What is a Contingency Fee?
The word “contingent” means dependent or conditional. A “contingency fee” is a a legal fee that you pay if you receive money for winning a case or from a settlement. If you lose, you do not pay legal fees, although you may have to pay for other legal expenses such as disbursements. For a contingency fee, you will usually be charge a percentage of the money you receive, plus HST. Contingency fees in have been allowed in Ontario since 2004 but have recently undergone an overhaul.
What is the current law in Ontario regarding contingency fees?
In Ontario, both lawyers and paralegals can accept contingency fees in certain matters. Contingency fees are not allowed for criminal law and family law matters, pursuant to section 28.1(3) of the Solicitors Act.
New changes July 1, 20201
A new contingency fee regime came into force on July 1, 2021 when changes to the Solicitors Act came into effect as well as a new regulation, O. Reg. 563/20. Along with these changes, there were also amendments to the Rules of Professional Conduct for lawyers and also changes to the rules and guidelines for paralegals. The purpose of these changes is to increase transparency and fairness for clients. The changes apply to contingency fee agreements entered into on or after July 1, 2021.
New Standard Form Agreement
Generally, lawyers and paralegals must use the new Standard Form agreement and in all cases, certain standard provisions must be included in the contingency fee agreement. Lawyers must also disclose the maximum contingency fee percentage charged, provide clients with the Law Society’s Guide on Contingency Fees before they sign, and provide certain fee-related reporting at the end of the matter. Finally, lawyers should not recover more in fees than the client receives.
Helpful Links:
Ontario Legislation covering Contingency Fees: Solicitors Act, R.S.O. 1990, c. S.15 (ontario.ca)
Ontario Regulation on Contingency Fees: O. Reg. 563/20: CONTINGENCY FEE AGREEMENTS (ontario.ca)
Law Society of Ontario Contingency Fee Guide: Contingency fees: What you need to know (azureedge.net)
Law Society of Ontario, Contingency Fees and Standard Form Contingency Fee Agreement: