The law in Canada generally prohibits lawyers from entering into a contingency fee agreement with clients in family law cases. In Ontario there is an absolute prohibition, while in British Columbia, it is permissible so long as the matter does not relate to children and is strictly financial.
In a recent Ontario case, the Court of Appeal (Jackson v. Stephen Durbin and Associates 2018 ONCA 424) considered whether a family law lawyer’s retainer agreement, which stipulated that if the lawyer achieved exceptional results he could charge an additional fee, constituted a contingency fee agreement.
Client Davis Jackson, a police officer earning $96,000 per year, hired Stephen Durbin and Associates to represent him in an action where he sought custody of his six-year-old daughter. The firm’s representation was excellent. Mr. Jackson received sole custody of his daughter, one-half of the sale proceeds of the matrimonial home, and costs of $192,000.
Mr. Jackson owed the law firm $132,597 in legal fees which he paid, but the firm also held back a “results achieved fee” of $72,433, to which he objected. No breakdown of the extra fee calculation was provided.
Ontario’s Solicitor’s Act reads as follows:
Contingency fee agreements
28.1 (1) A solicitor may enter into a contingency fee agreement with a client in accordance with this section.
Remuneration dependent on success
(2) A solicitor may enter into a contingency fee agreement that provides that the remuneration paid to the solicitor for the legal services provided to or on 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.
No contingency fees in certain matters
(3) A solicitor shall not enter into a contingency fee agreement if the solicitor is retained in respect of,
(a) a proceeding under the Criminal Code (Canada) or any other criminal or quasi-criminal proceeding; or
(b) a family law matter.
The law firm argued that the results fee was not a contingency fee but a “bonus” or “premium” which was not inappropriate.
The court disagreed saying that family law litigation is fundamentally different from civil litigation. They said that because family finances are divided and no outside funds are injected, it is inappropriate for a lawyer’s fee to be contingent on a particular result.
In respect of a custody issue, the court confirmed there are no “winners” or “losers” as a determination of custody is based on a child’s best interests and an analysis of which parent had more success is contraindicated: it is the child’s success that is paramount.
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