A personal injury law firm has agreed to pay an estimated $4 million to settle claims that the firm double-dipped from the settlements of nearly 1,800 accident victims it represented.
The settlement between Neinstein & Associates LLP, a prominent personal injury law firm, and its clients was approved Wednesday by Justice Paul Perell.
Perell’s sign-off on the settlement effectively ends a class-action lawsuit that was certified in June 2017 but never made it to trial.
At the time the class-action commenced, lawyers working on contingency — “you don’t pay unless we win” — were not allowed to take a sum of money called “costs” in addition to a percentage of the settlement, according to the Solicitor’s Act governing lawyers.
In 2012, the roughly 1,800 class members alleged that Gary Neinstein and the law firm breached provincial law and their “fiduciary duties because they charged an amount for costs” in addition to the fee spelled out in their contingency fee agreement, according to Perell’s settlement approval decision. The firm denied the allegations.
Jeff Neinstein, managing partner of Neinstein Personal Injury Lawyers, told the Star in an email his firm is “pleased that this issue has been resolved.”
“We appreciate the trust and confidence that our clients have continued to place in us and we remain dedicated to providing compassionate legal representation for all victims across Ontario.”
During a brief hearing in a second-floor courtroom at downtown Toronto’s Osgoode Hall, Perell additionally approved $1 million in legal fees and assorted charges incurred during the litigation for plaintiff lawyers Peter Waldmann and Andrew Stein, plus a $10,000 honorarium to accident victim Cassie Hodge, the 46-year-old mother of two at the heart of the case.
Waldmann, who represented Hodge and the other class members, said the settlement is “a compromise,” but he is pleased the accident victims are getting some remedy.
A Star investigation that began in 2016 found personal injury lawyers in Ontario had routinely taken their fees then also taken the “costs,” which a Divisional Court judge had called “double dipping.” As a result, the Star story said, many Ontario residents had been overcharged thousands of dollars and likely did not know it.
On the heels of the Star’s findings, the Law Society of Ontario decided to make changes to the way personal injury lawyers can advertise their services, bill their clients and charge and collect referral fees.
“When this issue was first raised, it became clear that there was confusion regarding the interpretation of the Solicitors Act,” Jeff Neinstein said Wednesday. “We took these concerns very seriously. We worked collaboratively to ensure that these issues were responsibly addressed. We are proud of the work that we do and continue to promote access to justice.”
In his settlement approval order, Justice Perell said negotiations between both sides were “intensive.” He said the settlement is “a good result for the class particularly having regard to the litigation risks and the long litigation road that would await them.”
As part of the settlement, a class member could get 30 per cent of what Neinstein referred to on his accounts as costs, the court said, provided she or he signed or amended a contingency fee agreement with the firm after October 1, 2004 and paid their fees before December 9, 2015.
Their cases must also have settled for at least $40,000 and their bills included at least $15,000 for an amount the firm called “party and party costs,” “partial indemnity costs” or another term using equivalent language.
Perell said that he awarded Hodge the honorarium to pay her personal expenses during the case and “to acknowledge her extraordinary contribution.”
Hodge’s battle against Neinstein began in 2010 after the law firm settled her car accident case for $150,000, sending her a final account that included charges for “legal fees” of $30,326 and “costs” of $30,000. She was also charged for $48,924 of “disbursements,” charges incurred by the lawyer in the course of litigation, which included $4,008 for photocopies, $2,791 for “laser copies,” and $1,372 for “interest recovery,” according to an earlier appeal court ruling that upheld the certification of the class.
Hodge alleges she was left with a fraction of her settlement.
Hodge had retained the Neinstein firm after a 2002 accident that left her with a concussion, whiplash, a retinal tear, soft tissue injures and chronic pain.
“Justice is served,” Hodge said outside the courtroom after the hearing. “Now people are aware of what was happening at law firms, and they know that they do have recourse.”
Michele Henry is a Toronto-based investigative reporter. Follow her on Twitter: @michelehenry
Kenyon Wallace is a Toronto-based investigative reporter. Follow him on Twitter: @KenyonWallace or reach him via email: firstname.lastname@example.org