C.A. Disallows Law Firm’s $60,000 Premium for Result “Beyond Wildest Expectation”

Last April, we began a post by remarking that “The law firm of Kramer Henderson had a very good day today.” Mr. Justice John Belleghem had allowed an appeal from a decision of an assessment office and had allowed a premium of $60,000 that the law firm had added to its bill to a client, for its services in defending a copyright infringement action. As we said then, His Honour had “lavishly praised the ‘wisdom’, ‘exceptionality in negotiating skills’ and ‘exceptional skill and ability of the law firm, in achieving a ‘result…beyond the client’s wildest expectation’”.

Today’s news was not so good for the law firm. The Court of Appeal allowed the client’s appeal and restored the ruling of the assessment officer (who had disallowed the $60,000 premium). In Henderson v. Salgado, the Court observed that the assessment officer had focused on the fact that the solicitors did not face a risk of non-payment of fees, was not carrying the litigation for the client and was not working at a reduced rate.

The most important factor in the Court’s reasons though, was the fact that the law firm already had an agreement with the client on fees and that agreement did not say anything about a premium. Both the firm and the client had known, before the solicitors had completed their work, that the result of the case was going to be a windfall for the client. The Court said that there had been no attempt by the lawyers, at that point, to try to renegotiate the fee arrangement. The $60,000 premium had simply been added to the bill. In these circumstances, the assessment office was found to have acted properly in disallowing it.


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