From time to time I attend at Small Claims Court. Almost always I am there defending a client. I am there for a plaintiff client only very rarely. Why is that? Because it doesn’t make sense for me to be there in most instances. It doesn’t make sense in a couple of ways.
The first way is economics. The current maximum dollar limit for the Ontario Small Claims Court is $10,000. By far, most claims are worth much less than $10,000. Even if the plaintiff asks for $10,000, the amount ultimately awarded is less than that. However, if one assumes that the amount at stake is $10,000, it can cost half of that for a lawyer to attend. I recently defended a bank in a small claims matter and the other side hired another lawyer to only attend the trial. The other lawyer was literally retained the night before the trial and showed up and learned the basic information from the client that morning. As I later learned in discussions with the other side (who had since fired the lawyer), that lawyer charged the client $5,000 for the one-day trial. I’m not going to get into the question of whether the other lawyer’s fee (which came to approximately $425 per hour) was reasonable for a small claims trial because if the client did not think it reasonable, the client would not have agreed to pay that fee. But the amount at stake was $10,000. The lawyer’s fee for the trial alone (it would have been more if the lawyer had been involved from the very beginning) counted for half of the value of the claim. Say you are a defendant facing a $10,000 claim. If you are going to have to pay $5,000 or more to your lawyer and the chances that you will get back more than $1,000 of that (if you win!) are slim, doesn’t it make better economic sense to offer the other side $4,000 (which you would have been spending anyways) and see if a settlement can be reached? Either way, the economic reality of these claims is that it is often not worthwhile engaging a lawyer to represent you all the way through the matter. I often agree to draft the claim or defence for the client for a fixed fee, leave them to deal with the lawsuit and try to settle it at the settlement conference on their own, and then if they really need me for the trial either they can retain me to provide consulting or advice on how to do the trial or else I will represent them at the trial.
The second reason why it often makes little sense for me to be there is a question of tactical advantage. More realistically, tactical disadvantage. I am a member of the bar. I am also an officer of the court. As such, I am held to certain professional and ethical levels for which non-lawyers are not similarly held. What does this mean? Well, there are rules for the Small Claims Court. All parties are required to follow these rules. However, if I do not follow the rules the court will call me (and thus my client) onto the carpet. I cannot plead ignorance of the rules and ask for a special dispensation. Individuals who are representing themselves in Small Claims Court, however, do this all the time and get away with it. Am I bitter about this? A bit, but it’s just the reality of the situation. Sometimes, then, it may make more tactical sense to not have a lawyer. When is that? Well, for example, where the dispute is more about who should be believed, or if the judge’s sympathies might come into play (they are human too, after all), as opposed to a dispute over the proper interpretation of a contractual term.
So, the next time you have a fight with a customer and want to sue and the amount at issue is $10,000 or less, you should give some serious consideration to whether it is worth your while proceeding with a lawyer. I’m sure my accountant and banker aren’t happy if they are reading this post, but I’d rather have a client come to me after having considered the pros and cons of retaining my services than have a client come and say “go get ‘em” and then question why my fees ate up a significant chunk of the winnings.