This is an update of materials prepared by Marko Vesely for Legal Research CLE 2004

Transcription

1 MEMORANDUM To: Vancouver Association of Law Library Members From: Karen Leung 1 Date: April 19, 2007 Re: Recovery of Disbursements for Computer Research (Speaking Notes) This is an update of materials prepared by Marko Vesely for Legal Research CLE 2004 entitled Recovering the Costs of Legal Research which also includes an article by Lisa Peters entitled Recovery of Legal Research Expenses in Taxations and Assessments of Costs published in The Advocate in January 1997 (55 Advocate 79-87) with respect to recovery of disbursements for computer research. Recovery of disbursements for computer research arises in two contexts: (1) Review of Solicitor s Accounts and (2) Assessment of Party and Party Costs. 1. Review of Solicitor s Accounts The law cited by Marko has remained unchanged. A registrar is more likely to allow a disbursement for computer-assisted legal research on a review of a solicitor s account as between lawyer and client than on an assessment of party and party costs as between opposing parties in litigation. 1 Research lawyer at Davis & Company LLP in Vancouver. The author is indebted to Weiguo (William) He, Articled Student at Davis & Company LLP (Vancouver) in the preparation of these speaking notes.

2 - 2 - However, as the cases illustrate, to ensure that lawyers recover from their clients the full value of the legal research service that they provide, they should o Enter into a written retainer agreement with each client; o Ensure that the retainer agreement: (a) states that the client agrees to pay for charges for research and research services, and (b) if appropriate, states that the client agrees to pay for the costs of legal research conducted by a contract lawyer; o Sample from Marko s paper, p : With respect to charges for computerized research, we generally have contracts under which we pay a fixed annual access fee, which is adjusted from time to time based on our overall usage. It is not possible to allocate the proportionate costs of the research services among our clients on a pro forma basis. Accordingly, we establish reasonable fixed time charges for computer research that will be reflected in your account as an expense. In our experience, the use of computerized research services significantly reduces our research and document review time. If you wish, we can provide you with charge rates for computer research in advance of any such research being performed; o Describe legal research in time charges effectively so as make clear to the client (and to a registrar on review, if necessary) that the work relates to the particular matter and is not an example of educating oneself on basic principles of law; and

3 - 3 - o If one s account is challenged on a review before a registrar, be prepared to lead evidence describing what legal research was conducted, time spent who conducted the research, the advantages of the particular research methods chosen, the complexity of the issues being considered, and why the research was necessary [this is the same evidence that will be required in an assessment of party and party computer research costs]. o Finally, to avoid misunderstandings before they arise, one should make sure that a client understands the role of legal research in the practice of law. A client should understand that it can be a false economy to try to save legal fees by failing to research a problem properly from the outset. 2. Assessment of Party and Party Computer Research Costs See Appendix A for history of BC judicial treatment One point is clear, however. Where a party fails to lead proper evidence showing what electronic research was done or why it was done, a disbursement relating to that research will be disallowed or significantly reduced. Case law Since Denmar Equipment I have only found four cases in BC on point since Denmar Equipment. They are discussed as follows.

4 - 4 - In Loxterkamp v. Cluff, 2005 BCSC 426, Registrar Baker allowed a Quicklaw charge by simply noting that there is no cause to reduce or disallow his on-line charges for research with Quicklaw, a subscription service. (at para. 71) In Summers v. McGinnis, [2005] B.C.J. No. 779, 2005 BCSC 523, Bouck did not think Quicklaw charge is part of a firm s overhead: I have yet to be persuaded that Quicklaw research is part of a firm s overhead, although I appreciate that other registrars have that point of view. (at para. 41) On that ground, Bouck allowed Quicklaw disbursements since the amount claimed for such research is not excessive given the nature of the claim (at para. 41). In Ezer v. Yorkton Securities Inc., [2006] B.C.J. No. 3098, 2006 BCCA 548, Registrar Jordan of the Court of Appeal discussed the standard used to determine whether computer research charges should be paid in a party and party context. Registrar Jordan refused the criterion of necessary and reasonable, holding that that is the rule in party and party assessments under the court tariffs. According to Registrar Jordan, the correct criterion in party and party special costs assessments is proper or reasonably necessary : Mr. Ezer argues that Mr. Pelletier should have demonstrated why the computer research charges are necessary and reasonable in the circumstances of the proceeding in which they are claimed. This dictum is taken from Practice Before the Registrar Chapter This chapter covers party and party assessments under the court tariffs. On a special costs assessment there are other considerations. A special costs assessment is more analogous to a Legal Profession Act review. The only difference is that the registrar must apply a different standard than that set out in s. 71 of the Act. For a special costs assessment, all I must decide is whether the charge is "proper or reasonably necessary to conduct the proceeding" (Rule 61(2)). I find that computer research is a proper disbursement which appears on the March 28, 2006 bill as it

5 - 5 - relates to the research done in early February on waiver of privilege relating to the disclosure of documents request. The research charge which appears on the April 28, 2006 bill does not relate to an activity which is highlighted, so I will disallow the $ (para , emphasis added) Parsons v. Finch, [2007] B.C.J. No. 68, 2007 BCSC 59 is the most recent case on this issue. In related proceedings, the Parsons had sued the City of Richmond for failing to carry out proper inspections of their property, which suffered uneven settling and caused loss of about $300,000. The court dismissed the plaintiffs claim and the City proceeded to have its costs assessed here. Registrar Scarth reduced Quicklaw charges on the basis that the City did not establish the actual cost of the Quicklaw research done but only the amount billed to the City. (para. 31) Registrar Scarth continued to note that although the City may be willing to overpay its counsel, the other party should not be ordered to do so: This finding is not inconsistent with the decision in Summers v. McGinnis, [2005] B.C.J. No. 779, 2005 BCSC 523, in which the learned registrar allowed the Quicklaw disbursement, but simply recognizes that, while the City may be willing to pay Quicklaw charges over actual cost as billed by its counsel, such amounts may not be recoverable as against an opposing party on a bill of costs. As can be seen, in all of the four cases since Denmar Equipment, the principle is that Quicklaw disbursements can be allowed. None were completely eliminated, and the reduction results from lack of evidence. A basic conclusion that can be drawn from the recent case law in British Columbia is that courts have shown more understanding towards Quicklaw disbursements. Although none of them quoted Denmar Equipment, those decisions appear to be consistent with the proposition raised by Bouck Denmar Equipment that Quicklaw research can be allowed as a proper disbursement but that the reasonableness of the amount claimed must be critically analyzed (at para. 56).

6 - 6 - The Law in Ontario The law in Ontario on this issue is quite similar to that in BC: the court has allowed a disbursement for a Quicklaw search and the reasonableness of the amount claimed must be critically examined. In Banihashem-Bakhtiari v. Axes Investments Inc., (2003), 66 O.R. (3d) 284 (S.C.J.), the defendants objected to several categories, including legal research (i.e., Quicklaw etc.) as falling outside the tariff, but Lane J. strongly supported the reasonableness of Quicklaw disbursements: These omissions merely illustrate the degree to which the tariff of disbursements has lost touch with modern legal practice. All of these items are everyday costs in running any litigation and are case-specific, rather than mere overhead, as for example, the cost of local telephone service is. If they are not included expressly, they are certainly disbursements "reasonably necessary for the conduct of the proceeding" within Tariff item 35, and I so order. (at para. 52, emphasis added) In Atkinson v. McGregor, [1998] A.J. No. 838, 1998 ABQB 629, although Veit J. disallowed the Quicklaw discharges because of lack of evidence, he expressed his strong support for recovering Quicklaw charges. Veit J. repeated his reasoning for this belief in a Memorandum that he prepared before, which included that the it was a file-specific cost that incurred in the process of physically transmitting the cases to the lawyer s computer. Moreover, he stressed the public policy reasons for supporting computer research: Done responsibly, computer access to data bases will give lawyers, and therefore litigants, much quicker access to applicable case law than can be achieved by the traditional, labour intensive, methods of legal research. The dramatic savings in time spent result in major savings to the clients. In addition, computerized legal research gives access to current case law, months before any of those cases would be published by traditional means. It may be too soon to declare that the normative standard for legal research is computer research, but the day on which courts will make that pronouncement cannot be far off (at para. 17, emphasis added).

7 - 7 - In Moon v. Sher, (2004), 246 D.L.R. (4 th ) 440 (Ont. C.A.), the court concluded that Quicklaw fees are not overhead and are reasonably necessary for the conduct of the proceeding and allowed the disbursements. It also stressed the convenience Quicklaw brought to legal research: As Quicklaw and similar search vehicles have become convenient aids to research, although not found in the Tariff, their costs should be recoverable as disbursements provided they are not excessive and have been charged to the client. It is for the party seeking recovery of the disbursements to satisfy these criteria (at para. 39). Mandic v. See-Me Auto Leasing Ltd., [2004] O.J. No (S.C.J.), Glithero J. readily allowed Quicklaw disbursements: I do not have any concern as to why a legal research service should not be a recoverable disbursements. In this day and age, it likely represents the most cost effective way to locate and copy cases (at para. 15). Kennedy Electric Ltd. v. Dana, [2005] O.J. No (S.C.J.), G.P. Killeen J. cannot see how so-called online search is other than an overhead item for practicing law (at para. 33). G.P. Killeen J. made this conclusion without even distinguishing whether the Quicklaw fees are charged on an hourly basis or a flat fee basis. In Biggin v. Maloney [2006] O.J. No. 975 (S.C.J.), G.A. Campbell J. declined to award some legal research charges on the basis that the lawyer could have used Quicklaw and therefore significantly reduced the time used on the research. In Nelligan v. Fontaine, [2006] O.J. No (S.C.J.), R.J. Smith J. allowed a reduced disbursement of $200 from $ for computer research: [t]he disbursements of $ (including computer research and other fees) are modest, and while there is an absence of evidence of the subject of the computer research, I will allow $ as a reasonable amount for computer research as a substantial amount of case law was presented (at para. 4).

8 - 8 - Summary Disbursements for computer research is recognized as recoverable. You ll have to prove it to the Registrar (who, what, when, why, and how). It may be that the courts will determine set amounts (just like for sending faxes and photocopies) - this will remain to be seen.

9 APPENDIX A : TABLE OF BC CASES Note: The following is a complete summary chart of all cases in BC Supreme Court or Court of Appeal related to the assessment of party and party Quicklaw fees. The sources of the cases are limited to what I have found in Quicklaw using the following parameters: ( Quicklaw + Research in the same paragraph--search in the entire document) + courts in British Columbia; ( computer research as an exact phrase - search in the entire document) + courts in British Columbia; ( computer-assisted research as an exact phrase - search in the entire document) + courts in British Columbia; and ( computer assisted research as an exact phrase - search in the entire document) + courts in British Columbia. The last date of access is March 21, The cases are arranged chronologically, from the earliest to the latest. Case name Citation Heard By Rationale Disposition Brucker v. Gale [1992] B.C.J. No (S.C.) Master Bishop This item (the Quicklaw expense) is not allowed as a Disallowed disbursement. The general opinion is that the item is covered by item 1 of the tariff items (at para. 6) Moore v. Dhillon [1992] B.C.J. No Master Wilson This is an exceptionally high expenditure; unless there are compelling reasons to the contrary, legal research is not usually a necessary or proper inclusion in a party and party bill of costs; if I am wrong in that view, then, and in any event, absent an explanation of the particulars of this expenditure, it has been disallowed. (paras ) Disallowed Powar v. British [1995] B.C.J. No. 706 (S.C.) Master Disallowed a $ disbursement paid to Quicklaw, Disallowed Columbia (Ministry of Chamberlist finding that the tariff items already provide for legal Transportation and research. Highways) Parsons v. Canada [1995] B.C.J. No (S.C.) Master Allowed a $ claim for Quicklaw, having regard Allowed Safeway Ltd. McCallum to the legal issues raised in the case, and finding that many unreported decisions were only available through the Quicklaw database. Girocredit Bank [1999] B.C.J. No. 182, 1999 BCCA Registrar Jordan Accepted detailed evidence about the Quicklaw Allowed Aktiengesellschaft Der Sparkassen v. Bader 58 research in the affidavit. Sandhu v. I.C.B.C. (1999), 45 C.P.C. (4th) 266 Registrar Baker Allowed computer research charges but only insofar as Allowed (B.C.S.C.) they relate to obtaining copies of unreported or foreign decisions:

10 - 2 - Prevette v. Cusano Hazbawi v. Lucier Jeff (Guardian ad litem of) v. Kozak Sarkodee-Adoo v. Sarkodee-Adoo McKnight v. Hutchison Bridgewater Financial Services Ltd. v B.C. Ltd Rohani v. Rohani French v. Fort St. John (City) Denmar Equipment Rentals Limited v B.C. Ltd., [2001] B.C.J. No. 2997, 2001 BCSC 1104 [2001] B.C.J. No. 2842, 2001 BCSC 844 [2002] B.C.J. No. 179, 2002 BCSC 103 [2003] B.C.J. No. 1458, 2003 BCSC 950 [2003] B.C.J. No. 1906, 2003 BCSC 1240 [2004] B.C.J. No. 21, 2004 BCSC 21 [2004] B.C.J. No. 682, 2004 BCSC 353 [2004] B.C.J. No. 118, 2004 BCSC 93 [2004] B.C.J. No. 1874, 2004 BCSC 1169 Sainty Sainty Registrar Baker Disallowed on the ground that since 1996, unreported decisions have been available on the Superior Courts website without the need to use Quicklaw. Law on allowing a disbursement for Quicklaw research is unsettled. As many cases are now only available through Quicklaw, a reasonable amount for Quicklaw research in respect of the trial of a matter may be allows. Not allow if it is about review of the bills of costs. Not allowed since it is not legal research (checked all similar cases heard by the judge). Master Doolan the Quicklaw charges from $ to $200 on the basis that [t]o a great degree I am of the view that the hourly fee charged, in this case $225, presumes counsel has a reasonable knowledge of the law, and if they do not, research, including Quicklaw, is in effect a learning exercise, the benefit of which stay with counsel. (at para. 51) Bouck Bouck Sainty Bouck Bouck Need evidence whether it is the most efficient tool; standard of reasonable evidence; usu. Grants $60-70; it may be allowed if shown to be the only source for certain case law or other authorities. Necessity for the charges not addressed in the affidavit material A reasonable amount should be allowed. However, necessity for the charges not addressed in the affidavit materials; particularly given the amount of time billed by lawyer and student for researching the law. Fee arrangements are relevant. Absent evidence justifying the charge, I would substantially reduce the amount but not eliminate it. Evidence should address time spent, fee arrangement, more detail as to why it is necessary to use Quicklaw in this case. The law in this area remains unsettled. I am of the view that Quicklaw research can be allowed as a proper disbursement but that the reasonableness of the Disallowed Disallowed since it is about review of costs. Disallowed

11 - 3 - amount claimed must be critically analyzed. Fee arrangements relevant. Expects firm to have some precedents and expertise. Loxterkamp v. Cluff 2005 BCSC 426 Registrar Baker Allowed a Quicklaw charge by noting that there is no cause to reduce or disallow his on-line charges for research with Quicklaw, a subscription service. (at para. 71) Summers v. McGinnis Ezer v. Yorkton Securities Inc. Parsons v. Finch [2005] B.C.J. No. 779, 2005 BCSC 523 [2006] B.C.J. No. 3098, 2006 BCCA 548 [2007] B.C.J. No. 68, 2007 BCSC 59 Bouck Registrar Jordan of the Court of Appeal Registrar Scarth Did not think Quicklaw charge is part of a firm s overhead: The amount claimed for such research is not excessive given the nature of the claim here. Registrar Jordan refused the criterion of necessary and reasonable and adopted proper or reasonably necessary test. Quicklaw charges on the basis that the City did not establish the actual cost of the Quicklaw research done but only the amount billed to the City. Allowed Allowed Allowed bills some