Institute for Public Affairs of Montreal
The Price of Justice

Me. Julius Grey
The Gazette 21 November 2004  

In directing everyone's attention to the scandalously high costs of litigation, the bar of Montreal has performed a great public service. However, one of the propositions in the recently published report is a sharp increase in the costs paid by the losing side to cover the winning side's attorney fees. That is ill-advised and will in fact diminish access to justice.


At first glance, the idea has some appeal. At present, the costs awarded to the winner by courts are a small percentage of the real fees. Why should a person who wins an award of $30,000 spend twice that amount on lawyers without some compensation? However, closer scrutiny will show the problem is the excessively high total cost of the trial, not which of the parties pays it. Placing the burden on the loser will not alleviate the difficulty or increase accessibility.


There are, of course, situations where such an idea is appropriate and a dogmatic rejection would be wrong. Already, the courts can award fees in cases of abuse of process or dishonest litigation. Moreover, where the Quebec Charter of Rights and Freedoms are violated, exemplary damages can be used to palliate the cost of proceedings.


Finally, in family law, the courts can and do use "advances for costs" to create a level playing field between the parties. One could extend this family-law practice to life insurers who deny coverage or to employers who refuse to compensate dismissed employees and this would be just. One could also increase moderately the level of costs awarded in all cases.


However, a general rule condemning the losing party to compensate for the real legal fees would have a chilling effect on the system of justice.


It stands to reason that powerful and wealthy parties would be more likely to be able to take the risk of paying double fees than the weak or indigent. Further, such frequent litigators as insurers and banks would naturally work out their optimum aggregate costs, factoring the occasional double fees into their projections along with the occasional recovery of fees. One-time litigators have no such luxury and cannot hope to recoup their costs in the future. They would, therefore, hesitate, even more than they do now, before taking proceedings that are risky and those who did so would sometimes be utterly ruined.


One of the bar's suggestions is particularly pernicious. It suggests when a defendant (for example, an employer) makes an offer that is subsequently deemed reasonable, the full solicitor-client costs would be owed to him from that moment. Already and quite properly, a defendant can liberate himself from future costs by making a deposit of a reasonable amount. The new proposal, however, goes beyond this. It would allow a powerful defendant to make the lowest offer that might possibly be accepted by a judge and, thus, put a weaker plaintiff before an insoluble dilemma. A less than satisfactory offer would often be accepted.


Furthermore, the new system would effectively destroy contingency fees. Contingency fees are not, in general, an attractive system, but in certain types of cases, they are the only way for plaintiffs to be represented. If your own lawyer's undertaking to be paid only out of winnings is no longer a guarantee that there will not be a crushing legal bill from the opposing party, then the entire system of contingency fees loses its purpose.

One reason why payment by the losing party seems initially attractive to many is the prevailing but erroneous view that law is a system of fairly objective rules and that it is possible to know in advance who will succeed and, thus, to take only well-founded cases. In fact, a lawsuit is a complex web of fact and interpretation of statutes. The outcome changes drastically from epoch to epoch. Except for frivolous or dishonest claims, it is almost impossible to know the result in advance.

Moreover, one of the most important factors, the identity of the judge, is not known in advance. Yet different judges come to drastically different conclusions on the same cases and this is a feature inherent in the complex nature of litigation. It is neither possible nor even desirable to try to eliminate this since different and even contradictory judgments are part of how law evolves.

Once we realize that winning and losing are not simple, predictable propositions, the idea that fairness can be achieved by making the loser pay falls apart. On the contrary, the advancement of law depends often on innovative and, therefore, risky actions by weaker parties and the new system would tend to make these far more difficult to undertake. It is true the bar suggests a discretion to avoid costs in such cases, but given the subjective nature of adjudication and the extraordinary place that political correctness has assumed in Canadian life, it is certain that the exercise of discretion would vary from judge to judge and from topic to topic, in accordance with current fashion. It, too, would be unpredictable.

What, then, is to be done? Apart from the few specific areas where the bar suggestion is feasible, the solution lies in the reduction, not reapportionment, of legal and expert fees and in public legal aid. The reduction in fees must be done through the reduction of expenses and time, which, much more than attorney profits, are making litigation unaffordable for most people.

We now have a single system of procedure, except for small claims and a few insignificant modifications for actions under $25,000. This is a Cadillac system - virtually unlimited length of trial, number of expertises, discoveries and a complicated system of evidence. We should replace it with a Volkswagen system - strictly limited duration of trial and discoveries, fewer expert reports and simpler pleadings. In proper cases, a party could, by motion, request a Cadillac trial and the court, if it grants the motion, should adjudicate on the additional costs, usually against the stronger party. It is through simplification of procedure and reduction of time spent in most matters that real saving of costs can be achieved for winners and losers.

Of course, most civil cases not involving significant points of principle should be settled amicably. Settlement conferences before judges have been remarkably successful and they should be encouraged or perhaps made mandatory. This would increase the number of settlements without putting the weaker party at a disadvantage.

Finally, it is naive to think we can solve all the problems of costs without a greater injection of public funds for legal aid. No system will work well until we face this fact squarely.

Accessible justice is a fundamental condition for democracy. Its importance cannot be overestimated. The Montreal bar proposals should be welcomed as a basis for discussion. The final product will only emerge after a very difficult and subtle balancing of all of the interests involved and a real attempt to reduce the total cost of each case.