O. Reg. 563/20: CONTINGENCY FEE AGREEMENTS
under Solicitors Act, R.S.O. 1990, c. S.15
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CONTINGENCY FEE AGREEMENTS
Consolidation Period: From January 1, 2022 to the e-Laws currency date.
Last amendment: 836/21.
Legislative History: 676/21; 836/21.
This is the English version of a bilingual regulation.
Contingency fee not to exceed award or settlement
1. A solicitor for a client who is a claimant shall not recover more in fees under a contingency fee agreement than the amount recovered by the client under an award or settlement from the party or parties against whom the claim was made, including any costs but excluding disbursements and taxes.
Certain disbursements to be excluded
2. A contingency fee agreement that provides that the fee is determined as a percentage of the amount recovered by the client under an award or settlement shall exclude any amount that is specified as being in respect of disbursements that a court allows or would allow as recoverable from an adverse party.
Money to be held in trust
3. A client who is a party to a contingency fee agreement shall direct that the amount of funds claimed by the solicitor for legal fees, costs, taxes and disbursements be paid to the solicitor in trust from any award or settlement.
Disbursements and taxes
4. (1) If the client is responsible for the payment of disbursements or taxes under a contingency fee agreement, a solicitor who has paid disbursements or taxes during the course of the matter in respect of which services were provided shall be reimbursed for the disbursements or taxes on any amount recovered by the client under an award or settlement of the matter. O. Reg. 563/20, s. 4 (1).
(2) Except as provided under section 13 of the Legal Aid Services Act, 2020, the amount to be reimbursed to the solicitor under subsection (1) is a first charge on the amount recovered under the award or settlement. O. Reg. 563/20, s. 4 (2); O. Reg. 676/21, s. 1.
Timing of assessment of contingency fee agreement
5. For the purposes of clause 28.1 (11) (b) of the Act, the client or the solicitor may apply to the Superior Court of Justice for an assessment of the solicitor’s bill rendered in respect of a contingency fee agreement to which subsection 28.1 (6) of the Act applies within six months after its delivery.
Person under disability
6. A solicitor for a person under disability, as defined in the Rules of Civil Procedure, who is represented by a litigation guardian with whom the solicitor is entering into a contingency fee agreement shall,
(a) apply to a judge for approval of the agreement before the agreement is finalized; or
(b) include the agreement as part of the motion or application for approval of a settlement or a consent judgment under rule 7.08 of the Rules of Civil Procedure.
Agreement form, terms
7. (1) A contingency fee agreement for legal services to be provided wholly or partly in exchange for a percentage or proportion of the amount or the value of the property recovered under an award or settlement shall be in the form titled “Standard Form Contingency Fee Agreement”, dated November 18, 2021, and published by and available on the website of the Law Society of Ontario. O. Reg. 836/21, s. 1.
(2) In the case of a contingency fee agreement to which subsection (1) does not apply, the solicitor shall ensure that the agreement includes the following:
1. A statement that sets out the method by which the fee is to be determined.
2. A statement that a solicitor for a client who is a claimant shall not recover more in fees under a contingency fee agreement than the amount recovered by the client under an award or settlement from the party or parties against whom the claim was made, including any costs but excluding disbursements and taxes.
3. A statement in respect of disbursements and taxes, including the HST payable on the solicitor’s fees, that indicates that if the client is responsible for the payment of disbursements or taxes and the solicitor pays the disbursements or taxes during the course of the matter, the solicitor is entitled to be reimbursed for those payments, subject to section 13 of the Legal Aid Services Act, 2020, as a first charge on any amount recovered under an award or settlement of the matter.
4. A statement that explains costs and the awarding of costs and that indicates that a client is responsible for paying any costs contribution or award, on a partial indemnity or substantial indemnity basis, if the client is the party liable to pay costs.
5. A statement that informs the client of the client’s right to ask the Superior Court of Justice to assess and approve of the solicitor’s bill, and that includes the applicable timelines for asking for the assessment set out under section 5 or clause 28.1 (11) (a) of the Act, as the case may be.
6. If the client is a party under disability, as defined in the Rules of Civil Procedure, who is represented by a litigation guardian, a statement that the contingency fee agreement either must be approved by a judge before the agreement is finalized or must be reviewed as part of the motion or application for approval of a settlement or a consent judgment under rule 7.08 of the Rules of Civil Procedure.
7. A statement that outlines when and how the client or the solicitor may terminate the contingency fee agreement, the consequences of the termination for each of them and the manner in which the solicitor’s fee is to be determined in the event that the agreement is terminated.
8. A statement that informs the client that the client retains the right to make all critical decisions regarding the conduct of the matter. O. Reg. 836/21, s. 1.
(3) Subsections (1) and (2) do not apply if,
(a) either the client or any person or entity responsible for the payment of the client’s legal fees in the matter that is the subject of the agreement is an organization that, together with any affiliates, members of the same joint venture or any other related persons or entities,
(i) employs more than 25 individuals,
(ii) employs a lawyer on a full-time basis, or
(iii) has assets or gross annual revenues that exceed $10 million; or
(b) a court has approved the agreement or the contingency fee set out in the agreement. O. Reg. 836/21, s. 1.
Impermissible terms
8. A solicitor shall not include in a contingency fee agreement a provision that,
(a) requires the solicitor’s consent before a claim may be abandoned, discontinued or settled at the instructions of the client;
(b) prevents the client from terminating the contingency fee agreement with the solicitor or changing solicitors; or
(c) permits the solicitor to split their fee with any other person, except as provided by the Rules of Professional Conduct of the Law Society of Ontario.
Application to other licensees
9. (1) For the purposes of section 32.1 of the Act, this Regulation applies, with necessary modifications, with respect to contingency fee agreements between clients and persons licensed under the Law Society Act to provide legal services in Ontario.
(2) For the purposes of subsection (1), the reference in clause 8 (c) to the Rules of Professional Conduct shall be read as a reference to the Paralegal Rules of Conduct of the Law Society of Ontario applicable to persons licensed under the Law Society Act to provide legal services in Ontario.
10. Omitted (revokes other Regulations).
11. Omitted (provides for coming into force of provisions of this Regulation).