file transfer issues melanie hodges neufeld jody martin

File Transfer IssuesFile Transfer Issues

Melanie Hodges NeufeldMelanie Hodges Neufeld

Jody MartinJody Martin

Webinar SummaryWebinar Summary

1.1. Issues arising with open file if Issues arising with open file if account paidaccount paid

A.A. Who is entitled to documentsWho is entitled to documentsi.i. Coming into existence before retainerComing into existence before retainer

ii.ii. Coming into existence during retainerComing into existence during retainer

B.B. File Transfer FeesFile Transfer Feesi.i. Photocopy FeesPhotocopy Fees

ii.ii. Time spent preparing file for transferTime spent preparing file for transfer

Webinar SummaryWebinar Summary

2.2. Issues Arising with closed fileIssues Arising with closed fileA.A. File RetentionFile Retention

3.3. Issues arising when a lawyer Issues arising when a lawyer leaves a firmleaves a firm

4.4. Issues arising with open file if Issues arising with open file if account unpaidaccount unpaid

A.A. Solicitor’s LiensSolicitor’s Liens

Duty Following Duty Following Withdrawal/DischargeWithdrawal/Discharge

Code of Professional Conduct, Code of Professional Conduct, Chapter XII, Chapter XII, Commentary 2:Commentary 2:

2.2. The lawyer who withdraws from The lawyer who withdraws from employment employment should act so as to should act so as to minimize expense and avoid minimize expense and avoid prejudice to prejudice to the client, doing everything reasonably the client, doing everything reasonably possible to facilitate the expeditious and possible to facilitate the expeditious and orderly orderly transfer of the matter to the transfer of the matter to the successor lawyer.successor lawyer.

Duty Following Duty Following Withdrawal/DischargeWithdrawal/Discharge

Code of Professional Conduct, Code of Professional Conduct, Chapter XII, Commentary 2:Chapter XII, Commentary 2:

8.8. Upon discharge or withdrawal the lawyer should:Upon discharge or withdrawal the lawyer should:(a)(a) deliver in an orderly and expeditious manner to or deliver in an orderly and expeditious manner to or to the order of the to the order of the client all papers and property to client all papers and property to which the client is entitled;which the client is entitled;(b)(b) give the client all information that may be required give the client all information that may be required about the case or about the case or matter;matter;(c)(c) account for all funds of the client on hand or account for all funds of the client on hand or previously dealt with and previously dealt with and refund any remuneration not refund any remuneration not earned during the employment;earned during the employment;(d)(d) promptly render an account for outstanding fees promptly render an account for outstanding fees and disbursements;and disbursements;(e)(e) co-operate with the successor lawyer for the co-operate with the successor lawyer for the purposes outlined in purposes outlined in paragraph 2.paragraph 2.

““The documents that should be handed The documents that should be handed over to a client...is a matter of law and over to a client...is a matter of law and not professional conduct.”not professional conduct.”

Who owns what is answered by Who owns what is answered by reference to legal principles of reference to legal principles of ownership and possession, not by ownership and possession, not by consideration of legal ethics.consideration of legal ethics.

Aggio v. RosenbergAggio v. Rosenberg

File Open & Account PaidFile Open & Account PaidWho Owns the Document?Who Owns the Document?

Factors to Consider When Determining Factors to Consider When Determining Ownership:Ownership:

1.1. When did the document come into When did the document come into existence?existence?

2.2. For whose benefit was the document For whose benefit was the document prepared?prepared?

3.3. Who paid for or is properly liable to pay Who paid for or is properly liable to pay for the document’s preparation?for the document’s preparation?

Before the RetainerBefore the Retainer

Clearly belong to the clientClearly belong to the client Lawyer holds documents as agent Lawyer holds documents as agent

for and on behalf of the client or for and on behalf of the client or third partythird party

On termination of retainer, originals On termination of retainer, originals must be returned to appropriate must be returned to appropriate partyparty

During the RetainerDuring the Retainer

Lawyer CanLawyer Can show ownership by meeting show ownership by meeting three criteria:three criteria:

1.1. The lawyer was under no duty to The lawyer was under no duty to prepare them,prepare them,

2.2. The document was not prepared for The document was not prepared for the benefit of the client, andthe benefit of the client, and

3.3. The client cannot be regarded as The client cannot be regarded as being liable to pay for thembeing liable to pay for them

During the RetainerDuring the Retainer

Client ownership is proven by Client ownership is proven by showing:showing:

1.1. The document was a necessary part The document was a necessary part of the business transactedof the business transacted

2.2. The client has in fact paid (or is The client has in fact paid (or is liable to pay) in one form or liable to pay) in one form or another for the document’s another for the document’s preparationpreparation

Four Categories of Four Categories of OwnershipOwnership

Client’s DocumentsClient’s Documents

1. Documents prepared by the lawyer 1. Documents prepared by the lawyer for the benefit of the client and for for the benefit of the client and for which the client has paidwhich the client has paid

2. Documents prepared by third 2. Documents prepared by third parties during the course of the parties during the course of the retainer and sent to the lawyer retainer and sent to the lawyer (other than at the lawyer’s own (other than at the lawyer’s own expense)expense)

Four Categories of Four Categories of OwnershipOwnership

Lawyer’s DocumentsLawyer’s Documents

3. Documents prepared by the lawyer 3. Documents prepared by the lawyer for the lawyer’s benefit and for which for the lawyer’s benefit and for which the client was not chargedthe client was not charged

4. Documents sent by the client to the 4. Documents sent by the client to the lawyer during the course of the lawyer during the course of the retainer with the intention that, at the retainer with the intention that, at the time of delivery, ownership of the time of delivery, ownership of the document would pass to the lawyerdocument would pass to the lawyer

1. Documents prepared by the lawyer for the 1. Documents prepared by the lawyer for the benefit of the client and for which the client benefit of the client and for which the client

has paidhas paid Copies of case lawCopies of case law BriefsBriefs Document drafts and copiesDocument drafts and copies Originals of all documents prepared for clientOriginals of all documents prepared for client Copies of letters received by the lawyer (if paid for by Copies of letters received by the lawyer (if paid for by

the client)the client) Copies of letters from the lawyer to third parties kept Copies of letters from the lawyer to third parties kept

in the client’s filein the client’s file Originals of letters from the lawyer to clientOriginals of letters from the lawyer to client Memoranda of law (prep paid for by client)Memoranda of law (prep paid for by client) Pre-trial notes and tapes of conversations with Pre-trial notes and tapes of conversations with

witnesseswitnesses Trial preparation documents (chambers and trial Trial preparation documents (chambers and trial

briefs, documents book, trial books, etc.)briefs, documents book, trial books, etc.) Copies of any other documents prepared by the Copies of any other documents prepared by the

lawyer for which the client has paidlawyer for which the client has paid

2. Documents prepared by third parties during 2. Documents prepared by third parties during the course of the retainer and sent to the the course of the retainer and sent to the

lawyer lawyer (other than at the lawyer’s own expense) (other than at the lawyer’s own expense)

Letters received by the lawyer from third Letters received by the lawyer from third partiesparties

Vouchers and receipts for disbursements Vouchers and receipts for disbursements made by the lawyer on behalf of the clientmade by the lawyer on behalf of the client

Experts’ reportsExperts’ reports Discovery and trial transcriptsDiscovery and trial transcripts

3. Documents prepared by the lawyer for the 3. Documents prepared by the lawyer for the lawyer’s benefit and for which the client was lawyer’s benefit and for which the client was

not chargednot charged Copies of letters Copies of letters Copies of letters from the lawyer to third parties kept Copies of letters from the lawyer to third parties kept

in filing system of all letters written in the lawyer’s in filing system of all letters written in the lawyer’s office office

Entries of attendanceEntries of attendance Working notes, summaries of evidence and Working notes, summaries of evidence and

submissions to the courtsubmissions to the court Pre-trial notes and tape recordings of conversations Pre-trial notes and tape recordings of conversations

(other than with witnesses)(other than with witnesses) Inter-office memorandaInter-office memoranda Entries in diariesEntries in diaries Time sheetsTime sheets Office journalsOffice journals Books of accountBooks of account Computerized recordsComputerized records Notes and documents prepared for the lawyer’s own Notes and documents prepared for the lawyer’s own

benefit/protection at the lawyer’s own expensebenefit/protection at the lawyer’s own expense

4. Documents sent by the client to the lawyer 4. Documents sent by the client to the lawyer during the course of the retainer with the during the course of the retainer with the

intention that, at the time of delivery, intention that, at the time of delivery, ownership of the document would pass to the ownership of the document would pass to the

lawyerlawyer Originals of letters from client to Originals of letters from client to

lawyerlawyer Instructions from client to lawyerInstructions from client to lawyer Authorization from client to lawyerAuthorization from client to lawyer Documents sent by client to lawyer Documents sent by client to lawyer

with the intention that they become with the intention that they become the solicitor’s propertythe solicitor’s property

Lawyer’s NotesLawyer’s Notes

Traditional view:Traditional view:

All notes, including notes All notes, including notes of interviews and of interviews and preparations for trial, and preparations for trial, and tape recordings, are the tape recordings, are the property of the lawyer.property of the lawyer.

Lawyer’s NotesLawyer’s Notes

Current View:Current View: Ownership of most notes and tape Ownership of most notes and tape

recordings of conversations are the recordings of conversations are the property of the lawyer, as they are made property of the lawyer, as they are made toto aid the lawyer’s memoryaid the lawyer’s memory

Notes and tape recordings of Notes and tape recordings of conversations of witnesses, when the conversations of witnesses, when the trial has not been held or the matter trial has not been held or the matter settled, belong to the clientsettled, belong to the client Provide important information for new Provide important information for new

counsel in preparing the casecounsel in preparing the case

Original Documents Not Found in Original Documents Not Found in the Filethe File

Example: Original of Chambers brief Example: Original of Chambers brief in possession of the Court in possession of the Court

Original represented in the file by a Original represented in the file by a copy of the originalcopy of the original

At termination of the retainer, the At termination of the retainer, the client entitled to the copy just as client entitled to the copy just as would be entitled to the originalwould be entitled to the original As client has been billed for the As client has been billed for the

expense of producing the original and expense of producing the original and the copythe copy

File Transfer FeesFile Transfer Fees

1.1. Photocopy FeesPhotocopy Fees

2.2. Time Spent Preparing File Time Spent Preparing File for Transferfor Transfer

Photocopy CostsPhotocopy Costs

Considerations when determining Considerations when determining who bears cost of photocopies:who bears cost of photocopies:

1.1. Who Owns the Document to be Who Owns the Document to be Copied?Copied?

2.2. For Whose Benefit the Copy is For Whose Benefit the Copy is Being Made?Being Made?

Photocopy CostsPhotocopy Costs

Once a lawyer’s authority to retain Once a lawyer’s authority to retain documents is terminated, the lawyer documents is terminated, the lawyer should return all documents belonging to should return all documents belonging to the client without charge. the client without charge.

Lawyers are entitled to keep file copies of Lawyers are entitled to keep file copies of documents to protect themselves against documents to protect themselves against allegations of negligence or misconduct.allegations of negligence or misconduct.

The cost of copying the file (documents The cost of copying the file (documents owned by the client) for the lawyer’s owned by the client) for the lawyer’s benefit is borne by the lawyer.benefit is borne by the lawyer.

Photocopy CostsPhotocopy CostsCorrespondence Example 1.Correspondence Example 1.

Our firm sends clients copies of Our firm sends clients copies of all letters written and received all letters written and received on the client’s behalf during on the client’s behalf during the course of the retainer. Now the course of the retainer. Now that the retainer has ended, that the retainer has ended, can we charge the client for can we charge the client for copies of these letters? copies of these letters?


Since copies of letters received Since copies of letters received and sent out to the client are and sent out to the client are normally charged to the client, normally charged to the client, the lawyer is not entitled to the lawyer is not entitled to charge the client again for the charge the client again for the letter on the file if the lawyer is letter on the file if the lawyer is copying it for his or her own copying it for his or her own purpose.purpose.


When the retainer was When the retainer was terminated, our firm gave the terminated, our firm gave the file to the client, including all file to the client, including all correspondence, without charge. correspondence, without charge. The client is now requesting The client is now requesting additional copies of this additional copies of this correspondence. Can we charge correspondence. Can we charge the client for these photocopies?the client for these photocopies?


Yes, the lawyer can charge a Yes, the lawyer can charge a reasonable amount for reasonable amount for making any additional copies making any additional copies for the client.for the client.

2007 SKLSPC 132007 SKLSPC 13FactsFacts

Lawyer K requested a ruling with respect Lawyer K requested a ruling with respect to file transfers. Lawyer K and Lawyer B to file transfers. Lawyer K and Lawyer B were in the same Firm and Lawyer B left were in the same Firm and Lawyer B left to open her own firm. Lawyer K was of the to open her own firm. Lawyer K was of the view that he was entitled to charge clients view that he was entitled to charge clients asking to transfer their files to Lawyer B, asking to transfer their files to Lawyer B, for copying and maintaining a copy of that for copying and maintaining a copy of that client’s file at his Firm. Lawyer K argued client’s file at his Firm. Lawyer K argued that it was for the client’s own benefit that that it was for the client’s own benefit that he maintain a copy of the client’s file.he maintain a copy of the client’s file.

2007 SKLSPC 132007 SKLSPC 13RulingRuling

The Ethics Committee would like to confirm The Ethics Committee would like to confirm that prior rulings in Chapter XII of the Rulings that prior rulings in Chapter XII of the Rulings section of the Law Society of Saskatchewan section of the Law Society of Saskatchewan Handbook. The file is the property of the client Handbook. The file is the property of the client as long as accounts are paid or secured. If a as long as accounts are paid or secured. If a lawyer wishes to retain a copy of a file for his lawyer wishes to retain a copy of a file for his or her own records, it is at his or her own cost. or her own records, it is at his or her own cost. The Ethics Committee indicated that it is clear The Ethics Committee indicated that it is clear in this situation that Lawyer K is not entitled to in this situation that Lawyer K is not entitled to charge clients for transferring files to Lawyer charge clients for transferring files to Lawyer B’s office or for maintaining his own copy of B’s office or for maintaining his own copy of said files.said files.

Time Spent Preparing File for Time Spent Preparing File for TransferTransfer

If the labour involved in going through If the labour involved in going through the file or preparing it for transfer is the file or preparing it for transfer is minimal, no chargeminimal, no charge

In certain situations, reasonable fees In certain situations, reasonable fees may be charged for example:may be charged for example:

1.1. Time spent on determining which file Time spent on determining which file documents belonged to the client and documents belonged to the client and which belonged to the lawyerwhich belonged to the lawyer

2.2. Preparing transfer memoranda for new Preparing transfer memoranda for new counselcounsel

Factors to Consider if Appropriate to Recover Factors to Consider if Appropriate to Recover Transfer Fees:Transfer Fees:

1.1. Preparation Time, Complexity of the Case, Preparation Time, Complexity of the Case, and Benefit to the Clientand Benefit to the Client

2.2. Number of files to be transferred and the Number of files to be transferred and the time taken away to attend to other client time taken away to attend to other client mattersmatters

3.3. Reasonableness in facilitating transfer and Reasonableness in facilitating transfer and shortening up ‘Start up Time’ (re-preparation shortening up ‘Start up Time’ (re-preparation time)time)

4.4. Absence of Advance Notice of Termination by Absence of Advance Notice of Termination by the clientthe client

5.5. Reasonableness of the Amount ChargedReasonableness of the Amount Charged

McNeil v. Kansa General McNeil v. Kansa General International Insurance CoInternational Insurance Co

1.1. Preparation Time, Complexity of Preparation Time, Complexity of the Case, and Benefit to the the Case, and Benefit to the ClientClient

complex insurance matterscomplex insurance matters the preparation time required to put the preparation time required to put

the file in order was a direct benefit the file in order was a direct benefit to the new solicitor and the clientto the new solicitor and the client


2.2. Number of files to be transferred and the Number of files to be transferred and the time taken away to attend to other client time taken away to attend to other client mattersmatters

Involved approximately 150 active filesInvolved approximately 150 active files Comprised a significant portion of the firm’s Comprised a significant portion of the firm’s

workwork Very large task of preparing the files for Very large task of preparing the files for

transfertransfer Took up time that would otherwise be Took up time that would otherwise be

available to service needs of other clientsavailable to service needs of other clients


3.3. Reasonableness in facilitating Reasonableness in facilitating transfer and shortening up transfer and shortening up ‘Start up Time’‘Start up Time’

Former counsel prepared transfer Former counsel prepared transfer memoranda for new counselmemoranda for new counsel

Was reasonable for former counsel Was reasonable for former counsel to facilitate the transfer and to to facilitate the transfer and to shorten ‘start up’ or re-preparation shorten ‘start up’ or re-preparation


4.4. Absence of Advance Notice of Absence of Advance Notice of Termination by the clientTermination by the client

No advance notice was givenNo advance notice was given


5.5. Reasonableness of the Amount Reasonableness of the Amount ChargedCharged

Amount charged not excessiveAmount charged not excessive Between $50 - $625 per fileBetween $50 - $625 per file On many files no transfer fee soughtOn many files no transfer fee sought

File RetentionFile Retention

No universal agreement on how long No universal agreement on how long files should be retainedfiles should be retained

Law Society has no set policy Law Society has no set policy requirements of guidelinesrequirements of guidelines

Likely should be at least 7 yearsLikely should be at least 7 years Each lawyer and each firm must Each lawyer and each firm must

assess and be responsible for assess and be responsible for identifying a retention period that is identifying a retention period that is appropriate for each particular fileappropriate for each particular file

Disposition StreamsDisposition Streams

1.1. Retain File 7 yearsRetain File 7 years Simple files when there is no Simple files when there is no

comeback outside the limitation comeback outside the limitation periods and the tax considerationsperiods and the tax considerations

Examples:Examples: Simple real estate filesSimple real estate files Simple files related to criminal Simple files related to criminal

prosecution and defence workprosecution and defence work


2.2. Retain file 10 yearsRetain file 10 years Use for great majority of filesUse for great majority of files


3.3. Retain file in Permanent Retain file in Permanent CollectionCollection

Where the consequences of the Where the consequences of the work are long-lasting for both work are long-lasting for both client and lawyerclient and lawyer

Examples:Examples: Will instructionsWill instructions Estate files with ongoing trust Estate files with ongoing trust

implicationsimplications

When a Lawyer Leaves a When a Lawyer Leaves a FirmFirm

The Law Societies of British The Law Societies of British Columbia, Alberta and Manitoba all Columbia, Alberta and Manitoba all have a section in their respective have a section in their respective Codes of Professional Conduct Codes of Professional Conduct dealing with lawyers leaving a firm. dealing with lawyers leaving a firm. The Law Society of Saskatchewan The Law Society of Saskatchewan addresses the issues related to when addresses the issues related to when a lawyer leaves a firm in various a lawyer leaves a firm in various chapters of the Code.chapters of the Code.

Primary ConsiderationPrimary Consideration The client has the right to terminate the lawyer The client has the right to terminate the lawyer

client relationship at will and to be represented by a client relationship at will and to be represented by a lawyer of their choosing. lawyer of their choosing.

When a client has terminated the retainer, much like When a client has terminated the retainer, much like when a lawyer withdraws, the lawyer should act so when a lawyer withdraws, the lawyer should act so as to minimize expense and avoid prejudice to the as to minimize expense and avoid prejudice to the client doing everything reasonably possible to client doing everything reasonably possible to facilitate the expeditious and orderly transfer of the facilitate the expeditious and orderly transfer of the matter to the successor lawyer. matter to the successor lawyer.

Chapter XII of the Saskatchewan Code of Chapter XII of the Saskatchewan Code of Professional Conduct, Commentaries 9 through 13 Professional Conduct, Commentaries 9 through 13 indicate that lawyers should behave civilly and avoid indicate that lawyers should behave civilly and avoid “unseemly rivalry” as it is the client’s choice as to “unseemly rivalry” as it is the client’s choice as to the lawyer who will represent them.the lawyer who will represent them.

In addition, it would be unethical for the firm to fail In addition, it would be unethical for the firm to fail or refuse to provide the client with the departing or refuse to provide the client with the departing lawyer’s new contact information.lawyer’s new contact information.

All three Codes (BC, All three Codes (BC, Alberta, and Manitoba) Alberta, and Manitoba)

indicate:indicate:1.1. It is the client’s decision whether to stay with It is the client’s decision whether to stay with

the law firm or go with the departing lawyer.the law firm or go with the departing lawyer.2.2. There is a duty on the departing lawyers to There is a duty on the departing lawyers to

inform all clients for whom they were the inform all clients for whom they were the responsible lawyer, of the client’s right to responsible lawyer, of the client’s right to choose who will continue to represent them.choose who will continue to represent them.

3.3. It is preferable that a letter to the clients be It is preferable that a letter to the clients be sent jointly by the departing lawyer and the sent jointly by the departing lawyer and the law firm, however, in the absence of a joint law firm, however, in the absence of a joint announcement, the announcement or announcement, the announcement or notification should be provided by both.notification should be provided by both.

The notification to the client The notification to the client should advise the client that they should advise the client that they

have the following options:have the following options:

1.1. The client may have the departing The client may have the departing lawyer continue to act;lawyer continue to act;

2.2. The client may have the firm which the The client may have the firm which the lawyer is leaving continue to act; orlawyer is leaving continue to act; or

3.3. The client may retain other counsel.The client may retain other counsel.

In each of these cases, file transfer In each of these cases, file transfer issues will be raised and must be issues will be raised and must be addressed by the lawyer and the firm.addressed by the lawyer and the firm.

Notification and Notification and distribution of files:distribution of files:

The Law Society of Alberta suggests, and we The Law Society of Alberta suggests, and we agree that:agree that:

““the approach taken should be moderate, the approach taken should be moderate, reasonable, and free of efforts by either the reasonable, and free of efforts by either the departing lawyer or the firm to unduly departing lawyer or the firm to unduly influence a client’s instructions regarding influence a client’s instructions regarding disposition of a current matter. An optimum disposition of a current matter. An optimum solution would be mutual review of the client solution would be mutual review of the client list and agreement as to a fair and appropriate list and agreement as to a fair and appropriate manner of contacting clients and obtaining manner of contacting clients and obtaining written authorizations for the transfer of files written authorizations for the transfer of files moving with the lawyer…”moving with the lawyer…”

Who Owns What? Who Owns What? The Departing Lawyer v. The Departing Lawyer v.

The FirmThe Firm1.1. The client is a client of the firm, not The client is a client of the firm, not

the lawyer;the lawyer;

2.2. The firm is entitled to possession of The firm is entitled to possession of the file; andthe file; and

3.3. Work in progress and accounts Work in progress and accounts receivable on a file belong to the receivable on a file belong to the firm and not the lawyer.firm and not the lawyer.

The above 3 points apply whether or not The above 3 points apply whether or not the client came to the firm only to see the client came to the firm only to see that lawyer and never saw another that lawyer and never saw another lawyer of the firm. lawyer of the firm.

It is also not relevant if the lawyer is It is also not relevant if the lawyer is partner or an associate of the firm. If partner or an associate of the firm. If the firm is an association of independent the firm is an association of independent practitioners, subject to any agreements practitioners, subject to any agreements between the practitioners, then it would between the practitioners, then it would not be likely to be considered a “firm” not be likely to be considered a “firm” for the purpose of ownership of files, for the purpose of ownership of files, work in progress or accounts receivable.work in progress or accounts receivable.

Financial IssuesFinancial Issues

The negotiation of financial The negotiation of financial settlement between the departing settlement between the departing lawyer and the firm should include a lawyer and the firm should include a negotiation with respect to fees and negotiation with respect to fees and disbursements owing on files going disbursements owing on files going with the departing lawyer.with the departing lawyer.

Financial IssuesFinancial Issues

The Law Society of Alberta provides that:The Law Society of Alberta provides that:

““The lawyer and firm must come to a The lawyer and firm must come to a mutually acceptable arrangement mutually acceptable arrangement respecting work in progress and respecting work in progress and disbursements outstanding on files that disbursements outstanding on files that are to be transferred with the lawyer. are to be transferred with the lawyer. The transfer of a file and, consequently, The transfer of a file and, consequently, the progress of a client matter should the progress of a client matter should not be unduly delayed.”not be unduly delayed.”

An Important Business An Important Business IssueIssue

Some departing lawyers make the mistake Some departing lawyers make the mistake of ensuring that as many files as possible of ensuring that as many files as possible are transferred to them when they leave the are transferred to them when they leave the firm. firm.

This is especially relevant to those This is especially relevant to those departing lawyers who are opening their departing lawyers who are opening their own practice. own practice.

This mistake may occur because of concerns This mistake may occur because of concerns that the new practice will not generate that the new practice will not generate enough cash flow on the up-start and the enough cash flow on the up-start and the lawyer may think that any work will be lawyer may think that any work will be better than no work.better than no work.

An Important Business An Important Business IssueIssue

However, when considering transferring files, the However, when considering transferring files, the departing lawyer must not only consider the clients departing lawyer must not only consider the clients interests in transferring the file but should put interests in transferring the file but should put thought to whether the type of work is going to be thought to whether the type of work is going to be at odds with the business plan of the new practice. at odds with the business plan of the new practice.

Transferring the wrong type of files can result in Transferring the wrong type of files can result in the practice being taken in an unplanned direction the practice being taken in an unplanned direction and divert attention from the many organizational and divert attention from the many organizational tasks involved with starting a new practice. tasks involved with starting a new practice.

One of the greatest threats to a new practice is too One of the greatest threats to a new practice is too much legal work that overwhelms the management much legal work that overwhelms the management of the practice and the necessary infrastructure of of the practice and the necessary infrastructure of the new practice is not properly established.the new practice is not properly established.

In Summary:In Summary:

1.1. It is the client’s right to be informed that a It is the client’s right to be informed that a lawyer with whom they are working is lawyer with whom they are working is leaving firm and to decide who will leaving firm and to decide who will represent them.represent them.

2.2. The client is a client of the firm, not the The client is a client of the firm, not the lawyer.lawyer.

3.3. The firm is entitled to possession of the file.The firm is entitled to possession of the file.

4.4. Work in progress and accounts receivable Work in progress and accounts receivable on a file belong to the firm and not the on a file belong to the firm and not the lawyer.lawyer.

In Summary:In Summary:

5.5. It is advisable for the firm and the departing lawyer It is advisable for the firm and the departing lawyer to send the clients a joint letter advising of the to send the clients a joint letter advising of the departure and of their choice to stay with the firm, departure and of their choice to stay with the firm, follow the departing lawyer, or seek new counsel.follow the departing lawyer, or seek new counsel.

6.6. It is advisable for law firms to have lawyer/firm It is advisable for law firms to have lawyer/firm agreements in place to deal with issues which may agreements in place to deal with issues which may arise upon a lawyer’s departure, which include arise upon a lawyer’s departure, which include issues around the transfer of the file, including issues around the transfer of the file, including work in progress and accounts receivable.work in progress and accounts receivable.

7.7. When considering transferring files, the departing When considering transferring files, the departing lawyer must not only consider the client’s interests lawyer must not only consider the client’s interests in transferring the file but should consider whether in transferring the file but should consider whether the type of work is going to be at odds with the the type of work is going to be at odds with the business plan of the new practice.business plan of the new practice.

Solicitor Liens and File Solicitor Liens and File TransferTransfer

From a complaint perspective, we often From a complaint perspective, we often receive inquiries with respect to solicitor’s receive inquiries with respect to solicitor’s liens in relation to the refusal of a lawyer to liens in relation to the refusal of a lawyer to transfer the client’s file. transfer the client’s file.

We often will advise the complainants that if We often will advise the complainants that if the lawyer is maintaining a solicitor’s lien on the lawyer is maintaining a solicitor’s lien on the file that the Law Society of Saskatchewan the file that the Law Society of Saskatchewan Complaints Process has no jurisdiction to Complaints Process has no jurisdiction to become involved in such and the complainant become involved in such and the complainant has other remedies to address payment of has other remedies to address payment of their account and transfer of their file.their account and transfer of their file.

When a firm receives a written When a firm receives a written authorization from the client to authorization from the client to transfer the file, either to a transfer the file, either to a departing lawyer or a new firm, the departing lawyer or a new firm, the firm should in all cases transfer the firm should in all cases transfer the file subject only to its right to render file subject only to its right to render an account and exercise a solicitor’s an account and exercise a solicitor’s lien on the file for unpaid fees and lien on the file for unpaid fees and disbursements.disbursements.

Types of Liens:Types of Liens:

The obligation to transfer the file, The obligation to transfer the file, and to deliver papers and property is and to deliver papers and property is subject to the lawyer's right of lien. subject to the lawyer's right of lien. A solicitor’s lien my be pursued A solicitor’s lien my be pursued through 3 separate avenues through 3 separate avenues

See Merchant Law Group v. McLeod See Merchant Law Group v. McLeod & Co, 2005 ABQB 875, for thorough & Co, 2005 ABQB 875, for thorough discussion on the 3 types of discussion on the 3 types of solicitors liens availablesolicitors liens available

When Does the lien When Does the lien Arise?Arise?

In most cases the lawyer’s In most cases the lawyer’s authority to hold clients documents authority to hold clients documents terminates upon termination of the terminates upon termination of the retainer. The lawyer’s authority to retainer. The lawyer’s authority to hold back client documents arises hold back client documents arises when at the termination of the when at the termination of the retainer some or all of the lawyer’s retainer some or all of the lawyer’s accounts remain unpaid.accounts remain unpaid.

Retaining LienRetaining Lien The most common type of lien is the “retaining The most common type of lien is the “retaining

lien” lien” Enables a lawyer to retain a clients file and Enables a lawyer to retain a clients file and

refuse to transfer it to a subsequent lawyer refuse to transfer it to a subsequent lawyer until satisfactory arrangements have been until satisfactory arrangements have been made for payment of the prior lawyer’s made for payment of the prior lawyer’s account. account.

The transfer is often achieved through trust The transfer is often achieved through trust conditions agreed to between the new and the conditions agreed to between the new and the prior lawyer.prior lawyer.

It is this type of lien we will be dealing with It is this type of lien we will be dealing with today as it is most relevant to the issue of file today as it is most relevant to the issue of file transfer.transfer.

Charging OrderCharging Order The “charging order”, which is encoded in the The “charging order”, which is encoded in the

following excerpt of following excerpt of The Legal Profession Act, The Legal Profession Act, 19901990::

66(1) A member who is employed to prosecute or defend a proceeding 66(1) A member who is employed to prosecute or defend a proceeding in a court or tribunal may apply to the court for an order granting the in a court or tribunal may apply to the court for an order granting the member a lien or charge against any personal property not in the member a lien or charge against any personal property not in the member’s possession that is recovered or preserved as a result of the member’s possession that is recovered or preserved as a result of the member’s services for the proper fees and expenses of or in relation to member’s services for the proper fees and expenses of or in relation to the proceedings, including counsel fees.the proceedings, including counsel fees.(2) On an application pursuant to subsection (1) or for the enforcement (2) On an application pursuant to subsection (1) or for the enforcement of an order made pursuant to subsection (1), a judge may make any of an order made pursuant to subsection (1), a judge may make any order that the judge considers appropriate for payment of the lien or order that the judge considers appropriate for payment of the lien or charge out of the property recovered or preserved.charge out of the property recovered or preserved.(3) A member has a lien or charge for the member’s proper fees and (3) A member has a lien or charge for the member’s proper fees and expenses in relation to all legal services performed by the member for expenses in relation to all legal services performed by the member for a client against any property owned by the client that is in the a client against any property owned by the client that is in the member’s possession.member’s possession.(4) Nothing in subsection (3) overrides the exceptions to a solicitor’s (4) Nothing in subsection (3) overrides the exceptions to a solicitor’s lien at common law.lien at common law.(5) On application by a client, the court may, on any terms and (5) On application by a client, the court may, on any terms and conditions that the court considers appropriate, order the delivery of conditions that the court considers appropriate, order the delivery of any of the client’s property in a member’s possession that is held any of the client’s property in a member’s possession that is held pursuant to subsection (3).pursuant to subsection (3).

Common Law “Charging Common Law “Charging Lien”Lien”

Prior to the creation of the statutory Prior to the creation of the statutory charging order, lawyers could rely charging order, lawyers could rely upon a common law “charging lien”. upon a common law “charging lien”.

This has been described as “a claim to This has been described as “a claim to the equitable interference of the court the equitable interference of the court to have a judgment held as security to have a judgment held as security for the solicitor’s debt”. for the solicitor’s debt”.

Often the charging lien and charging Often the charging lien and charging order are used interchangeably order are used interchangeably though they are two distinct types of though they are two distinct types of liens.liens.

Professional Code of Professional Code of ConductConduct When considering whether a lien is appropriate, When considering whether a lien is appropriate,

the firm must ensure that the retention of the the firm must ensure that the retention of the file does not prejudice the client. file does not prejudice the client.

Chapter 12 Commentary 11 of the Code, though Chapter 12 Commentary 11 of the Code, though specifically addressing withdrawal, applies specifically addressing withdrawal, applies equally to the refusal to transfer a file and equally to the refusal to transfer a file and provides:provides:

11. Where upon the discharge or withdrawal of 11. Where upon the discharge or withdrawal of the lawyer the question of a right of lien for the lawyer the question of a right of lien for unpaid fees and disbursements arises, the unpaid fees and disbursements arises, the lawyer should have due regard to the effect of lawyer should have due regard to the effect of its enforcement upon the client's position. its enforcement upon the client's position. Generally speaking, the lawyer should not Generally speaking, the lawyer should not enforce such a lien if the result would be to enforce such a lien if the result would be to prejudice materially the client's position in any prejudice materially the client's position in any uncompleted matter.uncompleted matter.

An enshrined in the Code, the lawyers right to An enshrined in the Code, the lawyers right to enforce the lien on client documents may be enforce the lien on client documents may be restricted if to enforce the lien would prejudice restricted if to enforce the lien would prejudice the client. The courts have looked to the client’s the client. The courts have looked to the client’s interest and note that the client’s interests must interest and note that the client’s interests must be given “great weight”. Specifically, where the be given “great weight”. Specifically, where the client’s interests can be preserved by allowing client’s interests can be preserved by allowing access to the file, courts have upheld the lien access to the file, courts have upheld the lien subject the clients right to inspect the subject the clients right to inspect the documents at the lawyers office. (see for documents at the lawyers office. (see for example Appleton v. Hawes(1990) 47 C.P.C.(2d)example Appleton v. Hawes(1990) 47 C.P.C.(2d)(Gen. Div.), additional reasons at 2 W.D. C.P. (Gen. Div.), additional reasons at 2 W.D. C.P. (2d) 154.(2d) 154.

The lawyer’s right to retain the liened The lawyer’s right to retain the liened documents is no greater than the client’s rights. documents is no greater than the client’s rights. As such if a third party has an interest or a As such if a third party has an interest or a right superior to that of the client the lawyer’s right superior to that of the client the lawyer’s ability to retain the documents is subject to ability to retain the documents is subject to those superior rights or interests.those superior rights or interests.

File Transfer ProcedureFile Transfer Procedure

There are no rules that dictate what There are no rules that dictate what procedure should be followed by procedure should be followed by lawyers when a client moves a file lawyers when a client moves a file from one lawyer to another and from one lawyer to another and there is considerable uncertainty there is considerable uncertainty about what is appropriate or about what is appropriate or acceptable when the first lawyers acceptable when the first lawyers account is unpaid. account is unpaid.

File Transfer ProcedureFile Transfer ProcedureHowever, we suggest the following as a However, we suggest the following as a guideline:guideline:

1.1. The new lawyer should request transfer of the The new lawyer should request transfer of the file from the prior lawyer;file from the prior lawyer;

2.2. If the prior lawyer has not been paid, then a If the prior lawyer has not been paid, then a retaining lien may be asserted by refusing to retaining lien may be asserted by refusing to hand over the file unless arrangements can hand over the file unless arrangements can be made with the client of the new lawyer to be made with the client of the new lawyer to pay or secure the account.pay or secure the account.

3.3. If the prior lawyer has not already sent the If the prior lawyer has not already sent the client an account, this should be done as soon client an account, this should be done as soon as possible.as possible.


4.4. The lawyer wishing to assert the lien must The lawyer wishing to assert the lien must consider, pursuant to the Code, whether a lien consider, pursuant to the Code, whether a lien is appropriate, so as to not materially prejudice is appropriate, so as to not materially prejudice the client’s position.the client’s position.

5.5. Outstanding accounts can often be secured by Outstanding accounts can often be secured by (a) the client providing other security for the (a) the client providing other security for the account or (b) the new lawyer providing an account or (b) the new lawyer providing an undertaking to pay the account. However, undertaking to pay the account. However, where there is a valid solicitor’s lien, there is no where there is a valid solicitor’s lien, there is no obligation on the prior lawyer to accept an obligation on the prior lawyer to accept an undertaking or security instead of payment undertaking or security instead of payment before giving up the file.before giving up the file.


6.6. As noted, the new lawyer and the prior lawyer As noted, the new lawyer and the prior lawyer can agree that the file be transferred on can agree that the file be transferred on undertakings. These undertakings should be undertakings. These undertakings should be very carefully worded and the wording will very carefully worded and the wording will vary according to the circumstances and to vary according to the circumstances and to what is agreed to between the client, the new what is agreed to between the client, the new lawyer and the prior lawyer. The new lawyer lawyer and the prior lawyer. The new lawyer should also realize that the arrangements should also realize that the arrangements made with the prior lawyer may affect any made with the prior lawyer may affect any retaining lien he or she may wish to exercise retaining lien he or she may wish to exercise against the client.against the client.


7.7. If there are outstanding disbursements If there are outstanding disbursements in addition to fees, the prior lawyer may in addition to fees, the prior lawyer may insist that the disbursements be paid. insist that the disbursements be paid. Otherwise the prior lawyer would Otherwise the prior lawyer would continue to finance the case by continue to finance the case by agreeing to wait for payment until the agreeing to wait for payment until the file is complete.file is complete.

8.8. If the client does not consent to the If the client does not consent to the prior lawyer’s account, the account may prior lawyer’s account, the account may be assessed.be assessed.


9.9. If satisfactory arrangements cannot be If satisfactory arrangements cannot be made to address the outstanding made to address the outstanding reviewed account, the client my apply reviewed account, the client my apply for a court order directing the prior for a court order directing the prior lawyer to deliver the file to the new lawyer to deliver the file to the new lawyer.lawyer.

10.10. If the prior lawyer refuses to release If the prior lawyer refuses to release the file or if the court refuses to order the file or if the court refuses to order delivery, then the new lawyer may delivery, then the new lawyer may have to construct the file to proceed have to construct the file to proceed with the case. with the case.

Note on Trust ConditionsNote on Trust Conditions Where there is no right of lien either through Where there is no right of lien either through

the Act or the common law, it would be the Act or the common law, it would be improper to refuse to deliver the file if the improper to refuse to deliver the file if the receiving lawyer is unwilling to accept trust receiving lawyer is unwilling to accept trust conditions requiring the receiving lawyer to conditions requiring the receiving lawyer to undertake to repay the outstanding fees and undertake to repay the outstanding fees and disbursements owed to the first firm. disbursements owed to the first firm.

While the receiving lawyer may, as a matter of While the receiving lawyer may, as a matter of professional courtesy, voluntarily agree to give professional courtesy, voluntarily agree to give such an undertaking or seek directions from such an undertaking or seek directions from their client to accept such trust conditions, the their client to accept such trust conditions, the original firm cannot insist upon this as a original firm cannot insist upon this as a precondition to delivery of the file if the firm is precondition to delivery of the file if the firm is not in a position to assert a solicitor’s lien. not in a position to assert a solicitor’s lien.

Note on Trust ConditionsNote on Trust Conditions

Even when the file is obtained Even when the file is obtained without trust conditions relating to without trust conditions relating to unpaid fees and disbursements, the unpaid fees and disbursements, the receiving lawyer has an ethical receiving lawyer has an ethical obligation to assist in collecting the obligation to assist in collecting the original lawyer’s account by urging original lawyer’s account by urging the client to attend to payment or the client to attend to payment or otherwise securing what is owed to otherwise securing what is owed to the former lawyer.the former lawyer.

Chapter XII Commentary 12, Chapter XII Commentary 12, addresses the duty of the addresses the duty of the

successor lawyer in this regard:successor lawyer in this regard:12. Before accepting employment, the successor 12. Before accepting employment, the successor

lawyer should be satisfied that the former lawyer should be satisfied that the former lawyer approves, or has withdrawn or been lawyer approves, or has withdrawn or been discharged by the client. It is quite proper for discharged by the client. It is quite proper for the successor lawyer to urge the client to the successor lawyer to urge the client to settle or take reasonable steps toward settling settle or take reasonable steps toward settling or securing any account owed to the former or securing any account owed to the former lawyer, especially if the latter withdrew for lawyer, especially if the latter withdrew for good cause or was capriciously discharged. But good cause or was capriciously discharged. But if a trial or hearing is in progress or imminent, if a trial or hearing is in progress or imminent, or if the client would otherwise be materially or if the client would otherwise be materially prejudiced, the existence of an outstanding prejudiced, the existence of an outstanding account should not be allowed to interfere with account should not be allowed to interfere with the successor lawyer acting for the client.the successor lawyer acting for the client.

ResourcesResources Law Society of SaskatchewanLaw Society of Saskatchewan

Retention, Storage and Disposition of Client Retention, Storage and Disposition of Client Files by Rod MacDonald, Q.C. Files by Rod MacDonald, Q.C.

Law Society of British ColumbiaLaw Society of British Columbia Whose File is it Anyway? Who Owns Client File Whose File is it Anyway? Who Owns Client File

Documents When the Retainer Ends by Documents When the Retainer Ends by Jacqueline Morris, Felicia S. Folk & John Jacqueline Morris, Felicia S. Folk & John VamplewVamplew

Getting Paid: Asserting and Defending a Getting Paid: Asserting and Defending a Solicitor’s Lien by Jacqueline Morris & Felicia Solicitor’s Lien by Jacqueline Morris & Felicia S. FolkS. Folk

Charging Liens – 2005 Update by Felicia S. FolkCharging Liens – 2005 Update by Felicia S. Folk Law Society of Upper CanadaLaw Society of Upper Canada

File Transfer on Termination of RetainerFile Transfer on Termination of Retainer Solicitor’s LiensSolicitor’s Liens

Law Society of AlbertaLaw Society of Alberta When a Lawyer Leaves a Law FirmWhen a Lawyer Leaves a Law Firm