Contingency Fees in Estate Litigation - Part III
Having addressed yesterday the treatment of contingency fees under Ontario’s Solicitors Act, we now turn to Regulation 195/04 to that Act, which addresses contingency fee requirements in greater detail. (Section number references are to those Regulations.)
Contingency Fee agreements must be in writing, must be entitled “Contingency Fee Retainer Agreement”, must be dated and must be signed by both lawyer and client with both signatures being verified by a witness. The lawyer must provide a signed copy of the contingency fee agreement to the client and must retain a copy as well. (Section 1)
Section 2 mandates certain inclusions in the written contingency fee agreements:
1. The name, address and telephone number of both solicitor and client;
2. A statement of the basic type and nature of the matter with respect to which the solicitor is providing services;
3. A statement that indicates that the client and solicitor have discussed options for retaining the solicitor other than by contingency fee, including hourly rate retainer, that the client has been advised that hourly rates may vary among lawyers, that the client is free to speak with other solicitors to compare rates, that the client has chosen to retain the lawyer by way of contingency fee agreement, and that the client understands all usual protections and controls on retainers between lawyer and client apply to the contingency fee agreement. This last protection ensures that clients know that if there is a breakdown in the relationship or a disagreement as to the contingency fee agreement and the value of services and the amount of payment to be made, the client can apply to the Court for an assessment of the contingency fee agreement;
4. The agreement must also state the contingency upon which the fee is to be paid to the solicitor, usually the recovery of an amount or interest in an asset;
5. A statement describing the method by which the fee is to be determined must be included and must state that costs are excluded from the calculation of the fee;
6. A simple statement must be included showing how the contingency fee is calculated;
7. A statement must be included outlining how the contingency fee is to be calculated if recovery is by way of structured settlement;
8. There must be a statement informing the client of the right to ask the Court to review and approve of the lawyer’s bill and must include the applicable timelines for asking for the review;
9. There must be a statement outlining when and how the client or the lawyer can terminate the contingency fee agreement and the consequences of the termination for each of them, and finally the manner in which the lawyer’s fee is to be determined if the agreement is terminated; and
10. There must be a statement that informs the client that the client can still make all critical decisions regarding the conduct of the matter.
These requirements are apparently intended to ensure that the client understand the agreement clearly before entering into a contingency arrangement. The extent to which the legistlation goes in ensuring full disclosure to clients reflects the possibilities for abuse of contingency agreements, particularly when dealing with clients with less experience dealing with lawyers.
The lawyer will be well-served by having the client sign a clear, plain English agreement after taking whatever time is needed to ensure that the client understands the merits and demerits of contingency arrangements, and the more those discussions are documented the better for enforcement purposes.
Tomorrow I will conclude this discussion of the Regulations and then on Friday I will offer some thoughts on the experience so far with contingency arrangements in Estate litigation.
Thanks for reading.
Sean Graham
