What exactly is a joint retainer and what are some of the pros and cons? 

When you select a lawyer, you are actually retaining the law firm and not exclusively the lawyer.  At times, it makes sense for one or more unrelated parties to join forces and retain the same law firm. For example, several claimants collectively pursuing lien claims or trust claims against a general contractor and/ or owner. Or several contract claims being advanced on behalf of sub-trades against a contractor. Perhaps several claimants joining forces to pursue their remedies against a bankrupt contractor or owner. There can be significant benefits in joining forces including: cost savings (shared legal & expert fees); common litigation strategy; time savings; sharing of information; and streamlining of proceedings.

However, during the course of litigation, issues can arise that create a conflict of interest between the joint clients themselves or with other clients of the law firm. These are distinct types of conflicts. For example, determining that one client’s claim lacks merit and if eliminated or reduced would increase the recovery of the other joint clients. Or an entirely different kind of conflict, such as an internal conflict about the handling of the case: perhaps the joint clients develop opposing views of the case and are unable to provide unanimous instructions or agree upon a strategy. Or a conflict arises when it is discovered (in the midst of the proceedings) that an existing client of the same law firm should be added and will be adverse in interest. It is costly for joint clients to have to go their separate ways mid-stream. Add to that the inevitable delay caused by changing law firms. So, the joint retainer agreement is geared to managing risk and client expectations.

The  joint retainer agreement must clearly spell out what happens when conflicts arise after the fact and how client confidentiality will be maintained . Law firms may want to try and retain their key clients for whom the firm has acted for years in all matters over others that retained the firm for a limited purpose on a specific matter. How does the joint retainer address the competing values: the client expectation of undivided loyalty from its lawyer and the freedom to be represented by a competent lawyer of one’s choice?

In the leading criminal case of R. v. Neil the Supreme Court of Canada concluded “a bright line is required” and explained the principle as follows : “The bright line is provided by the general rule that a lawyer may not represent one client whose interests are directly adverse to the immediate interests of another current client-even if the two mandates are unrelated-unless both clients consent after full disclosure (and preferably independent legal advice) and the lawyer reasonably believes that he or she is able to represent each client without adversely affecting the other. “But the Supreme Court did not render an absolute prohibition against law firms acting adversely to the interests of other clients. Clients acting upon informed consent may waive conflicts of interest (and there have been several cases since, including CNR v.McKercher LLP. , which have added to our understanding of the limited exceptions to this rule). It is feasible (albeit far from ideal) with the informed consent of the clients for two lawyers in the same firm to represent parties opposed in interest.

Joint retainer agreements will typically spell out that in the event of a conflict, the law firm may decline to continue to represent one or all of the clients. It might specify that, in the event of a conflict, the law firm retains the right to still act for its “continuing client” (the key client of the firm). But if ethical concerns arise, the law firm is required to withdraw acting for all clients in the same matter.

Lawyers are governed in all provinces by conflict of interest rules and guidelines promulgated by their law societies or the Canadian Bar Association. Significant emphasis is also placed on the duty of client confidentiality and the duty of client loyalty.  The joint retainer will deal with confidential information acquired during the course of the litigation. The retainer typically will emphasize undivided client loyalty such that no information can be treated as confidential as between joint clients.  Joint retainer agreements are alive to the issues of client conflicts, confidentiality and client loyalty. But the retainer agreement is a contract and so there are many variations used by firms depending on the circumstances. There are far too many complexities and variables to engage in a comprehensive review of retainer agreements in this short article.

From the client’s perspective, here are the key points to take away:

1. Understand the business risks as well as the potential benefits of the joint retainer arrangement. At times the joint retainer is the only cost effective method of recovery. But if your claim appears too small to warrant participating, don’t.
2. Get a second opinion, especially if you are uncertain about your working relationship with the other proposed joint clients.
3. Don’t join in just because other reputable clients have jumped on board. Do your own due diligence.
4. Get independent legal advice to explain the terms & conditions of the joint retainer agreement (as distinct from a legal opinion about the merits of your case).
5. Make sure you have an exit strategy you can live with (termination terms of the joint retainer).
6. If you are a small stakeholder don’t be surprised if the major stakeholders want a bigger voice at the table. The joint retainer may specify just that.
7. Understand who is responsible to pay the law firm (likely all the clients with few exceptions) and how those fees & expenses are allocated as between clients.
8. You are not off to a good start if you don’t have confidence and trust in the lawyer representing you.

Eric Appotive

This article was first published in the Ottawa Construction Association’s Construction Comment magazine.