An accident victim from Vancouver Island has filed a formal complaint against her lawyer after legal fees and related expenses took more than half of her $250,000 insurance settlement.

"He never let me believe once that I would be walking out of there with nothing," said Kyli Murphy of Comox, B.C.

Her final bill included $30,827 in interest — at a 24 per cent annual rate — charged for a loan arranged by the lawyer's office to cover Murphy's living expenses while she recovered from her injuries and took job retraining.

"I'd actually never heard of that high of interest on anything," she said.

"I don't understand. I understand where the money I spent went — I know that. Where's the rest of it? I don't understand that."

Money all gone

When the case was settled this spring, lawyer Al McGarvey of Comox told her there was no money left after covering legal bills, other expenses and living costs over several years.

Murphy was 21 and employed full-time as a retail sales assistant when she was seriously injured as a passenger in a one-vehicle accident in December of 2005. A male friend was driving.

She spent several weeks in hospital and then went through months of rehabilitation before doctors said she could work again.

"I was hoping [the settlement] would give me a platform to build a life from," she said tearfully. "Instead I've got nothing."

McGarvey declined to comment about the case.

"I am of the view that it would be unprofessional for me to publicly comment upon this matter at this time," he wrote in a letter to CBC News.

Complaint investigation

Murphy's complaint against McGarvey has been filed with the Law Society of B.C., which confirmed it is investigating.

Records show McGarvey took Murphy's case just days after the accident as she was lying in hospital with several broken bones.

Kyli Murphy and her three-year-old son now live on social assistance. (CBC)

"When he came to see me in the hospital and the contract was brought in he looked like a big professional. I've never met him before," said Murphy. "I guess my fault was just for trusting him so much."

She said McGarvey told her his fee would be 30 per cent of whatever insurance payout she received. He later told her in writing that he hoped to get $350,000 in a settlement with the Insurance Corporation of B.C.

Based on that, Murphy calculated she would net $245,000 — 70 per cent — after the lawyer's bill was paid.

Instead, Murphy claims McGarvey later pressured her to settle when she didn't want to, for $100,000 less than she expected.

McGarvey's final accounting — which lists everything paid by his office — includes $136,000 for legal fees, expenses, research and interest. That alone is more than half the quarter-million-dollar final settlement amount.

Thousands for photocopies, faxing

The expenses include $5,683 for photocopying — which would pay for almost 60,000 pages at 10 cents each — and $1,734 for faxes. All billed to an insurance claim on a one-vehicle accident.

"I didn't know I would get charged for his office supplies, or his research, or anything like that," Murphy said. "I was never told I would pay for all of that stuff."

The rest of the insurance payout went to Murphy's medical and living expenses, incurred before the case was settled.

Included in that is $20,000 worth of counselling — including sessions listed on dates when Murphy was living out of the province and said she was in fact not getting counselling. Several invoice numbers also appear to be duplicates.

McGarvey's office had also advanced her a living allowance against her future settlement. Her case dragged on for 4½ years and the bill for her advances mounted. On average, she was advanced $2,200 per month over that period.

In the meantime, Murphy gave birth to a son and took upgrading courses, a decision she said her lawyer supported.

"He became like my biggest support group," Murphy said. "By the end of it, he was telling me not to speak to anyone in my family — not even my grandpa — and I believed him."

After several months, Murphy said McGarvey told her he couldn't afford to advance her any more money, so he arranged a loan from a "litigation funding" firm in Waterloo, Ont.

High-interest loan

Lexfund lends money to litigants against future settlements. According to its website, clients "owe nothing if the case is lost." In Murphy's case, Lexfund charged 24 per cent interest on a $70,000 loan.

Murphy was 21 when she was seriously injured in a car accident. (CBC)

Records show that McGarvey didn't give those funds directly to Murphy. Instead, he used them to pay off the debt he had incurred paying her living expenses up to that point.

His office then resumed paying her what he called the "modest" bi-weekly allowance.

The Law Society of B.C. says it is improper for lawyers to lend money to clients when it gives them a vested interest in the case.

"Our code of professional conduct makes quite clear that a lawyer should not take a personal interest in a client's matter if, by doing so, their judgment might be impaired," said Stuart Cameron, the Law Society's director of investigations.

"In a situation where the lawyer would be loaning a significant amount of money to a client, that's worrisome," he said.

"It's something we'd investigate very thoroughly. And we'd want a very satisfactory explanation — satisfactory to us and ultimately satisfactory to the client."

Potential conflict

Critics like Adam Dodek, a law professor at the University of Ottawa, believe lawyers should never be allowed to lend money to clients, under any circumstance.

"If the client owes the lawyer money, the client might feel beholden to the lawyer and that might restrict their ability to call the shots in a lawsuit," said Dodek.

Personal injury lawyer Al McGarvey declined to comment on the Murphy case. (CBC)"People should never feel the only way they will get some funding for their expenses is to go to a lawyer and file a lawsuit. If … the lawyer is essentially their banker or their payday lender, then that's a real problem."

In most states, U.S. lawyers are strictly prohibited from lending money to clients because of the potential for conflict of interest. In Alberta, two lawyers have been disciplined for doing so in the last few years.

One was suspended and the other was fined and reprimanded.

"I'd like to see something even more explicit — like the Americans have — that … this is something that lawyers must not do and cannot do," said Dodek.

The Law Society promises a thorough investigation of the Murphy case.

Now on welfare

"You have to account for every nickel," Cameron said. "Whether it went to the client, whether it went to you for fees, or whether it went to a third party for disbursements, it all has to add up. And if it doesn't add up, then we're going to want to know why."

Murphy is now on welfare and said she will be scrambling to find a decent job.

"When it was all over, it was like, 'See you later, Kyli. Good luck.' Not even good luck. 'Go see welfare.' It's hard. I wasn't on welfare before the accident," she said.

Stuart Cameron of the Law Society of B.C. confirmed McGarvey's handling of the case is under investigation. (CBC)

The bottom line, Murphy said, is if her lawyer hadn't covered her expenses, she would have arranged a job months ago and she and her son would be much better off now.

"I wish he had said, 'You know I can only help you out with maybe $2,000, but the rest you've got to figure out on your own' because then I would have gone out and done that."