[12]        
Following settlement of the client’s claims, CPH advised HLG of the
settlement amount and the fact that CPH charged a 30% contingency fee on the
settled damages. The legal fee charged to the client by CPH was $75,600, plus
12% tax. The client does not dispute this fee. However, it was the client’s
belief that HLG would share in the 30% contingency fee on a quantum meruit
basis. However, HLG takes the position that they are entitled to a legal fee to
be paid independently by the client, in addition to that charged by CPH.

[13]        
In a letter dated March 30, 2015, HLG submitted a final account for fees
in the amount of $37,044 after taxes, and summarized their services as follows:

·       
Medical and liability investigation;

·       
Ordering medical and loss of earning evidence, scheduling of
independent medical assessments;

·       
Pursuing accident benefits;

·       
Research liability and possible defences;

·       
Obtaining records, review medical and loss of earnings evidence;

·       
Review of policy limits issues with client and possible claims;

·       
Update client meetings including settlement advice and
instructions;

·       
Drafting and filing Notice of Civil Claims for M.V.A.s: May 26,
2008 and September 25, 2010;

·       
Drafting and filing Part VII Bad Faith NOCC for M.V.A.s: May 26,
2008, September 25, 2010, and November 10, 2011;

·       
Demand Discovery, review of Statement of Defence, closing
pleadings;

·       
Preparation and attendance at the Examination for Discovery of
the Client;

·       
Drafting and delivering List of Documents, inspection of
documents;

·       
Responding to interlocutory applications and approving of
chambers orders;

·       
Preparing plaintiff for Discovery;

·       
Drafting and delivering a settlement proposal for the accident of
May 26, 2008.

[14]        
HLG based their fee upon 30% of what they had calculated their
contingency ought to have been based upon a “work and progress” worksheet
prepared by them. The amount charged by HLG coincidentally amounts to exactly
43.75% of the amount billed by CPH. Both HLG and CPH claim a fee based upon a
30% contingency.

[15]        
CPH submits that the contingency ought to be apportioned between law
firms as this approach is in the best interests of the client and consistent
with the laws surrounding contingency fee agreements, and respects the Law
Society’s maximum regarding contingency fee agreements.

[16]        
HLG submits they are not bound by another firm’s contingency fee
agreement and that they are entitled to their contractual contingency fee
regardless of what may be charged by a subsequent law firm.

[17]        
The contingency fees of CPH and HLG, as billed, would total $108,675 of
the $252,000 settlement amount, or 43.13% of the damages plus applicable taxes.

legal principles

[18]        
The factors to be considered on a review are stated in s. 71 of the
LPA which provides:

71 (1)
This section applies to a review or examination under section 68 (7), 70, 77
(3), 78 (2) or 79 (3).

(2) Subject to subsections (4) and (5),
the registrar must allow fees, charges and disbursements for the following
services:

(a) those
reasonably necessary and proper to conduct the proceeding or business to which
they relate;

(b) those
authorized by the client or subsequently approved by the client, whether or not
the services were reasonably necessary and proper to conduct the proceeding or
business to which they relate.

(3) Subject to subsections (4) and (5),
the registrar may allow fees, charges and disbursements for the following
services, even if unnecessary for the proper conduct of the proceeding or
business to which they relate:

(a) those
reasonably intended by the lawyer to advance the interests of the client at the
time the services were provided;

(b) those
requested by the client after being informed by the lawyer that they were
unnecessary and not likely to advance the interests of the client.

(4) At a review of a lawyer’s bill, the
registrar must consider all of the circumstances, including

(a) the
complexity, difficulty or novelty of the issues involved,

(b) the skill,
specialized knowledge and responsibility required of the lawyer,

(c) the
lawyer’s character and standing in the profession,

(d) the amount
involved,

(e) the time
reasonably spent,

(f) if there
has been an agreement that sets a fee rate that is based on an amount per unit
of time spent by the lawyer, whether the rate was reasonable,

(g) the
importance of the matter to the client whose bill is being reviewed, and

(h) the result
obtained.

(5) The
discretion of the registrar under subsection (4) is not limited by the terms of
an agreement between the lawyer and the lawyer’s client.

[19]        
Although a lawyer or law firm may enter into an agreement with any other
person requiring payment for services provided or to be provided by the lawyer
or law firm, pursuant to s. 65(1) of the LPA, s. 71(5) of the LPA
provides the discretion of the Registrar is not limited by the terms of an
agreement between the lawyer and the lawyer’s client. On a review, “all factors
essential to justice and fair play must be taken into account”. This was stated
in the seminal case of Yule v. Saskatoon (City) (No. 4), [1955] 16
W.W.R. 305 at p. 313 and was cited by the BC Court of Appeal in Diligenti
v. McAlpine, Roberts and Poulus, [1978] 9 BCLR 153 (C.A.) at para. 9, where
the Court stated:

[9]        Counsel on the appeal have
agreed, and I agree, that the amount of the fee is to be determined according
to the principle and considering the factors described by Thomson J. in Yule
v. Saskatoon (1955), 1955 CanLII 186 (SK QB),
16 W.W.R. 305 at 313, affirmed 1955 CanLII 217 (SK CA),
17 W.W.R. 296, 1 D.L.R. (2d) 540 (Sask. C.A.):

“In fixing the remuneration of the plaintiff in this case
all factors essential to justice and fair play must be taken into account: Re
Solicitor (1920), 47 O.L.R. 522, affirmed 48 O.L.R. 363 (C.A.). The
circumstances to be considered in arriving at the proper amount are the extent
and character of the services rendered; the labour, time and trouble involved;
the character and importance of the litigation in which the services were
rendered; the amount of money or the value of the property to be affected; the
professional skill and experience called for; the character and standing in his
profession of the counsel; the results secured, and to some extent at least the
ability of the client to pay: Murphy v. Carry (1906), 7 O.W.R.
363.”

single or stacking contingencies

[20]        
If the position of HLG was given effect, it would result in the stacking
of contingency fees, and conceivably give rise to a situation where combined
contingency fees could consume an entire award of damages. If enough lawyers
were dismissed and others retained along the way to the conclusion of the case,
the combined contingencies could conceivably amount to100% of any damages
awarded. This would be an absurd result and contrary to s. 66 of the LPA.

[21]        
Section 66(1) through (4) of the LPA provides:

66 (1)
Section 65 applies to contingent fee agreements.

(2) The benchers may make rules
respecting contingent fee agreements, including, but not limited to, rules that
do any of the following:

(a) limit the
amount that lawyers or law firms may charge for services provided under
contingent fee agreements;

(b) regulate
the form and content of contingent fee agreements;

(c) set
conditions to be met by lawyers and law firms making contingent fee agreements.

(3) Rules under subsection (2) apply only
to contingent fee agreements made after the rules come into force and, if those
rules are amended, the amendments apply only to contingent fee agreements made
after the amendments come into force.

(4) A
contingent fee agreement that exceeds the limits established by the rules is
void unless approved by the court under subsection (6).

[22]        
Law Society Rules 8-1(2) and 8-2(1)(a) provide:

8-1(2) A lawyer who prepares a bill for fees earned under a
contingent fee agreement must ensure that the total fee payable by the client

(a) does not exceed the
remuneration provided for in the agreement, and

(b) is reasonable under the circumstances existing at the
time the bill is prepared.

8-2(1) Subject to the court’s approval of higher remuneration
under section 66(7) of the Act, the maximum remuneration to which a lawyer is
entitled under a contingent fee agreement for representing a client up to and
including all matters pertaining to the trial of an action, when acting for a
plaintiff in

(a) a claim for personal injury or wrongful death arising
out of the use or operation of a motor vehicle, is 33 1/3% of the amount
recovered

[23]        
The Law Society Rules set a maximum fee allowable under a contingency
fee agreement and provides that the total fee payable by the client must be
reasonable in the circumstances and not exceed 33 1/3% of the amounts recovered
in a personal injury claim arising out of the use of a motor vehicle.

[24]        
Pursuant to s. 66(6) and (7) of the LPA, a fee in excess of
33 1/3% must be approved by the court, before entering into the contingency fee
agreement, otherwise it is void pursuant to s. 66(4) of the LPA.

[25]        
If contingency fees were stackable, from firm to firm, not only would
the contingency fees potentially exceed the Law Society’s maximum in short
order, this would ultimately exploit clients and dissuade them from dismissing
a lawyer who the client may no longer wish to represent them. Despite losing
confidence in their counsel, a client could be forced to continue to retain
that lawyer for fear of escalating fees. This would not be in accord with
justice and fair play.

[26]        
CPH submits this approach is in accord with the concerns expressed by
the BC Court of Appeal in McQuarrie, Hunter v. Lord Estate (1982), 41 B.C.L.R.
123, wherein the Court stated at para. 14:

14.       I prefer this approach
because of the historic recognition of the solicitor-client relationship as a
very special one. It is a relationship based on confidence and trust. The
dignity and integrity of the legal profession demand that the interests of the
client be fully protected. The relationship is such that the client is
justified in seeking to dissolve it whenever he ceases to have absolute
confidence in his solicitor. The fact that the solicitor has rendered valuable
services under his employment, or that the client is indebted to him for these
services does not deprive the client of this right. If, however, the client
were to become liable to pay the reasonable fees of the solicitor at the time
of discharging him, the client would be forced to choose between continuing the
employment of a solicitor in whom he has lost faith or, in some cases,
discontinuing his action. This would defeat the underlying rationale of
contingency fees. In addition, if responsibility to pay reasonable fees were to
accrue immediately upon discharge and the subsequent damage award to the client
were substantially less than that anticipated, a financial disaster for the
client may occur. The risk of success or failure would have been shifted
entirely to the shoulders of the client. It is more consistent with the special
relation between solicitor and client and the underlying rationale of a
contingency fee agreement to have both parties await the happening of the
contingency. The interests of both parties can then be balanced in light of the
outcome of the litigation.

[27]        
CPH further submits that the principle which provides any payment is
delayed until the conclusion of a legal claim is consistent with the
apportionment of a contingency fee between firms to a “cap” at the legislative
maximum. CPH submits this approach ensures the interests of the client are
fully protected, and the underlying aims and limits of contingency fee
agreements are maintained.

[28]        
HLG cites Label v. Nobiss (1999), 34 C.P.C. (4th) 86 (B.C.S.C.), in
support of the notion that contingency fees can be cumulative.

[29]        
In Label, supra, a lawyer was retained on a contingency
fee basis and subsequently dismissed. The contingency fee agreement provided
for the payment of a fee calculated on an hourly basis, in the event that the
lawyer was dismissed. The District Registrar in Label upheld the
contract, stating “a deal is a deal”.

[30]        
In my view, Label, supra, is distinguishable as the
contract of HLG did not provide for the payment of an hourly rate upon their
dismissal. Indeed, the contingency fee agreement of HLG provided that in the
event they were dismissed, the client was to pay “a percentage of the
applicable professional fees … which reflect the proportion of contribution in
the work completed by HLG”.

[31]        
HLG did not bill on an hourly rate, nor was there an agreement which
provided for payment on that basis. Finally, Label, supra, can be
distinguished on the basis that the maximum contingency fee, as mandated by the
Law Society, was not threatened nor were subsequent contingency fees stacked
upon the existing contingency fee.

[32]        
The Label decision was referenced in Kelly v. McMillan &
Harbottle & Co., 2000 BCSC 709, wherein the Court stated:

[19]      It is
important to note that in both Label v. Nobiss and Ayeras v.
Oostlander the final settlement amounts were known to the court at the time
the decision was made.  This was not the case in McQuarrie, Hunter v.
Foote, Doyle v. Keats or the tort action that gives rise to this
application.

[20]      In my
view, although the relationship between Dr. Kelly and Harbottle & Co. is
essentially a matter of contract, the contract must be interpreted in light of
the case law relating to contingency fee agreements and the provisions of the Legal
Profession Act.  As a result, when Dr. Kelly discharged Harbottle
& Co. he became obliged to pay them, but the amount of that obligation must
await the determination of the result of the action.  It is also my view
that the relative priority of the claims of Mr. Prodor and Harbottle & Co.
must await that determination.

[33]        
In the present case, both law firms participated in the outcome of the
same matter, with the same client. Both firms were engaged on a contingency fee
basis. Both firms agree their fee would be calculated on a 30% contingency fee
basis, given the stage at which the case was settled.

[34]        
This is a case where justice and fair play require a single fee to be
apportioned between the two firms on a quantum meruit basis, taking into
account all the circumstances and factors expressed by s. 71(4) of the LPA.
That fee cannot exceed the 33 1/3% limit set by the benchers pursuant to s. 66(2)
of the LPA.

[35]        
In this case, the reasonable global fee before apportionment is $75,600
plus tax, which represents a 30% contingency fee which is not disputed by the
client.

[36]        
This approach is further consistent with the express contractual
provision of HLG’s contingency fee agreement which provides for the percentage
applicable fee of 30% as confirmed by the law firm and, which reflects the
proportionate contribution and work completed by HLG on settlement or judgment.

application of The s. 71(4) factors

[37]        
The Registrar is to consider all the circumstances of the case,
including those specifically listed in s. 71(4) of the LPA, where
relevant.

1.     Complexity,
difficulty, or novelty of the issues involved

[38]        
Although the case involved four motor vehicle accidents, the matter was
relatively average in terms of the legal issues involved. However, the
litigation did span a total of seven years, from May 26, 2008, the date of the
first motor vehicle accident, to March 23, 2015, the date the four motor
vehicle accidents were settled.

[39]        
HLG litigated the first and second motor vehicle accident. They issued a
writ with respect to the Part 7 action; however, it was not served.

[40]        
CPH litigated the Part 7 action and all four motor vehicle accidents.
They conducted a full-day examination for discovery of the ICBC adjuster and
prepared a list of documents with respect to the Part 7 action. The complexity
of the litigation increased during CPH’s watch, as they received a total of
five defence medical reports and obtained six of their own expert reports to
prepare for the 15-day trial scheduled to commence in April 2015.

2.     Skill,
specialized knowledge, and responsibility required of the lawyer

[41]        
Both law firms were required to bring their skill and experience to bear
in order to conclude the litigation in the client’s favour. The client
ultimately terminated HLG after four years, during which the maximum offer
advanced by ICBC was $20,000. The client states she felt frustrated by HLG’s
handling of her case.

[42]        
The client felt confident and supported by CPH and felt the firm had
prepared for trial in the event the matter did not settle.

[43]        
Although it cannot be said that HLG would not have achieved the same
result had they continued to pursue the matter on the client’s behalf, having
lost the client’s confidence, the reigns had to be handed over to CHP, who
applied the necessary knowledge and responsibility to force the matter to a satisfactory
conclusion from the client’s point of view. The client takes no issue with the
fee charged by CPH.

3.     The
lawyer’s character and standing in the profession

[44]        
Both HLG and CPH are active members of the plaintiffs’ personal injury
bar.

4.     The
amount involved

[45]        
After four years into the case, HLG were able to elicit a formal offer
to settle in the amount of $20,000, from which the defendants would not budge.
At the point in time when CPH took over the litigation, HLG had invested
$9,219.59 in disbursements to advance the client’s case.

[46]        
CPH reimbursed HLG the amounts they expended on disbursements
immediately upon assuming conduct of the case. Over the next three years, CPH
invested a further $40,452.43 in disbursements. The final bill for
disbursements upon settlement totalled $49,672.02, inclusive of taxes.

[47]        
CPH invested a significant sum in order to investigate and prosecute the
client’s case. No doubt the investment of time and disbursements worked to the
client’s advantage and ultimately resulted in settlement for $252,000 plus
costs and disbursements.

5.     The
time reasonably spent

[48]        
HLG had conduct of the file for approximately four years. They tracked
their time with the use of computer software. However, there were discrepancies
in the timekeeping and it was stated that the purpose of the timekeeping was to
“identify deficiencies” rather than to keep a true and accurate record of time.

[49]        
CPH does not keep formal time records. However, they submit the time
spent can be extrapolated from the work product completed. CPH submits that
although HLG carried the file for many years, they spent significantly less
time in terms of producing substantive work product, than did CPH.

[50]        
CPH submits that “essential to justice and fair play” is the comparison
of overall work product on the files by each law firm and the overall results
achieved by each. I am in agreement with this submission.

6.     If
there has been an agreement that sets a fee rate that is based upon an amount
per unit of time spent by the lawyer, whether the rate was reasonable

[51]        
The matter was handled on a contingency basis by each law firm. Both law
firms agree that a 30% contingency was applicable based upon the terms of their
respective agreements.

[52]        
There was no set fee provided in HLG’s contingency fee agreement upon
being discharged. The contract appropriately provided that in the event the
firm was discharged, the fee would reflect their proportionate contribution and
work completed by HLG.

7.     Importance
of the matter to the client whose bill is being reviewed

[53]        
The client had been injured in four motor vehicle accidents and was
locked in a dispute regarding entitlement to Part 7 benefits. As such, the
matter was of the utmost importance to the client.

[54]        
The client does not disagree with the 30% contingency fee and agrees it
accurately reflects the importance of the matter to her. The client submits,
however, that the fee must be apportioned on a quantum meruit basis between HLG
and CPH. Again, for the reasons already expressed, I agree with this
submission.

8.     The
result obtained

[55]        
The client was not satisfied with the result obtained by HLG, an offer
of $20,000, following four years of their managing the case. The client was
satisfied with the result obtained by CPH in the amount of $252,000 plus
taxable costs and disbursements, a result roughly 12 times greater than that
obtained by HLG.

9.     Comparative
work product

[56]        
The list of factors enumerated in s. 71(4) of the LPA is not
exhaustive. The Registrar “must consider all the circumstances” and those
“which are essential to fair play and justice”. In the present circumstances,
in order to apportion the 30% contingency fee, it is necessary to consider the
comparative work product of each firm.

[57]        
HLG pursued litigation in relation to the first and second motor vehicle
accidents. Although they investigated and drafted the notice of civil claim for
the Part 7 action, the pleading was never served.

[58]        
CPH pursued the litigation for all four motor vehicle accidents and the
Part 7 action. With respect to the latter, they conducted a full-day’s examination
for discovery of the ICBC adjuster, prepared a list of documents, and received
and reviewed the defendant’s list of documents with respect thereto.

[59]        
CPH states they had 122 pages of Part 7 correspondence.

[60]        
In the tort actions, HLG conducted an examination for discovery of a
defendant and took part in one examination for discovery of the client.

[61]        
CPH conducted four defendants’ examinations for discovery and took part
in one examination for discovery of the client.

[62]        
In terms of document disclosure and discovery, HLG produced one list of
24 documents. CPH produced one list containing 93 documents. At the time of
settlement, the number of documents totalled 118, of which four documents
totalled approximately 880 pages.

[63]        
In terms of court appearances, HLG made one appearance in chambers in
response to a document disclosure application made by the defendants. CPH
attended one scheduled case planning conference.

[64]        
The correspondence generated by CPH was approximately 760 pages,
consisting of 194 emails; 26 letters to the client; 47 letters to the
defendants; and, 76 letters to medical practitioners, experts, and
record-holders. HLG produced approximately 262 pages of file correspondence
which was handed over to CPH.

[65]        
The amount of expert reports generated during the CPH time frame was
substantially more than that generated during the first four years HLG had
conduct of the file.

[66]        
HLG received one defence report and obtained one plaintiff’s report. CPH
was served with five defence reports and arranged for six plaintiff’s reports.
No doubt, the investment in the plaintiff’s experts was partly responsible for
the defendants’ increasing their offer from $20,000 to $252,000 plus taxable
costs and disbursements.

[67]        
The proliferation of experts during the time period the case was being
litigated by CPH also resulted in the prior trial scheduled for eight days
commencing in January 2013, being adjourned by consent, and re-scheduled for 15
days commencing in April 2013.

[68]        
When CPH assumed conduct of the file they reimbursed HLG for all their
disbursements and subsequently invested heavily in the client’s claim with the
disbursements eventually totalling $49,672.02, inclusive of tax. This
investment and risk of non-recovery rested entirely on the shoulders of CPH from
the point they assumed conduct of the case, until the matter was ultimately
settled.

10.  Alleged
conflict of interest

[69]        
CPH submits that HLG was in a “significant risk” of a conflict of
interest from November 2011, the time of the third motor vehicle accident.

[70]        
At the time of the third motor vehicle accident, the client was in the
passenger seat of a vehicle driven by her common-law partner. HLG was acting
for both the client and the client’s common-law partner with respect to the
third motor vehicle accident. However, liability was in dispute. In fact, this
aspect of the case was referenced in the bill of HLG dated March 30, 2015,
where “research liability and possible defences” is specifically referenced in
the fourth bullet of their letter.

[71]        
In order to protect the client’s interests the driver of the vehicle in
which the client was a passenger would have to be sued, unless liability was
admitted. Otherwise, there would be a risk of non-recovery if the client’s
common law partner was held liable. In my view, this would have given rise to a
potential conflict of interest. The Law Society’s Rules, as stated in ch. 10(1)(d)
of the Professional Conduct Handbook, stated at the relevant time:

Obligatory Withdrawal

1. A lawyer is required to sever the solicitor-client
relationship or withdraw as counsel if:

(d) the lawyer’s continued involvement will place the lawyer
in a conflict of interest, or

[72]        
In Campbell v. Ragona, 2010 BCSC 1339, the Court applied the
principle of disgorgement when a lawyer and law firm did not insist on the
plaintiff obtaining independent legal advice in the face of a conflict of
interest in their continued representation. All the legal fees collected during
the retainer were ordered to be repaid to the plaintiff. The Court discusses
the duty to avoid a conflict of interest at paras. 561-581. At paras. 578
and 579, the Court states the purpose of disgorgement as follows:

[578]    In Strother v. 3464920 Canada Inc., [2007]
S.C.R. 177 at paras. 75 and 76, Justice Binnie held that the remedy of
disgorgement may be ordered for either prophylactic or restitutionary
purposes.  The prophylactic purpose is served by
appropriating “for the benefit of a person to whom the fiduciary duty is owed
any benefit or gain obtained or received by the fiduciary in circumstances
where there existed a conflict of personal interest and fiduciary duty or a
significant possibility of such conflict, the objective is to preclude the
fiduciary from being swayed by considerations of personal interest.” Strother
at para. 75, citing Chan v. Zacharia (1984), 154 C.L.R. 178 (Aust H.C.)
per Deane J., at p.108.

[579] The
prophylactic purpose of disgorgement is intended to teach fiduciaries that
conflicts of interest do not pay.  The plaintiff is not required to prove
a loss in order to recover a gain or benefit received by the fiduciary as a
result of its breach of duty: Strother, at para.77.

[73]        
In the present case, the risk of a conflict of interest on the part of
HLG was very real. However, the file was assumed by CPH and the issue did not
reach the stage at which disgorgement for a conflict of interest would be
appropriate.

conclusion

[74]        
A 30% contingency fee plus applicable taxes is appropriate in all the
circumstances. The 30% contingency fee will be divided between the two law
firms, with HLG receiving 20% of the contingency fee, and CPH receiving 80% of
the contingency fee.

[75]        
As this was essentially a dispute between law firms and their respective
share of the fee, no interest is payable to either law firm in respect of their
share of the contingency fee.

[76]        
As the client, acting through CPH, has been substantially successful,
the client is entitled to the costs of this review. If costs cannot be agreed, an
appointment can be taken out with the Registry and the matter spoken to. I
remain seized of the matter.

“District
Registrar Nielsen”