Employment law firm loses $200k fight with ex-partner
A management-side employment and labour law boutique lost out in its dispute with a former partner after a judge ruled she had validly retired from the firm.
Brampton, Ont.’s Crawford Chondon & Partners LLP sought to enforce the $200,000 liquidated damages clause in its partnership agreement after Karen Fields departed the firm at the end of 2018 to take a role leading the legal department at the City of Sault Ste. Marie.
But Justice William LeMay granted summary judgment dismissing the law firm’s claim after concluding that Fields’ withdrawal from the partnership accorded with the retirement clause in the agreement, while her new work as City Solicitor with Sault Ste. Marie was different enough to avoid triggering liquidated damages under the contract.
“As a result, the liquidated damages provision, and the other provisions of Article 21(f) do not apply to Ms. Fields,” the judge wrote.
According to the ruling, Fields joined Crawford Chondon as a partner in 2004 after moving from another management-side firm, and practised labour law, with a specialism in prosecutions under the Occupational Health and Safety Act and other similar regulatory actions.
At the time of her arrival, the firm’s liquidated damages clause was worth $100,000. However, the decision says the value of the provision rose to $200,000 in 2014, several years after the departure of another partner – Laura Williams – who left with clients and files to start her own firm.
Justice LeMay’s ruling says Fields – who grew up in northern Ontario and whose partner is from Sault Ste. Marie – applied for the city solicitor position in the summer of 2018 and interviewed without advising her firm of her interest.
After receiving a conditional offer, Fields wrote to her partners in mid-November of that year to inform them that she would be departing within weeks, on Dec. 31.
Although the ruling says the firm did not lose any work directly as a result of Fields’ departure, Crawford Chondon claimed to have missed out on more than $30,000 in fees during Fields’ transition because it was forced to refer out matters already booked for hearings after her withdrawal date.
However, Justice LeMay wrote that the recoverability of those alleged losses was moot given his interpretation of the partnership agreement.
In his decision, the judge found that Fields met the requirements for retirement under the contract, which provides for withdrawal of a partner at the end of any year after they turn 55.
Exceptions were carved out of the retirement clause for partners who joined a competing firm or opened a competing firm, neither of which applied to Fields.
Under the agreement, retiring partners also needed to assist with the transition of clients to other firm members and have “no intention of continuing to provide any similar services, legal or otherwise” for at least two years.
“I find that the City Solicitor’s position is not ‘similar services,’ Justice LeMay concluded, rejecting the law firm’s contention that any position Fields took involving legal services would fall under that umbrella:
“This interpretation would lead to an absurdity. As counsel for Ms. Fields points out in their factum, the interpretation offered by Crawford Chondon would mean that Ms. Fields would be required to pay the full amount under the liquidated damages clause if she went to work as a law clerk in Vancouver. To further illustrate the absurdity, it would also apply if Ms. Fields decided that she wanted to be a real estate law clerk in Vancouver or work in a legal clinic providing landlord and tenant services to low income families anywhere, including in Brampton,” the judge added.
In his decision, Justice LeMay also denied Fields’ $10,000 claim for her December 2018 draw from the partnership, finding she had already hit the minimum level guaranteed for the year.
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