Date: 19971106 Docket: C945219 Registry: Vancouver IN THE SUPREME COURT OF BRITISH COLUMBIA BETWEEN: JESSICA SUSAN ADAMS, an infant, by her mother and guardian ad litem, STEPHANIE ELIZABETH DEERING, and the said STEPHANIE ELIZABETH DEERING PLAINTIFF AND: KIRSTEN BARBARA EMMOTT and CONSTANTINOS M. PAPADOPOULOS DEFENDANT REASONS FOR JUDGMENT OF THE HONOURABLE Mr. JUSTICE PARRETT Counsel for Raymond MacLeod: Nathan Smith Counsel for the Public Trustee: Duncan Manson Place and Date of Hearing: Vancouver, B.C. October 23 and 24, 1997 INTRODUCTION [1] On January 9, 1997 this action came before me in chambers for approval of an infants settlement. The present application is a continuation of an application for approval of counsel's fees following that settlement. [2] The facts underlying this litigation are tragic. On November 16, 1992 Stephanie Elizabeth Deering was admitted to St. Paul's Hospital in labour at 12:25 hours. The defendant Kirsten Barbara Emmott was a medical doctor and a general practitioner who had the care of the case. Shortly after Ms. Deering's admission to hospital she was seen in consultation by Dr. Constantinos M. Papadopoulos, an obstetrician. By 22:04 the attending doctors had determined that the baby "was in deep trouble" and should be delivered. Despite this the baby was not delivered until 23:45. [3] As a result of the delayed delivery, the infant, Jessica Susan Adams suffered at birth from cerebral palsy, spastic quadriplegia and a seizure disorder. She is now approaching 5 years of age, she is unable to walk or talk and cannot sit or stand without support. Jessica is also mentally handicapped, although her age and lack of communication skills has made it difficult to quantify the level of that handicap, although there is general agreement that it is at least moderate. All experts agree that Jessica will be totally dependant on care givers for the rest of her life and that her life expectancy has been compromised. [4] On January 9, 1997 I approved a settlement of the infants claim at $3,025,000.00 which included a $25,000 contribution towards disbursements. At the time of this approval the court also authorized an interim payment on account of the infants legal fees in the amount of $362,500.00 which represented one half of the fees claimed by the plaintiff's counsel J. Raymond MacLeod. This payment was made subject to a specific undertaking set forth in the order to permit a review of the fees reasonableness by the public trustee and, eventually, by this court. THE FEE CLAIM [5] Mr. MacLeod entered into a contingency fee agreement with the infants guardian ad litem which provided for a 35% contingency fee. [6] I have had both at the original hearing and the present one the benefit of the Public Trustee's statutory comments. In addition, as a result of Mr. Manson's being retained by the Public Trustee I have had the benefits of his carefully considered submissions. [7] The issues before the court on the present application are introduced in the Public Trustees statutory comments in the following passage beginning on page 11: Mr. MacLeod asserts that two recent cases in which he was counsel now establish 25% as an acceptable percentage in cases such as this one. MacLeod Smith have therefore volunteered to reduce their fees in this case from 35% to 25% of the recovery. As a result, the legal fees being sought are $725,000.00 in fees, plus taxes on legal fees of $101,500.00, plus disbursements of approximately $25,000.00. The total legal account is therefore approximately $851,500.00. The Public Trustee cannot accept, without clear direction from the Court, that 25% is the appropriate fee in all birth injury cases settled before trial. In my reading of the caselaw, the Courts consider each case on its own facts. I consider myself obliged to follow the direction taken by the Court in past cases when I make my recommendations. Messrs. Smith and MacLeod do not keep time records. They have not provided the Public Trustee with details of the services they provided, or an estimate of how much time they believe they may have spent on Jessica Adam's case. I am aware that the fees claimed likely represent a very substantial premium over what would have been charged if counsel were being paid on an hourly rate basis. I believe that in deciding not to provide the Public Trustee with descriptions of the work performed and how long it took, counsel is inviting me to look at other factors in assessing the reasonableness of their fees. Some of the other factors which recent Court decisions indicate are important are as follows: a) the specialized knowledge of counsel and the complexity of the issues with which he was dealing; b) The risk that the case might fail entirely due to the inability to establish negligence or causation with the result that the lawyer would not be paid for his legal services or for the disbursement he had carried; c) The risk that the case might settle at less than full value due to difficulties proving negligence or causation and with the result that the lawyer would receive reduced remuneration on the case; d) The skill and experience of counsel in working up and presenting the plaintiff's case on liability and causation; e) The skill and experience of counsel in working up quantum (primarily non-pecuniary loss, cost of future care, and future wage loss); f) Whether trial preparation or a trial was required; g) Whether counsel carried disbursements and/or other expenses for his clients throughout the litigation (often with no interest being charged thereon) and the risk run by counsel that he might not be reimbursed for same; h) The degree of success, as evidenced by the result, achieved on behalf of the client; i) In order for the Public Trustee to delve more deeply into the factors listed above, the Public Trustee is prepared to appoint private counsel. The infant's lawyers have, in my opinion, carefully considered all the various heads of damage and worked each one up with solid knowledge and expertise. [8] The submission referred to in the opening paragraph of this quotation is indeed the position taken in the present case by Mr. Smith on Mr. Macleod's behalf. The two decisions on which Mr. Smith relies are: Cook v. Mission Memorial Hospital (11 June 1996) Vancouver Registry No. C927555 (B.C.S.C.) and Saunier v. Matsqui-Sumas Abbotsford General Hospital Society (September 17, 1996) Vancouver Registry No. C894930 (B.C.S.C.) [9] In both of these cases the claims advanced related to negligent management of a mother's labour and delivery. In each case the claim was settled before trial, and in each case Mr. MacLeod was the plaintiff's counsel. [10] Other decisions bearing directly on these issues include: Harrington v. Royal Inland Hospital (1995) 14 B.C.L.R. (3d) 201 (B.C.C.A.); Richardson v. Low (1996) 23 B.C.L.R. (3d) 268 (B.C.S.C.) and Chong v. Royal Columbian Hospital (3 February 1997) Vancouver Registry No. C953391 (B.C.S.C.). [11] Any analysis of the law in this area must begin with the majority decision of our Court of Appeal in Harrington. That decision affirmed this court's inherent jurisdiction in dealing with an application to approve an infant's settlement, to determine what fee is reasonable. The majority grounded that conclusion on three principles directly related to the courts jurisdiction namely: 1. Its inherent jurisdiction. 2. The court's parens patriae jurisdiction to protect the welfare of infants, and 3. The provisions of s. 31(7) of the Infants Act along with Rule 6(14) of the Rules of Court. [12] The Initial question to be addressed in the present application is whether or not the decisions in Cook and Saunier have now established 25% as "an acceptable percentage in cases such as this one." [13] In Cook Oliver, J. notes at paragraph 8 that: Medical malpractice cases are amongst the most complex types of litigation coming before these courts. Though in theory any member of the legal profession can appear as counsel in such cases, in practice solicitors are well advised to seek out one of the small number of experienced practitioners concentrating in this highly technical branch of the law. Both of the lawyers involved in the presentation of the plaintiffs' case form part of that small band. Not only are such cases of great complexity and technical difficulty but they are also very frequently fought by the defence to the bitter end. Few things can be more damaging to a medical practitioner, particularly to a careful and conscientious practitioner, than to suffer judgment in what are called medical malpractice cases, more properly referred to as medical negligence cases. The professional reputation of the medical practitioners involved (the most precious asset any doctor has) rides on each case, and - once impaired - is difficult to recover. For this reason, a large majority of such cases when brought are hotly contested by an organization specifically set up for that purpose by the medical profession. The battle then tends to be a somewhat uneven one between a well-funded professional organization on the one hand and the injured party, in this case an infant, on the other. Were it not for the existence of the contingency fee system by which plaintiffs' solicitors may, if the client wishes it, enter into contracts for remuneration based upon a percentage of any recovery obtained,c only the very rich would have the opportunity of pursuing a medical malpractice claim through trial. There are medical negligence actions brought which are without merit. There are many others brought which are meritorious. In the vast majority of these cases, liability is denied by the defendants at the outset. In some, liability is admitted at some stage during the waiting period between the making of the claim and the trial of the action - a period frequently of many years. On occasion, cases are settled on the courthouse steps as counsel are entering the courthouse for trial, and in the remainder of the cases, the trial proceeds and is either won or lost. Even in a strong case, the chances of failure in a medical malpractice action are very substantial. There is frequently great difficulty in finding expert witnesses willing and able to testify of the professional conduct of a colleague. It follows that from the plaintiffs' lawyers' point of view it is a very problematical field of litigation. The chances of success are very circumscribed. The defence is normally represented by outstanding counsel of great technical skill in this extremely specialised field of advocacy. The costs of preparing for trial can be enormous. If expert witnesses who are believable and who are willing to testify can be located, their professional fees are substantial. Sums of many tens of thousands of dollars normally have to be advanced by the plaintiffs' lawyer to make it possible for the actin to proceed at all. [14] In these passages the nature and risks associated with this type of litigation are touched on in some detail. In my view, those comments accurately set out the nature of the present litigation. [15] Oliver, J. then went on to consider the decision of our Court of Appeal in Harrington and that of the then Chief Justice of this court in Richardson. At paragraph 21 of his decision he quotes from Richardson: The question "what is the reasonable fee?" must be answered, not as a percentage, but in dollars. That is particularly so where, as here, there never was a binding contingency fee agreement between the infant and Mr. MacLeod. It is not without some difficulty that I can appreciate this difference, particularly when in the result the dollar amount approved in Richardson is slightly over 14% of the settlement amount, which is within the range which the learned Chief Justice noted at p. 22 of his judgment. [16] Oliver, J. goes on to conclude that: This was a complex and strongly contested case and substantial work was done. It is difficult for a solicitor to fill two weeks on such short notice. As Esson CJSC noted in Richardson, the solicitors are entitled to be well compensated. On the facts of this case that compensation should amount to considerably more than was awarded by my brother the Chief Justice on the particular facts of the Richardson case. This settlement eliminated the need for the trial itself as well as the ever-present risk factor involved in any trial, and so some reduction in the contingency fee is warranted. I would reduce the plaintiffs' solicitors' fee by $200,000 and approve a total fee of $650,000. As I have already allowed the interim payment of 12.5%, or $325,000, to the plaintiffs' solicitors, they are entitled to a further $325,000. The learned Chief Justice in Richardson has held that these reasonable fees should be represented by a dollar amount, and if the final award in this case resembles some particular percentage, that is purely coincidental. [17] The fee approved represented 25% of the settlement of $2,600,000. [18] In Saunier Cohen, J had before him a similar application in which the counsel sought approval for legal fees of $325,000 an amount which represented 35% of the settlement. At paragraph 27 ff Cohen, J. wrote: While I agree with the Public Trustee's counsel that there should be a downward adjustment of plaintiffs' counsel's legal fees. I do not agree with him that the appropriate range is 18 to 20%. In my opinion, the instant case is essentially on all fours with the circumstances found in Cook, supra, and the result here should be the same, that is, a reduction of the percentage from 35 to 25% [19] More recently Taylor, J. had before him in Chong v. Royal Columbian Hospital (Feb. 3, 1997) Vancouver Registry No. C953391 yet another similar application. In this case there was a contingency fee agreement of 33 1/3%. Settlement was achieved on the sixth day of trial. The fee as presented for approval was voluntarily reduced to 30%. [20] What emerges from these decisions is, in my respectful view, a recognition of the complexity and risk associated with these types of cases and, perhaps, a range in which fees for the successful prosecution of these cases may fall. [21] What does not, in my view, flow from these cases is the determination, urged on me by Mr. Smith, that 25% "is the acceptable percentage. . ." This argument has a certain seductive appeal for it brings a level of certainty for the bar and a simplification for the court to the determination of these difficult cases. [22] Regrettably such a process would abdicate the duties and obligations imposed upon the court to review and determine what is reasonable in all the circumstances of the case. At the heart of an application such as that presently before the court is an infant who has suffered substantial injury, the magnitude of the settlement is driven in large part by the extent of those injuries and the cost of future care required by that child. [23] Legal fees when they are substantial affect what is left to provide for that child's care, and, as a result the approval process must be done with care. [24] In my view, no overriding principle of an "acceptable percentage" emerges from these decisions and each case must be carefully considered on its own facts. It is always desireable to have a level of consistency in similar decisions, this must be achieved by examining the similarities within the cases not by application of a fixed percentage. THE APPROPRIATE FEE [25] The present case was set to proceed to trial for two weeks beginning Tuesday November 12, 1996. It was settled on the Thursday preceding the commencement of trial for $3,000,000 plus a $25,000 contribution toward disbursements. [26] Mr. MacLeod during the course of his preparation for trial delivered a Notice to Admit to counsel for the defendants. In their reply the defendants declined to make any admission as to causation. On November 4, 1996, approximately one week prior to the commencement of the trial, defence counsel, advised that they would not require Dr. Farquhuarson and Dr. Wagner for cross-examination. At the same time they confirmed that they had no instruction to admit liability. [27] Aside from the liability issues significant quantum issues remained. These included: (a) a contested issue of Jessica's life expectancy; (b) an issue as to the necessity of 24 hour care; (c) difficulties with respect to the assessment of Jessica's cognitive functioning and her potential for improvement; (d) future wage loss issues, and (e) the extent to which services and therapies were available through public agencies. [28] The settlement achieved in this case was at or near the top of the range of what may have been achievable at trial, and was completed within days of the opening of the trial. [29] It is clear on the evidence before the court that Mr. MacLeod quickly identified areas likely to lead to a finding of negligence and was able to find medical evidence to support his theory with little difficulty. The apparent ease with which this was achieved flows directly form the expertise and experience Mr. MacLeod has developed in this area of the law. [30] Mr. MacLeod prepared pleadings which were fairly routine and which reflected no unusual legal issues. He conducted an examination for discovery of Dr. Emmott which lasted for less than half a day and for which he testified he prepared for "a week". [31] Counsel for the Public Trustee does not seek to oppose the entitlement of Mr. MacLeod to a proper fee but rather he takes the position that those fees "must be substantial, but not exorbitant. . .". Harrington supra, at p. 269. [32] The issue for determination is essentially, what is a reasonable fee in light of all the circumstances. This determination is to be done in dollars not on a percentage basis, and the existence of the contingency fee agreement is not the measure of reasonableness. Richardson (supra). [33] The assessment as to what constitutes a reasonable fee is to be done on the basis of the factors set out in Yule v. City of Saskatoon (1955), 16 W.W.R. 305 subject to two further considerations raised in Richardson, supra, at p. 278. [34] In Harrington, supra, at p. 268-270 the Court of Appeal described the relevant factors in a useful summary: In considering whether the Judge erred in considering the reasonableness of the contingency fee and reducing it from $500,000 to $175,000 I take into consideration the following factors: 1. Charisse Harrington was impecunious. Her only hope of obtaining redress for the damage occasioned to her son at birth was to obtain the services of a solicitor who would undertake the prosecution of a claim on a contingency fee basis. 2. Although the contingency fee agreement provided that Ms. Harrington was "to pay all disbursements incurred in the prosecution of this claim", that provision was illusory. In the event that the lawsuit was not successful Mr. MacLeod would have been responsible to pay the disbursements because Ms. Harrington was bereft of funds. 3. The case involved complex and difficult issues of liability and quantum of damages. 4. Liability was much in issue. The defendant hospital was represented by senior counsel experienced in defending medical-hospital malpractice actions. If the case had gone to trial it was reasonable to anticipate that the defendant would have been well represented. 5. Mr. MacLeod accepted considerable risk in undertaking to represent the infant plaintiff on a contingency fee basis. If the action had been unsuccessful he exposed himself not only to the responsibility to pay the disbursements but also the expenditure of his own time without payment. 6. Mr. MacLeod is a senior counsel with considerable experience in the difficult and specialized legal field of medical- hospital malpractice. 7. The Judge concluded that Mr. MacLeod spent approximately 260 hours on the file, of which approximately 60 hours were spent on medical research in a library. 8. The settlement was effect on the eve of a trial which had been scheduled to last for approximately 10 days. 9. A successful conclusion to the litigation was ot great importance not only to the infant plaintiff but also to his mother, Ms. Harrington, who continues to have the responsibility of caring for her son. 10. The settlement of $1,525,000 for the infant plaintiff, achieved through the skill and determination of Mr. MacLeod, was a good settlement. 11. A solicitor who undertakes the prosecution of a difficult case, the prospects of which are uncertain due to various issues such as liability, causation or damages, is entitled ot be well compensated in the event the case is brought to a successful conclusion. Such remuneration must be substantial, but not exorbitant, in order to make up for those cases taken by the solicitor on a contingency fee basis which do not result in success. 12. Under inherent jurisdiction of the court the reasonableness of the amount of a contingency fee should be determined taking into consideration all of the circumstances existing up to the time of the conclusion of the retainer. [35] All of these factors with the exception of item (7) are applicable here. I will touch on each item in turn. [36] (1) Although the evidence is less then complete it would appear, and I conclude that the infants parents are without the resources to prosecute this claim except on a contingency basis. Ms. Deering at the time of Jessica's birth was 27 years old. In an affidavit filed on December 16, 1996 she describes the family of four, herself, her husband Rob Adams, Jessica and their four month old daughter Emma living in a one bedroom apartment. In the Report of the Public Trustee at p. 8 the parents limited means are touched upon. [37] (2) Although the contingency fee agreement provided for the payment of all disbursements this provision was equally illusory. In the event the action had been unsuccessful I consider it highly improbable that Jessica's parents would have had the means to pay those disbursements. [38] (3) The present case involved complex and difficult issues of liability and quantum of damages. Mr. Manson has submitted that by the time this matter was approaching trial the case had been simplified when the defence failed to serve expert reports on liability and then dropped their notice requiring the attendance of the plaintiff's experts for cross- examination. Mr. MacLeod maintained in his evidence that his preparation had to involve all aspects of the case. I am satisfied that as this matter approached trial those issues had indeed clarified themselves and that the climate had been set for the successful settlement negotiations that then occurred. That climate, however, was set by the skill and preparation that had gone into the issues as the matter approached trial. [39] (4) Although liability was never admitted it became apparent in the days before trial that it was less an issue than in some of these cases. In essence this resulted in little or no relaxation in preparations as the defence was still well represented by senior and very experienced counsel. [40] (5) Mr. MacLeod in taking this matter on accepted a very considerable risk. These cases are high risk cases for all the reasons touched on by Oliver, J. in Cook, and while it is improper to approach the matter on the basis that the successful cases must pay for those that are unsuccessful; the percentage of these cases which are unsuccessful do reflect the overall risk associated with them. [41] (6) Mr. MacLeod is a senior counsel with considerable experience in the specific area of medical-hospital negligence. [42] (7) The assessment of the time spent by Mr. MacLeod on this file is made difficult by the fact that he does not record his time. He persists in that approach to his files despite the pointed comments directed at that issue by Oliver, J. in Cook at p. 16: . . . It has been suggested, and there is authority to support the proposition that in a case involving a contingency fee, time records need not be kept by the solicitors. Nevertheless, having regard to the way in which the law is developing and the way that Yule v. Saskatoon has been applied in recent contingency fee review cases, it is my view that any lawyer who hereafter fails to keep time records when undertaking contingency fee litigation in circumstances where there is a possibility of his bill being taxed is foolhardy - for the lack of detailed time records deprives the Court of important information necessary to protect the legitimate interests of the provider of legal services. [43] I am aware that the reasons in Cook were delivered on June 11, 1996 and that the settlement in the present case was finalized approximately five months later. I would add however my own views to those expressed by Oliver, J. Recorded time is one aspect of the information which the court is entitled to consider in assessing the reasonableness of a proposed fee. That information is not to be used in a contingency fee case to simply consider an appropriate hourly rate for that would ignore both the value of counsel's experience and expertise and the time spent in staying on top of the field in which they practice. It would equally ignore the risk factor associated with these cases. [44] Nevertheless it is a factor which the court is entitled to consider and one which can be obtained with relatively little effort. I share the views expressed in Cook. [45] There is no way for me to determine exactly how much time was spent by Mr. MacLeod on this case but from the evidence before me I would estimate that time at approximately 300 hours. [46] (8,9&10)The settlement in this case was effected on the eve of a trial scheduled to last for some 10 days. The negotiations themselves began on November 6, 1996 when the defendants offered to settle for $1.45 million. This offer was rejected and a counteroffer of $3.5 million was presented. Through a series of offers and counteroffers the final settlement of $3.025 million was achieved. [47] This settlement was at or near the top of the range of what could have been achieved at trial. It was achieved through the skill, expertise and determination of Mr. MacLeod both in his preparation for trial and in the negotiations leading to the settlement. The settlement achieved was of substantial importance not only to the infant plaintiff but equally to her parents who continue to bear the responsibility of caring for Jessica. [48] This case presents some real difficulties in the determination of an appropriate and reasonable fee. It is obvious that an extremely favourable result was achieved and that this was due to the skill and attention of Mr. MacLeod. The very skill and experience which led to that result enabled Mr. MacLeod to achieve it with the commitment of less time than would have been required of many other practitioners. [49] The settlement eliminated the need for the commitment of the time reserved for trial and the array of risk factors that occur at trial. Taking the myriad of factors into account, I fix the fair and reasonable amount of Mr. MacLeod's contingency fee at $600,000. By the order of January 9, 1997 the payment of $362,500 plus GST and PST was authorized. The balance of $237,500 plus the applicable taxes is therefore approved. [50] One of the difficulties the court must face in approving legal fees of this magnitude when the claim involves an infant who has been seriously handicapped is that those fees reduce the total funds available for the future care of that infant. This must be taken into account and balanced against the skill, expertise and effort made by counsel in achieving the result. I am thankful that my adjudication has not had to include justification for the further reduction of the funds available to this injured child by $84,000, the sum extracted in the form of G.S.T. and P.S.T. [51] Counsel have liberty to speak to any outstanding issues. "Parrett, J."