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A Toronto litigation firm has launched a $200-million class-action lawsuit against Dye & Durham Ltd. DND-T for allegedly violating federal competition laws by misleading customers about a price freeze the company promised last year.

The lawsuit, filed by Charney Lawyers, argues that D&D, a legal-technology provider, “reneged” on a promise by increasing the transaction fee on its Unity conveyancing software a year after telling clients that the price would not increase for three years.

The action, which seeks $200-million in damages, was filed on behalf of all Unity customers who used the software at the time of the first price hike in January, 2021, and continued to use it afterward.

Class-action suit looms as Dye & Durham fee hikes anger lawyers

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Last January, D&D raised the conveyancing fee to buy, sell or refinance the mortgage on a property by 400 per cent, to $129 from $25 per transaction in Ontario, after acquiring DoProcess LP, Canada’s largest provider of real estate practice-management software, from Teranet Inc. in late 2020 for $530-million. D&D told clients at the time that they will “receive a minimum three-year price guarantee” on the transaction fee.

D&D clients in Ontario learned Monday, a year after the guarantee, that their transaction fee would rise again next week, to as high as $249, amounting to a 900-per-cent increase since D&D acquired DoProcess. That transaction fee is the most expensive of three packages clients will have to choose from to continue using D&D’s Unity software after Jan. 31. The transaction fee is passed on to home buyers as a disbursement charge.

“It was reckless and contrary to justice for the defendants to make the promise or to fail to disclose their intention to break it,” the lawsuit said. “The defendants’ representation was intended to – and did in fact – lull [its clients] into a false sense of security when they elected to continue with Unity.”

The lawsuit also argues that the one-week notice about the price changes made it “impossible for lawyers to transition to other software options in time to close transactions.”

The plaintiffs argue that D&D breached federal competition law which prohibits companies from making a materially “false or misleading” claim to promote a product.

D&D chief commercial officer John Robinson said the company will defend itself against the lawsuit.

“We believe Unity is the most advanced real estate conveyancing software in the world. Over the past year, we have invested hundreds of millions of dollars to innovate and improve it. ... We believe it’s only fair that users pay a fair price for a premium product,” he said.

“We, along with thousands of law firms across the country, stand behind Unity, which securely facilitates the most important transaction in most Canadians’ lives.”

On Tuesday, before the lawsuit was filed, Mr. Robinson said current Unity customers “are not under contract and have always had the option to switch to another software provider at any time,” he said.

Real estate lawyers say there are high barriers to switch to another conveyancing platform, which is the hub of their practices. Nonetheless, some fed-up legal practitioners have switched to other providers such as Toronto’s LawyerDoneDeal Corp.

Other upstarts are coming to market. Next week, for example, a Unity competitor called Closer is set to launch. Simon Graham, the co-founder of LawLabs, the London, Ont.-based company developing Closer, told The Globe on Wednesday that they have received “a flood of inquiries from lawyers and clerks who are frustrated with the current applications in the market.”

Toronto-based lawyer Olena Chepil started building Quintalink, an alternative to Unity, after the price hike last year. She told The Globe that she had planned to launch in June, but is now trying to accelerate the launch date after the D&D price increase, which she said drove an influx of interest in her product.

Multiple lawyers told The Globe and Mail that the newest Unity price hike will make their total disbursement charges higher than their actual legal fees, frustrating clients and further eroding home affordability.

“I’ve had clients come in, and every dollar counts,” said Tyler Banham, president of Hometown Law in Hamilton. Mr. Banham said he is leaving Unity and considering other options such as Closer. “It comes down to affordability for home buyers, and this is getting more and more expensive,”

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