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Contingency Fee Reforms

On July 1, 2021, the following amendments to the lawyer and paralegal conduct rules come into effect:

  • requirement to disclose the maximum contingency fee percentage charged in certain circumstances
  • requirement to provide potential clients with the standard form consumer guide entitled Contingency Fees: What you need to know
  • requirement to provide certain fee-related reporting to clients on completion of the agreement.


On July 1, 2021 amendments to the Solicitors Act and new regulation O. Reg. 563/20 also come into force.

The amendments to the Act:

  • repeal subsection 28.1(8), which prohibits the inclusion of costs in the amount on which a contingency fee calculation is based
  • extend the provisions on contingency fee agreements in the Solicitors Act and its regulation to paralegals (through new section 32.1).


New regulation, O. Reg. 563/20, requires use of a new standard form Contingency Fee Agreement , incorporated by reference into the regulation.

Key elements of the new standard form agreement are:

  • Costs included in the amount on which the contingency fee is based
  • Provisions on what can and cannot be charged to a client as disbursements
  • Plain-language to ensure that the agreement is easily understood by clients and licensees alike.


Use of the standard form Contingency Fee Agreement is required for most retainers where  a court has not approved the Contingency Fee Agreement or the ultimate contingency fee.

Supports and Resources for Lawyers and Paralegals

The Law Society has developed the following resources  to support lawyers and paralegals with understanding and implementing the new requirements:


Lawyers and paralegals with questions about the new requirements may also wish to contact the Law Society’s Practice Management Helpline at 416-947-3315 or toll free 1-800-668-7380 extension 3315 and select the option to connect with the Helpline. 

The Law Society will continue to provide updates and information on the reforms to licensees through this page and other Law Society communication channels.

Background

In 2017, Convocation approved a set of reforms to the contingency fee regime to enhance consumer protection, improve transparency and fairness for clients, and facilitate access to justiceAmendments to the Solicitors Act and regulations, as well amendments to the Law Society’s rules of conduct were required to fully implement the reforms.

In early 2018, Convocation adopted additional, related regulatory measures and held a call for comment on proposed rule amendments, a mandatory standard form contingency fee agreement and a ‘Know Your Rights’ guide (consumer guide) for clients.

The contingency fee reforms were recommended by the Advertising and Fee Arrangements Issues Working Group, which was formed in February 2016 to consider regulatory responses to issues related to advertising, referral, contingency and other fee practices. The working group held three calls for comment regarding contingency fees (see documents below). 

On October 22, 2020, Convocation approved amendments to the lawyer and paralegal conduct rules to implement certain transparency requirements, previously approved in principle by Convocation. 

Related documents

Report to Convocation – October 2020 – Rule amendments
Report to Convocation – October 2020 – Paralegal Professional Conduct Guideline amendments

Terms or Concepts Explained