Terminated unfairly? Beware the lawyer that costs you $50,000 to recover $10,000
How to guard against being taken to the cleaners by employment lawyers
By Howard Levitt
The internet is replete with self-help for first time car-buyers seeking to avoid being taken for a ride on their purchase, as well as for first-time homeowners wanting to rid themselves of burdensome mortgages.
But what about guidance for terminated employees – many of whom face the prospect of seeking legal advice for the first time in their lives?
Such a newly dismissed employee is particularly vulnerable to lawyers whose reflex is to over-promise and under-deliver, and whose approach feeds the negative stereotypes associated with the legal profession.
Losing one’s job is highly emotional, to say nothing of the inherent financial uncertainty. Self-serving counsel often take advantage of that fear and insecurity to run up disproportionate fees while generating little in the way of actual results.
Consider these two examples my colleagues and I have recently observed from across the aisle, in acting for employers.
Example #1: The plaintiff’s lawyer has a case that they know (or ought to know) is essentially without merit, and should properly be before the Small Claims Court, with a maximum award of $25,000. Instead, they obscenely overplay their hand, resulting in unnecessary court attendances and months of delay. The matter will inevitably end badly for the plaintiff, whose legal fees will assuredly eclipse any recovery that might otherwise have been possible . As well, if the case only receives an award within the small claims court limit , the employee cannot recover their costs.
Example #2: Despite a willingness on my client’s part to attend mediation to attempt to resolve the issue at hand, the employee’s lawyer eschewed early mediation and instead undertook a number of costly and time-consuming steps in the litigation.
This, despite the fact that mediation is mandatory for all wrongful dismissal litigation in Toronto. Mediation quite often results in a negotiated settlement that makes pragmatic sense for both parties – before the employer’s settlement budget has been substantially eroded by legal fees and the plaintiff’s net recovery amount has not yet been diminished by their own legal fees. The result? This plaintiff has almost certainly spent tens of thousands of dollars in legal fees, perhaps more, on a case that could likely have been settled on a reasonable and pragmatic basis more than a year ago, but instead has no end in sight.
It is possible that both of these dismissed employees were fully informed as to their lawyers’ approaches and are entirely satisfied with the strategies adopted on their behalf. But I very much doubt that … for the same reason I doubt that any of my own employee clients would leap if I proposed to spend $50,000 of their fees to recover $10,000.
These case studies illustrate what can happen when a lawyer prioritizes their own fee-generating agenda over the client’s. What, then, should a would-be plaintiff do to guard against legal fees that yield a negative return on their investment?
• Do your homework and choose your lawyer carefully. Does the lawyer have a reputation for success and results? Purported accolades from surveys can be jimmied and Google reviews be false. Great lawyering is to be found in a combination of book smarts, street smarts and client-focused service.
• Remember that the lawyer works for you. Your lawyer should be accessible and responsive to questions. Their job is to help you understand, navigate and optimize the outcome of matters that are inherently complicated, stressful and adversarial. Understand what your lawyer is doing to advance your interests and why. More fundamentally, you should be satisfied that the lawyer is expending fees responsibly and pragmatically. None of this is to say that clients should micromanage their legal counsel (which is in itself inefficient, impractical and costly). However, any client who doesn’t understand the lawyer’s overall strategy (as well as the strengths, weaknesses and range of potential outcomes in the case) has been done an immense disservice, and should properly be alarmed.
• Be particularly wary of lawyers who seem too eager to immediately sue. There are circumstances in which that approach is warranted; but there are many other instances in which – at least initially – the exercise of diplomacy under threat of litigation can yield a quicker and more constructive result. (That does not mean that one should hold off unduly before issuing a Statement of Claim.)
Litigation is a powerful tool. Used properly, it can be very effective in generating results. In the examples above, I wonder what sort of discussion had taken place between lawyer and client about the merits of pushing a bad position, or about refusing to proceed with mediation in favour of a costly litigation strategy.
There is no denying legal services are expensive, and that lawyers operate in an arena in which outcomes are not guaranteed, although reasonable assurances can be put in place if you understand the strength of your case and likely costs. But in this arena, just as in the financial world, there are good investments and bad investments. There are choices to be made, and steps that can be taken to increase the odds of a favourable return-on-investment – starting by heeding the age-old maxim of caveat emptor.