Wednesday, December 8, 2021

The Architect

The British Columbia Law Society Tribunal Hearing Division has found misconduct in an attorney's representation of a vulnerable client in a divorce matter

The Client had been a senior executive in a mining corporation.  Her former spouse was also a high earning executive with substantial assets valued between $15 and $17 million.  The Client’s mental health had deteriorated during the marriage.  In the years leading up to their separation, she became unable to work, suffered a mental break down, attempted suicide and was involuntarily hospitalized.  When the Respondent’s firm took the Client on, she was still under psychiatric care, had no income and nearly no assets.  The Client’s primary concern was obtaining spousal support.

Findings

 The Respondent was aware that the Client was desperate for money and exceedingly vulnerable.  The Respondent understood the Client’s clear instructions to seek spousal support as quickly as possible but did not follow them.  The Respondent did not prioritize the interim spousal support claim despite clear instructions to do so and correspondence from opposing counsel acknowledging that the Client was entitled to receive it.

The Respondent adjourned the application for interim spousal support scheduled for August 15, 2013 without communicating with the Client.  The adjournment was contrary to all of the Client’s previous instructions to seek spousal support as quickly as possible.

The Respondent was the architect of the contingency fee agreement.  The Respondent knew that the Client would likely receive a settlement valued between $3 million and $8 million and that it was not a particularly complex file.  A contingency fee agreement in these circumstances was not in her interest and was unfair.  The Respondent sought the contingency fee agreement for his personal financial benefit at the expense of the Client’s interest.

The Respondent did not take reasonable steps to ensure the Client was fully informed before entering into the contingency fee agreement.  The Respondent failed to ensure that the Client received independent legal advice and did not encourage her to seek independent legal advice.  The contingency fee agreement only required the Client to acknowledge that she “may” seek independent legal advice (Exhibit 36, paragraph 14).  The Respondent did not provide any written assessment of expected legal costs nor other comprehensive advice regarding the Client’s file that would allow her to make a reasonable assessment of the contingency fee agreement.

Once the contingency fee agreement was signed and approved by the court, the Respondent prioritized reaching a settlement over the Client’s clear instructions to obtain spousal support.  The Respondent was acting for his own benefit and not in the interests of the Client.

In August and September 2013, the Respondent made settlement offers to opposing counsel without instructions to do so.  Those settlement offers were contrary to the Client’s instructions offering to settle for millions of dollars less than the Client had agreed to.

On October 2 and 3, 2013, the Respondent made a settlement without instructions.  The settlement was substantially less than the Client had instructed the Respondent to reach.  The settlement did not include spousal support which the Client had instructed the Respondent to seek.

At no time, before or after the settlement, did the Respondent obtain an accurate valuation of the settlement for the Client.

The contingency fee agreement only permitted the Respondent to take 20 percent of the funds received.  The Client did not instruct the Respondent to take his full estimated fee based on the gross value estimate completed by ER.  The Respondent, acting without instructions, improperly took the Client’s funds for his own benefit

After the settlement was complete, the Respondent continued to mislead the Client into believing that she would receive spousal support when the settlement prohibited her from receiving any.

Presumably sanction will be addressed in a subsequent order. (Mike Frisch)

https://lawprofessors.typepad.com/legal_profession/2021/12/the-british-columbia-law-society-the-respondent-was-aware-that-the-client-was-desperate-for-money-and-exceedingly-vulnerab.html

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