Sources Consulted and Legal Research Costs

There are some recent decisions of the Federal Court that acknowledge the necessity of using online legal research sources and seem positioned to allow law firms to charge reasonable disbursements for them. The basis for having computer research costs allowed appears to be the ability to justify both the amount claimed, how it is calculated and the relevance and necessity of the research performed.

The key to costs happiness will lie in how legal researchers keep track of their work. A researcher in a costs argument will have to explain that the disbursements for billed research on Westlaw or Quicklaw was both relevant and necessary to the file and reasonably calculated. Consider how handy it would be if your research output documented both the method and sources used and a notation about what the disbursement is for that particular piece of work. Documentation on how the disbursement is calculated in your organization should also be readily available.

Some snips from the Federal Court decisions help with the rational my advice:

Cameco Corporation v. “MCP Altona” (The Ship), 2013 FC 1263 (CanLII) (December 19, 2013)

[54] Counsel for Nordbank claims a total amount of $1,615.15 (Quicklaw: $1006.89 and Westlaw Carswell: $608.26) for electronic legal research. Considering the paucity of evidence submitted, it is not clear whether the amount claimed is linked to searches done with regard to the priorities issue. I generally have no issue allowing claims for on-line legal searches. However, their necessity and relevance to the issue need to be clearly justified. In the circumstances of the Motion on Priorities, although it was relatively complex and heavily disputed, I find that I am not provided with the necessary evidence to support a claim of $1,615.15. As in Janssen (previously cited) at paragraph 152, I find that parties should not have to spend a disproportionate sum of money to prove a disbursement. However, a minimum amount of information should be provided as to why these searches were proper and relevant to the matter at hand and I would add, why they could not have been done using free on-line services. Furthermore, I was not provided with any relevant information as to the manner in which Mr. McEwen’s law firm pay for on-line research, yet I am aware that many law firms the size of Alexander Holburn Beaudin & Lang, generally pay a monthly fee to take advantage of systems like Quicklaw and Westlaw Carswell. Further, I agree with Mr. Isaacs’ representations that performing legal research using tools like Quicklaw has now replaced the use of the law firm legal library. As stated in Truehope Nutritional Support Ltd v Canada 2013 FC 1153 (CanLII), 2013 FC 1153 [Truehope], there might still be circumstances when on-line legal research could be a justifiable claim but the requirement to prove relevancy and necessity will continue to exist. In the case at bar, I do not find that Nordbank provided the necessary evidence to justify the amount claimed, nor the justification linking the research done to its relevancy to the Priorities Motion. As in Truehope (previously cited), I find it difficult to assess the relevance and necessity of the claim in consideration of the paucity of evidence submitted. In consideration of the fact that no clear justification has been provided to substantiate the amount claimed and the fact that I regard legal computerized research, unless otherwise proven, as office overhead expense as it compares to the subscription services law firms library had to maintain in the past and which were also considered office overhead, the disbursements claimed for electronic legal research are not allowed.

Hoffman-La Roche Limited v. Apotex Inc., 2013 FC 1265 (CanLII) (December 18, 2013)

[60] Roche has claimed $1,288.86 for Quicklaw and Westlaw fees. The only evidence provided is the statement at paragraph 14 of the Affidavit of Erin McIntomny. Counsel did not provide a copy of a printout from the accounting system referred to by Ms. McIntomny.
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Similarly, given the lack of evidence provided by Roche, it is impossible to reach a determination concerning relevance or necessity of the on-line searches. Therefore the claim for Quicklaw and Westlaw fees is not allowed.

Truehope Nutritional Support Limited v. Canada (Attorney General), 2013 FC 1153 (CanLII), (November 13, 2013)

[124] From the case law submitted, there appears to be a trend toward limiting or eliminating allowances for on-line computer research. Although Courts have found circumstances when online research could be seen as part of overhead and not a necessary disbursement to be passed along on a party and party assessment, I find that there are still circumstances when it may be a justifiable claim. As was held in Aram Systems Ltd v Novatel Inc (supra), I consider disbursements for electronic legal research similar to disbursements for photocopying. However, in keeping with Janssen Inc v Teva (supra), I find that there is also a requirement to provide evidence that the research is relevant. Further, considering that the charges for on-line research can mount up, the justification for on-line charges claimed is essential.

[125] With this in mind, and considering the jurisprudence above, I find that, in order to determine whether on-line searches are reasonable and necessary, there is a need for the production of evidence concerning the relevance and necessity of the on-line searches claimed in the Bill of Costs. Further, given the Respondents’ evidence that they pay a flat-rate monthly fee, there is a need to provide evidence of how these charges were calculated for this specific matter while ensuring that the amounts claimed in the Bill of Costs are a reflection of the actual disbursements. In light of these requirements, it is important to note that, despite the need for proof, the cost of proving the expenditures for computer research should not exceed the amount claimed (see: Almecon Industries Ltd. v. Anchortek Ltd., [2003] F.C.J. No. 1649). Taking this into consideration, I find that, in the present assessment, the Respondents have not provided the evidence required to justify on-line computer searches.

[126] Concerning the relevance and necessity of the on-line searches claimed by the Respondents, I have reviewed the evidence provided in the Affidavit of Tabitha Potts and the cross-examination of Ms. Potts and find that there is no evidence concerning relevance. The Respondents have provided no evidence concerning what the searches relate to, whether they relate to the Judicial Review or a motion, or whether they relate to the Charter challenge or the striking of an affidavit. On cross-examination, Ms. Potts was not able to provide any assistance in determining which searches related to motions and which did not. As evidence of necessity, the Respondents have submitted that 20 volumes of their Application Record consisted of authorities. However, there is no evidence concerning the cost of researching those specific authorities and there is no evidence suggesting which of the on-line searches related to those authorities. It is left to the Assessment Officer to reach a conclusion concerning the relevance and necessity of the searches based on the dates of the searches. This is an impossible task. Without evidence relating to the subject matter being researched, it is impossible to reach a determination concerning the relevance and necessity of individual searches. Therefore, it is impossible to make a finding of relevance and necessity concerning on-line searches based on nothing more than the volume of authorities filed.

[127] Concerning the flat-rate fees paid by the Respondents for Quicklaw services, I have reviewed the evidence provided in the Affidavit of Tabitha Potts and the cross-examination of Ms. Potts and find that Ms. Potts was unable to provide any information concerning the specifics of the fees. Although the Respondents have presented some evidence suggesting that the flat-rate fees were pro-rated, there is no evidence concerning how this was done. Further, the evidence of the Applicants suggests that the flat-rate fee for a sole practitioner could be as low as $180.00 per month. Considering this, the pro-rated charges for on-line computer searches seem excessive given that there were two lawyers on record for the Respondents. As suggested by the Applicants, even if the Respondents have a flat fee for a group of lawyers, the amount claimed could be inflated due to inconsistent use by practitioners. Also, I have not been provided with any specific evidence concerning the nature of the Respondents’ flat-rate per month agreement with Lexis Nexis. Without this evidence, it is impossible to know whether the calculations suggested by the Respondents are appropriate or whether the on-line searches being claimed should constitute office overhead.

Legal vendors share their suggested pricing with subscribers. Some firms have electronic resource management software to help them capture billable research. Those that don’t have an ERM do have some other institutionalized method for calculating research disbursements. Good legal research practice is to keep track of the sources you have searched and what method you used. Adding some notes to enable future relevance analysis will go a long way to being able to justify legal research costs.

Why not keep track of what the disbursements will be with the sources consulted portion of each research memo?