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Dr. Mr. Jacobus,

Thanks for contacting us with your question about whether there is a maximum allowable percentage in contingency fees. My apologies for the slow response, I hope this answer is helpful nonetheless.

Subsections 28.1(5) and (6) of the Solicitors Act (Ontario) state:

Maximum amount of contingency fee

(5) If a contingency fee agreement involves a percentage of the amount or of the value of the property recovered in an action or proceeding, the amount to be paid to the solicitor shall not be more than the maximum percentage, if any, prescribed by regulation of the amount or of the value of the property recovered in the action or proceeding, how ever the amount or property is recovered. 2002, c.24, Sched. A, s. 4.

Greater maximum amount where approved

6) Despite subsection (5), a solicitor may enter into a contingency fee agreement where the amount paid to the solicitor is more than the maximum percentage prescribed by regulation of the amount or of the value of the property recovered in the action or proceeding, if, upon joint application of the solicitor and his or her client whose application is to be brought within 90 days after the agreement is executed, the agreement is approved by the Superior Court of Justice. 2002, c. 24, Sched. A, s. 4.

Regulations

(12) The Lieutenant Governor in Council may make regulations governing contingency fee agreements, including regulations,

(a) governing the maximum percentage of the amount or of the value of the property recovered that may be a contingency fee, including but not limited to,

(i) setting a scale for the maximum percentage that may be charged for a contingency fee based on factors such as the value of the recovery and the amount of time spent by the solicitor, and

(ii) differentiating the maximum percentage that may be charged for a contingency fee based on factors such as the type of cause of action and the court in which the action is to be heard and distinguishing between causes of actions of the same type;

(b) governing the maximum amount of remuneration that may be paid to a solicitor pursuant to a contingency fee agreement;

(c) in respect of treatment of costs awarded or obtained where there is a contingency fee agreement;

(d) prescribing standards and requirements for contingency fee agreements, including the form of the agreements and terms that must be included in contingency fee agreements and prohibiting terms from being included in contingency fee agreements;

(e) imposing duties on solicitors who enter into contingency fee agreements;

(f) prescribing the time in which a solicitor or client may apply for an assessment under clause (11) (b);

(g) exempting persons, actions or proceedings or classes of persons, actions or proceedings from this section, a regulation made under this section or any provision in a regulation. 2002, c. 24, Sched. A, s. 4.

However, there is no specific prescription by regulation of the maximum amount, except perhaps for the following excerpt from Regulation 195/04:

Contingency fee not to exceed damages

7. Despite any terms in a contingency fee agreement, a solicitor for a plaintiff shall not recover more in fees under the agreement than the plaintiff recovers as damages or receives by way of settlement. O. Reg. 195/04, s.7.

My reading of section 7 is that the legal fee portion payable to the lawyer under a contingency fee agreement cannot exceed 50% of total recovery. In theory, legal fees plus disbursements plus GST might exceed 50% of total recovery.

Again, I hope this helps, and thanks for listening to the Podcast

Regards,
Sean Graham