Contingency Fees in Estate Litigation - Part IV
Today I finish my discussion of the Regulations governing contingency fees agreements between lawyer and client in the Province of Ontario. All section references are to Regulation 195/04 to Ontario’s Solicitors Act.
Section (3) of the regulations require the lawyer to ensure that a contingency agreement includes the following, in addition to the requirements discussed in yesterday’s blog:
1. If the client is a plaintiff, a statement that the lawyer cannot recover more in fees than the client recovers as damages or receives under a settlement;
2. A statement about disbursements and taxes including GST payable on the solicitor’s fees indicating whether the client has to pay disbursements and taxes. If the client is to pay, a general description of disbursements likely to be incurred, and that if the lawyer pays them during the matter, the solicitor is entitled to be reimbursed out of a judgment or settlement of the matter;
3. A statement explaining costs and the awarding of costs in litigation. This statement must indicate that the client is entitled to receive any costs contribution or award unless the agreement states otherwise, and that the client is responsible for paying any costs contribution award if the client is found liable to pay costs;
4. If the client is a plaintiff, a statement that indicates that the client agrees and directs all monies claimed by the lawyer for legal fees, costs, taxes and disbursements shall be paid to the lawyer in trust from a judgment or settlement money;
5. If the client has a disability, then there must be a statement by the litigation guardian that the contingency fee agreement must be reviewed by a judge before being finalized, a statement that the amount of legal fees, costs, taxes and disbursements are subject to the approval of a judge, and a statement that any money payable to a person under a disability under an order or settlement shall be paid into court unless a Judge orders otherwise.
Section 5 of the regulations deals with contingency fee agreements involving persons under disability. If a lawyer is acting for someone under disability represented by litigation guardian with whom that lawyer is entering into a contingency fee agreement, the lawyer must apply to a Judge for approval of the agreement before it is finalized or include the agreement as part of the motion or application for approval of settlement of consent judgment
The detail to which the Regulations require lawyers to deal with specified matters when preparing drafting contingency agreements reflects an underlying discomfort with contingency arrangements, and perhaps even a lack of trust in the legal profession to fully explain the arrangements in the absence of these requirements. While many of the requirements are time-honoured issues that have been covered in traditional retainer agreements all along, nonetheless the enshrining of such issues in legislation in such detail is novel. Lawyers who want their agreements with clients to be enforceable in case of tremendous success will do well to have a clear agreement, bolstered where necessary by explanatory letters sent prior to the entry into the agreement or immediately after any questions by the client at any point during the retainer.
Thanks for reading.
Sean Graham
