Contingency fees

To enhance consumer protection, improve transparency and fairness for clients, and facilitate access to justice, amendments to the contingency fee regime came into force on July 1, 2021. These amendments included

• changes to the Solicitors Act,

• the introduction of a new regulation, O. Reg. 563/20, Contingency Fee Agreements (“O. Reg. 563/20”), and

• the addition of client disclosure and transparency requirements under the  Law Society’s Rules of Professional Conduct (“Rules”), Paralegal Rules of Conduct (“Paralegal Rules”), and Paralegal Professional Conduct Guidelines (“Paralegal Guidelines”).

To provide further clarity and flexibility to licensees and their clients, the Ontario government made further amendments to O. Reg. 563/20, which came into force on January 1, 2022. To align with these additional legislative amendments, on February 24, 2022, Convocation approved further changes to the Rules, Paralegal Rules, and Paralegal Guidelines.

Overview of requirements

The contingency fee requirements:

• permit both lawyers and paralegals to accept a contingency fee in certain matters
• allow the inclusion of costs in calculating a contingency fee
• require lawyers and paralegals to use a revised Standard Form Contingency Fee Agreement dated November 18, 2021 (docx) (“Standard Form CFA”) where legal services are being provided wholly or partly in exchange for a percentage or proportion of the amount or value of the property recovered under an award or settlement
• for any other contingency fee agreements (CFA), prescribe that lawyers and paralegals include certain information identified in O. Reg. 563/20 in their CFA.
• exempt lawyers and paralegals from the obligations to use the Standard Form CFA and include the prescribed information in their CFA where the court has approved the contingency fee or the CFA or where the client (or any person or entity responsible for the payment of a client’s legal fees in the matter) is an organization as defined in O. Reg. 563/20 (“organization”)
• oblige lawyers and paralegals to:
  • provide clients with the Law Society’s Contingency fees: What you need to know consumer guide before they enter into a CFA
  • disclose certain prescribed information when billing the contingency fee, and 
  • disclose their general maximum contingency fee to the potential client if they market legal services on a contingency fee basis (together the “client disclosure and transparency requirements”)
• exempt from the client disclosure and transparency requirements matters where the client is an organization or where a lawyer is retained to represent one or more persons in a proceeding commenced under the Class Proceedings Act, 1992
• For more information on the above requirements and when they came into effect,  see the question “What are the most significant changes to the contingency fee requirements?” in the Law Society’s Frequently asked questions about contingency fees.
   

Lawyers and paralegals should note the following transitional requirements:

• Contingency fee arrangements entered into between July 1, 2021 and December 31, 2021 were governed by the Solicitors Act, O. Reg. 563/20 in effect on July 1, 2021, and rules 3.6-2 to 3.6-2.2 of the Rules or rules 5.01(7) to (9) of the Paralegal Rules. Subject to the limited exceptions, licensees who entered into a contingency fee agreement during this timeframe were required to have used the Standard Form Contingency Fee Agreement dated February 18, 2020.
• Contingency fee arrangements entered into before July 1, 2021 are governed by the previous Solicitors Act and the now revoked O. Reg. 195/04. The requirements set out in rules 3.6-2.1 and 3.6-2.2 of the Rules or rules 5.01(8) to (9) of the Paralegal Rules do not apply to CFAs entered into before July 1, 2021. There was also no requirement to use a standard form for these contingency fee arrangements.

Resources

For questions relating to a lawyer or paralegal’s obligations regarding contingency fees and CFAs, consult the following:

FAQs and checklists

• Frequently asked questions about contingency fees
• Instructions for the Standard Form Contingency Fee Agreement checklist
• Checklist: Standard Form Contingency Fee Agreement

Related resources

• Fees, disbursements, and billings
• Financial management practice management guideline
• LAWPRO®’s Retainers and non-engagement letters

Legislative authorities and Law Society rules

• Solicitors Act
• O. Reg. 563/20
• Rules
• Paralegal Rules
• Paralegal Guidelines

Convocation materials

• Professional Regulation and Paralegal Standing Committee Report to Convocation (February 24, 2022)
• Professional Regulation Committee Report to Convocation (October 22, 2020)
• Paralegal Standing Committee Report to Convocation (October 22, 2020)

Supports

Lawyers and paralegals who have questions about their contingency fee obligations may contact the Law Society’s Practice Management Helpline for guidance.
 

Last updated: March 24, 2022