CONTINGENCY FEES IN ESTATE LITIGATION - PART II

Posted on November 14, 2006 by Hull and Hull LLP
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Ontario’s Solicitors Act, R.S.O. 1990, c.S.15 (the “Act”) now broadly allows, in section 28.1(1) for the possibility of contingency fee arrangements between lawyers and clients, meaning that lawyers agree to be paid a percentage of the amounts recovered in a lawsuit. If nothing is recovered, the lawyer is paid nothing on account of legal fees.

However, not all types of cases can are amenable to contingency arrangements. For some types of proceedings, contingency fees are still not allowed, such as proceedings under the Criminal Code or any other criminal or quasi criminal proceeding, or family law matters. One obvious reason for contingency fees not being allowed in these cases is that it is extremely difficult to measure success in economic terms with respect to criminal or quasi criminal proceedings. With respect to family law, many entitlement are determined primarily by recourse to statute based on financial calculations. There is also likely a perception that family law proceedings, and the lawyers acting for clients in them, should not be motivated by the desire to obtain as high a contingency fee as possible. Measuring the benefit of securing custody of children is virtually impossible, not to mention fundamentally distasteful.

If contingency fee arrangements are to be enforceable, they must be in writing according to section 28.1(4) of the Act. Contingency fees cannot exceed a specified maximum percentage determined by regulation of the value of property recovered, although such a maximum percentage is not yet specifically set out.

Subsection 28.1(8) states that a contingency fee agreement shall not include in the fee payable to solicitors, in addition to the fee payable under the agreement, any amount arising as a result of an award of costs or costs obtained as part of a settlement, unless, the solicitor and client jointly apply to a Judge of the Superior Court of Justice for approval to include the costs or a proportion of costs because of exceptional circumstances, and the Judge is satisfied that exceptional circumstances apply and approves the inclusion of the costs or a proportion of the them.

Subsection 28.1(12) states that there may be regulations made governing contingency fee agreements including regulations governing the maximum percentage of the amount of the value of property recovered, setting a scale for the maximum percentage that may be charged for contingency fees based on factor such as value of recovery and amount of time spent, and differentiating the maximum percentage that may be charged in a certain type of cause of action, in respect of treatment of costs awarded, imposing duties on solicitors who enter into contingency fee agreements and exempting and so on.

Regulations have in fact been passed and those regulations will be discussed in the next blog.

Thanks for reading.

Sean Graham

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