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Contingency Fees

Both lawyers and paralegals may accept a contingency fee in certain circumstances (rule 3.6-2 and commentary of the lawyers' Rules of Professional Conduct (lawyers’ Rules), and subrules 5.01(7) through (9) of the Paralegal Rules of Conduct (Paralegal Rules). Neither lawyers nor paralegals may use contingency fee arrangements in criminal or quasi-criminal matters and lawyers are further prohibited from accepting contingency fees in family law matters, which are outside a paralegal's permitted scope of practice. 

To determine the appropriate percentage or other basis of the contingency fee, you 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 fee charged by the lawyer or paralegal in all of the circumstances is fair and reasonable. See rule 3.6-2 and commentary of the lawyers' Rules and subrules 5.01(7) through (9) of the Paralegal Rules.

In litigation matters where contingency fees are permitted, the 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 [see Paralegal Professional Conduct Guidelines, Guideline 13, section 21].

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

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

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