By A. Antonow
Published: December 21, 2010
Canadians who have suffered from personal injury or who desire to seek legal action have traditionally have had to pay for legal costs out of pocket. Until 2004, not all provinces in Canada allowed contingency fees, which according to the Ministry of the Attorney General, led to great dissatisfaction among clients who simply could not afford the hourly fees charged by attorneys. The fact that few other alternatives were available, the Ministry of the Attorney General concluded, meant that “costs can be a barrier to individual litigants in accessing the civil justice system.”
Today, all provinces in Canada permit contingency fees in some form, although each province has its own rules. In virtually all provinces, contingency agreements must be in writing and the agreement must state an estimate of the fee expected as well as the terms of the agreement. However, while contingency fees in some form are permitted in all provinces, the agreement must be approved by a court in order to be enforceable. Courts are allowed to deny fees which they deem are not reasonable. The court approval is intended to discourage frivolous lawsuits and to protect attorney’s clients. However, some have criticized the restrictions, claiming that the restrictions attempt to give judges the power to determine what an attorney’s time is worth or to speculate on how long attorneys work on specific cases. However, cases such as Strosberg LLP v. Atlas Cold Storage Holdings Inc. in Ontario have upheld the right of courts to place such restrictions on contingency fees.
Each province has slightly different rules regarding contingency fees. The province of Ontario, for example, was the last province to allow contingency fees, only lifting a ban on such fees on October 1, 2004, when the Solicitors Act of 1990 was amended. Since 2002, contingency fees have been permitted in Ontario, barring in cases involving criminal or family law. According to Regulation 195/04, attorneys cannot include cost award recoveries when tabulating contingency fees and cannot charge more than the recovery.
In the Canadian province of Manitoba, contingency fees are permitted but must be in writing. As well, the Law Society of Manitoba warns attorneys that once such an agreement has been signed, the attorney cannot withdraw representation unless the contingency agreement specifically allows it. Clients have the right to ask for a review of the fairness of any contingency agreement, but this review must be requested within six months of an attorney being paid.
The province of Alberta does allow contingency fees, but the Law Society of Alberta does impose restrictions on such fees. For example, under the 2000 amendments to the Rules of Court, attorneys cannot claim all recoverable taxable costs as part of the contingency fee. In the province of Nova Scotia, contingency fees are allowed, but according to the Nova Scotia Barristers’ Society Legal Ethics handbook, such agreements must be “fair and reasonable and the lawyer adheres to the rules of court and the regulations and rulings of the Society relating to such an arrangement.” Contingency fees in Nova Scotia are governed by the Civil Procedure Rules of the Province. Many attorneys in the province have a sliding scale of contingency fees, starting with lower fees if the case is resolved by a specific time and increasing if the case goes to trial.
In the province of Saskatchewan, contingency fees are permitted but must be in writing. As well, clients may still be responsible for some fees, such as disbursements. In the province of Quebec, however, contingency fees of 15% to 25% have been approved, but all contingency fees in that province are subject to claims of reasonableness. Overall, courts in Quebec have agreed that contingency fees are justified because they enhance access to justice and recognize the financial risks undertaken by attorneys.
In the province of British Columbia, contingency fees are permitted in most cases, provided that they are in writing. However, contingency fees are not allowed in some family law cases, specifically in cases related to child custody or access. In most family law cases in British Columbia, in fact, contingency fees must be approved by the court. British Columbia also places some restrictions on contingency fees. For example contingency fees must be no greater than one third of the amount recovered by any wrongful death or personal injury legal claims resulting from a vehicle accident. In all other wrongful death and personal injury cases, there is a maximum contingency fee of 40%. In cases other than wrongful death and personal injury, there are no limits on contingency fees. British Columbia requires clients to pay all disbursements outside of contingency fees and regardless of the outcome of a case.