[37] Bill 25 Original (PDF)

Bill 25 2002

An Act to amend the
Solicitors Act
to permit and to regulate
contingency fee agreements

Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:

1. Section 15 of the Solicitors Act is amended by adding the following definition:

"contingency fee agreement" means an agreement referred to in section 28; ("entente sur des honoraires conditionnels")

2. Subsection 16 (2) of the Act is repealed and the following substituted:

Definition

(2) For purposes of this section and sections 20 to 27 and 29 to 33,

"agreement" includes a contingency fee agreement.

3. Section 28 of the Act is repealed and the following substituted:

Contingency fee agreements

28. (1) If a solicitor is retained to bring an action or other proceeding on a client's behalf, the solicitor and the client may enter into a contingency fee agreement by which the solicitor,

(a) purchases all or part of a client's interest in the action or other contentious proceeding that the solicitor is to bring or maintain on the client's behalf;

(b) stipulates for payment only in the event of success in the action or proceeding that the solicitor is employed to prosecute or for which the solicitor is retained; or

(c) agrees with the client that the amount to be paid to the solicitor is a percentage of, or is otherwise determinable by, the amount recovered in the action or proceeding or the value in the property recovered in the action or proceeding, whether that amount or property is recovered as the result of a settlement, judgement, order or otherwise.

No contingency fees in certain matters

(2) A solicitor shall not enter into a contingency fee agreement if the action or proceeding for which the solicitor is retained is one of the following:

1. A proceeding under the Criminal Code (Canada) or any other criminal or quasi-criminal proceeding.

2. A divorce proceeding.

3. A proceeding related to the support of a spouse or child or to the custody of or access to a child.

Written agreement

(3) A contingency fee agreement shall be in writing.

Maximum amount of contingency fee

(4) A solicitor shall not enter into a contingency fee agreement if the amount to be paid to the solicitor under the agreement is more than one-third of the amount recovered in the action or proceeding or is more than one-third of the value of the property recovered in the action or proceeding, however the amount or property is recovered.

Greater maximum amount where approved

(5) Despite subsection (4), a solicitor may enter into a contingency fee agreement where the amount paid to the solicitor is more than one-third of the amount recovered in the action or proceeding or more than one-third of the value of the property recovered if, upon joint application of the solicitor and his or her client, which application is to be brought within 90 days after the agreement is executed, the agreement is approved by the Superior Court of Justice.

Enforceability of greater maximum amount or
contingency fee and costs

(6) A contingency fee agreement that is subject to approval under subsection (5) or (7) is not enforceable unless it is so approved.

Agreement not to include costs except with leave of the court

(7) A contingency fee agreement shall not include in the fee payable to the solicitor any amount arising as a result of an award of costs in addition to the amount recovered in the action or proceeding or a proportion of the value of the property recovered, unless the solicitor and client jointly apply to the Superior Court of Justice for approval to include a proportion of any award of costs in the agreement and the court approves it.

Agreement to include liability for costs

(8) Contingency fee agreements shall be deemed to include a provision that makes the solicitor liable for costs awarded against his or her client in the action or proceeding in the same proportion as the solicitor may recover if the action or proceeding is successful unless such term is explicitly excluded from the agreement.

Non-application

(9) Sections 17, 18 and 19 do not apply to contingency fee agreements.

Assessment of contingency fee

(10) For purposes of assessment, where a contingency fee agreement,

(a) is not one to which subsection (5) applies, the client may apply to the Superior Court of Justice for an assessment of the solicitor's bill within 30 days after its delivery or within one year after its payment; or

(b) is one to which subsection (5) applies, the client or the solicitor may apply to the Superior Court of Justice for an assessment within the time prescribed by regulation made under this section.

Regulations

(11) The Lieutenant Governor in Council may make regulations governing contingency fee agreements including regulations,

(a) prescribing terms that must be included in contingency fee agreements and prohibiting terms from being included in contingency fee agreements;

(b) imposing duties on solicitors who enter into contingency fee agreements;

(c) prescribing the time in which a solicitor or client may apply for an assessment under clause (10) (b);

(d) exempting persons, actions or proceedings or classes of persons, actions or proceedings from the Act, a regulation made under this section or any provision of the Act or regulation.

Commencement

4. This Act comes into force on the day it receives Royal Assent.

Short title

5. The short title of this Act is the Solicitors Amendment Act (Contingency Fee Agreements), 2002.

EXPLANATORY NOTE

The Bill amends the Solicitors Act to permit solicitors to enter into contingency fee agreements with their clients and to regulate such agreements. Contingency fee agreements are prohibited in criminal matters and family proceedings. Except with approval of the court, the maximum amount of a contingency fee is one-third of the amount recovered. Contingency fee agreements shall not permit the solicitor to recover costs as well as a proportion of the amount recovered unless approved by the court. Contingency fee agreements shall be deemed to include a provision to make the solicitor liable for costs if awarded against his or her client in same proportion as the solicitor would recover if the action or proceeding were successful, unless the agreement explicitly provides otherwise. The Bill allows the Lieutenant Governor in Council to make regulations governing contingency fees.