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Contingency Fees

Legislative and Regulatory Update:
Effective July 1, 2021, there will be changes to Ontario’s contingency fee regime. These changes will include:
  1. Legislative amendments to the Solicitors Act  
  2. Introduction of O. Reg. 563/20, governing the use of contingency fee agreements
  3. Amendments to the Law Society’s Rules of Professional Conduct, Paralegal Rules of Conduct, and Paralegal Professional Conduct Guidelines.
The information below reflects the current requirements.  The Law Society will update this page on the effective date with the new requirements, and links to supports and new resources. Until then, lawyers and paralegals should consult the Law Society’s Contingency Fee Reforms page for more detailed information, supports, and resources.

Both lawyers and paralegals may accept a contingency fee in certain circumstances [r. 3.6-2 and Commentary of the Rules of Professional Conduct (“Rules”), and rr. 5.01(7) through (9) of the Paralegal Rules of Conduct (“Paralegal Rules”]. Contingency fee arrangements are not permitted in family or criminal and quasi-criminal matters. 

To determine the appropriate percentage or other basis of a contingency fee, lawyers and paralegals should consider a number of factors, including 

  • the likelihood of success
  • the nature and complexity of the claim
  • the expense and risk of pursuing the claim
  • the amount of the expected recovery
  • who is to receive an award of costs, and
  • the amount of costs awarded.

The test in every circumstance is whether the contingency fee charged by the lawyer or paralegal is fair and reasonable [ r. 3.6-2 and Commentary of the Rules and rr. 5.01(7) through (9) of the Paralegal Rules ].

In litigation matters where contingency fees are permitted, the contingency fee agreement must be in writing and, when between a lawyer and client, must comply with the Solicitors Act and its regulation, O. Reg. 195/04 Contingency Fee Agreements. While paralegals are not governed by the Solicitors Act, it may be helpful for paralegals to refer to O. Reg. 195/04, Contingency Fee Agreements under the Solicitors Act  for guidance as to what terms should be included in contingency fee agreements [s. 21 of Guideline 13 of the Paralegal Professional Conduct Guidelines].

Where the contingency fee agreement is between a lawyer and client, under the Solicitors Act, the client may agree to have an award of costs or costs obtained as part of a settlement paid to the lawyer (i.e., in addition to the fee payable under the contingency fee agreement), provided that this is outlined in the contingency fee agreement and the agreement has received judicial approval [Commentary to r. 3.6-2 of the Rules]. However, after considering all factors in such circumstances, a smaller percentage of the award than would otherwise be agreed upon for the contingency fee will generally be appropriate.

Although an arrangement in which an award of costs or costs obtained as part of a settlement is paid to a paralegal is neither permitted nor prohibited by any Law Society rule, by-law, or guideline, paralegals should research the applicable law before entering into a contingency fee agreement that contains such a term.

Additional Resources

Contingency Fee Reform
Fees and Disbursements
Frequently Asked Questions about Contingency Fees
Instructions for Contingency Fee Agreement Checklists 
Checklist – Standard Form Contingency Fee Agreement 
Checklist – Non-Standard Form Contingency Fee Agreement

Terms or Concepts Explained