Ontario Announces Changes to Contingency Fees
In early October, the Province of Ontario amended the Solicitors Act to adopt a new regulation including a standard form contingency fee agreement. The amendment will come into effect next July, with implications for every personal injury lawyer in the province, including those listed in our Canadian lawyer directory.
Here is a primer wrote previously for our legal basics blog: What Are Contingency Fees?
What Are Contingency Fees?
“In order to ensure access to justice for all, the LSO allows lawyers in this province to take on risky cases without being paid at the start,” explains the Ontario Trial Lawyers Association’s (OTLA) blog. “These arrangements are commonly called ‘contingency fees,’ ‘no win no fees’ or ‘speculative fees.’ They are one type of retainer between a lawyer and a client.”
In other words, contingency fees allow lawyers to accept clients without demanding up-front or hourly legal fees. At the onset of the engagement, the lawyer and the client will agree on a percentage of the final settlement that the lawyer will accept as payment for their services.
This allows consumers of low and modest incomes to access the legal service, talents and advantages of top lawyers to advance their claims. This gives access to justice for all, allowing (for example) consumers to retain top personal injury lawyers in Toronto or top Toronto employment lawyers to advance their serious injury or employment claim.
How Will the Amendment Change Contingency Fees?
Put simply, the amendment will make contingency fee agreements used by Ontario lawyers more standardized and easier for clients to understand. The standard form agreement is shorter than what many lawyers currently use, the language is clearer, and the fee calculation process is less opaque.
The fee calculation issue has for years been a point of frustration for clients and personal injury lawyers alike, according to former OTLA president Adam Wagman, who recently discussed the amendment with Law Times. Clients were often confused about how much of their final settlement would land in their pocket, and how much would go to their legal team.
“Far too often in the past, a prospective client would say to me, yeah, but this other lawyer wants to charge me something very different from what we said that we were going to charge them,” Wagman said. “And, in reality, it was the same thing, just said a different way.”
More Changes Needed
Although Wagman supports the amendment, he believes more work can be done to clarify Ontario’s contingency fee system. He told Law Times that more guidance is needed relating to disbursements in all-inclusive settlement offers. Disbursements are costs paid by a lawyer to a third-party, and then charged to the client
Wagman also called for clarification on who should pay disbursements when a client changes lawyer mid-case. Currently, the new lawyer generally pays disbursements to the original lawyer in exchange for the file. The new form states that the original lawyer can collect disbursements from the settlement.
“In my opinion, that can’t be right,” Wagman said “It can’t be right that a lawyer who is no longer working on the file, because a retainer agreement has been terminated essentially has to continue to fund that file with their disbursement money – which can be 10s of thousands of dollars – while they have no involvement in the case.”
If you or a member of your family has been injured in an accident, a personal injury lawyer like the ones listed in our Canadian lawyer directory can help. Browse our listings today to find a lawyer near you.