A city in semi-lockdown grieves for big swinging solicitor … Costs battle against former client goes down the gurgler … Conflict of interest … Work under retainer adverse to clients interests … Unsanitisable activities … Solicitors expected to honour their word … Janek Drevikovsky reports
The shop sent the bill for fees it claimed chasing money stolen from Gordon by one of the firm’s own lawyers.
Supreme Court Justice David Hammerschlag refused to order Gordon, who was AH’s client for over 30 years, to pay the bill, finding it would risk the propriety of the legal profession to do so.
The decision comes after the same parties settled a larger fee dispute in mid-2019, with Gordon coughing up $928,982 in unpaid accounts.
The fees are part of the fallout from the spectacular implosion of Brodie Clarke, a young “hotshot” lawyer at Antagonistic & Heartless, who raided Gordon’s coffers to fund his gambling habit.
To achieve this, Clarke forged signatures, lied to the banks and impersonated Gordon’s son. Even mighty Deutsche Bank was duped, transferring about $7 million of Gordon’s money to Clarke.
When the fraud came to light in late 2017, Clarke was sentenced to three years’ porridge. Gordon, understandably, wanted his money back.
John Atanaskovic leapt to the aid of his long-term client, promising to chase-up the bullion.
AH presented a retainer agreement to Gordon and his holding company Birketu. The terms included a $900 an hour charge-out for the Golden Serb himself, plus lesser rates for grunts working on the matter.
The retainer also foreshadowed a “dispute” should Deutsche Bank refuse to refund the $7 million to Birketu. The thinking was the bank would say Clarke made the transfer with Birketu’s apparent authority.
Also in the retainer was a long disquisition on conflicts of interest. The conclusion was that AH had no such conflict.
It also set out “full information” about AH’s interest in the Clarke affair, so that Gordon would be “fully informed” if a conflict did arise.
“You [Gordon] have indicated that you understand the above, but that you nevertheless have confidence in this firm, and there are practical reasons why Birketu and you would still desire this firm to act as lawyers for Birketu and you in relation to this matter.”
Over at AH world headquarters, there were mutterings that the whole thing might not be so straightforward.
A partner named Jon Skene sent around an email, where he mused that the firm might be more conflicted than appeared.
Skene gave an example of the conflict this might cause:
“A settlement offer from [Deutsche Bank] might be for 75 percent of the losses suffered. An independent adviser might objectively recommend that such offer ought to be accepted by Birketu …
… but it might be in AH’s interest to advise Birketu to refuse such offer, if there is a risk that AH might be required to make up the 25 percent shortfall following a claim by Birketu against it in vicarious liability.”
Nonetheless, Vlad pressed on. After following the paper trail for some months, he met with Bruce Gordon and Andrew Lancaster, WIN’s chief financial officer, for a famous lunch at Q Dining.
According to Lancaster, Atanaskovic promised Gordon wouldn’t “be out of pocket” for Clarke’s fraud and undertook not to charge for the investigation.
In February 2018, Gordon and Co. decided to change solicitor. So Atanaskovic sent through his firm’s invoice. The total bill was $173,000, cut down to $150,000 and further reducible to $120,000 if paid within seven days.
The judge declared this bill to be unfair and unreasonable. It was not in dispute that AH had a conflict of interest, or that it did work under the retainer which was possibly unfavourable to Birketu and Gordon’s interests.
The problem was, according to HH, that the firm failed to obtain informed consent from its client.
The firm did not disclose that an investigation into Clarke’s “ostensible” authority to deal with Deutsche Bank would overlap with the question of AH’s vicarious liability for Clarke’s behaviour.
Nor did the firm disclose that, if Clarke was found to have authority, Birketu would then have to sue AH to get its money back.
His Honour said that even if he was wrong, this was the kind of conflict that no amount of “informed” consent could sanitise.
In fact, this case was not “far off” from that of a solicitor acting for a party in a court case against that very same solicitor.
Atanaskovic’s broken undertaking also counted against him and his firm. The judge found that, although the undertaking was not supported by consideration, there was an expectation that solicitors honour their word.
To allow AH to recover fees, in that circumstance, would be to allow a solicitor to benefit from improper dishonesty.
His Honour found that the supervisory powers of the court could not be exercised to that end. He therefore declined to force Gordon and Co. to pay its bills.
The sole exception was $14,930.15 charged for separate, commercial work that was unrelated to the conflict of interest.