The Ontario Court of Appeal recently discussed whether a “Results Achieved Fee” charged by a law firm to their client was a prohibited contingency fee agreement under the Solicitors Act, RSO 1990, c. S. 15 (“the Act”). The Ontario Court of Appeal concluded that the fee was prohibited.
Mr. Jackson (“the respondent”) retained Stephen Durbin and Associates (“the appellant law firm”) for a family law matter. The main issue was custody of the respondent’s young daughter. The respondent signed a retainer agreement, which outlined hourly rates, daily fees for court appearances, and an automatic annual 15% increase with respect to those fees. The retainer agreement also specified “an increase in fees in the event of a positive result achieved (‘Results Achieved Fee’).”
At the conclusion of the respondent’s family law matter, the respondent was awarded sole custody of the child, half of the proceeds of the matrimonial home, and costs of $192,000. The funds were all payable to the appellant law firm in trust, pursuant to the direction. Upon receipt of the monies, the appellant law firm deducted $132,597.74 to satisfy the respondent’s outstanding legal fees, as well as unilaterally deducted a Results Achieved Fee of $72,433.24.
While the respondent did not dispute the deduction to satisfy the outstanding legal fees, he did dispute the Results Achieved Fee. It was also unclear as to how the appellant law firm calculated that amount.
The Positions of the Parties
The appellant law firm submits that the Results Achieved Fee is not a contingency fee agreement, but instead “a permissible ‘premium’ or ‘bonus.’”
The appellant law firm argued that contingency fee agreements is limited to scenarios where a lawyer’s fees are solely payable in the event of success or when a lawyer’s fees are calculated based on a specific monetary result.
In support of its argument, the appellant law firm cited Teplitsky, Colson v. Mcrea, and other decisions when attempting to distinguish between contingency agreements and “premium” or “bonus” payments.
The respondent argues that the application judge was correct in determining that the “Results Achieved Fee” was a contingency fee agreement, which contravened the Act.
Section 28.1 of the Act addresses contingency fee agreements.
The provision stipulates that a solicitor may enter into a contingency fee agreement, except in respect of a proceeding under the Criminal Code (Canada) or any other criminal or quasi-criminal proceeding or a family law matter.
Section 28.1(2) describes a contingency fee agreement as “remuneration paid to the solicitor for the legal services provided to on or behalf of the client is contingent, in whole or in part, on the successful disposition or completion of the matter in respect of which services are provided.”
The Court of Appeal underwent a detailed analysis of the history of a contingency fee agreement. First, the Court considered the plain and ordinary meaning of the words in the Solicitors Act, followed by the broader statutory context.
The Court determined that the issue of whether “Results Achieved Fee” constitutes a contingency fee agreement is a question of mixed fact and law. Consequently, the appropriate standard of review is correctness, in accordance with Housen v Nikolaisen.
The Court highlighted that the modern approach to statutory interpretation is one that involves the provisions of an act “are to be read in their entire context and in their grammatical and ordinary sense harmoniously with the scheme of the Act, the object of the Act, and the intention of Parliament,” as concluded in
When reading the plain language of the provision, the Court of Appeal reasoned that a lawyer’s remuneration does not need to be contingent on success. Section 28.1(2) explicitly highlights that contingency fee agreements included where only “part” of a lawyer’s remuneration is contingent.
The Court of Appeal also noted that monetary recovery in family law litigation matters is different than civil litigation. In family law litigation, the Court of Appeal argued, there is an emphasis on resolution and methods to save time and expense. A fee contingent on success undermines that approach.
The Court of Appeal also indicated that when the primary issue is custody, a fee based on success is even less appropriate. The goal, the Court of Appeal noted, was not to determine a “winner” or “loser” but rather what is in the best interest of the child.
For the above reasons, the Court of Appeal concluded that the “Results Achieved Fee” is a contingency fee agreement as set out in the Solicitor’s Act and is prohibited. The appeal was dismissed.
What Does this Mean for Clients Seeking Family Law Guidance?
If you are involved in a dispute over child custody or support, it is important to retain a lawyer that you can trust. Mark Feigenbaum is a highly skilled Toronto family lawyer that is able to deliver exceptional representation while remaining sensitive to the costs of family law litigation. Contact Mark online or call him at (416) 777-8433 or toll-free at (877) 275-4792 to book a consultation.