Court of Appeal Decision of the Week

Is a “Results Achieved” Fee: Contingency, Premium, or Bonus?

Case: Jackson v. Stephen Durbin and Associates, 2018 ONCA 424 (CanLII)

Keywords: “Results Achieved Fee”; family law; retainer agreement; Solicitors Act, R.S.O. 1990, c. S. 15

Synopsis:

The Respondent retains the Appellant to represent him in family law litigation. The retainer agreement outlines hourly rates, daily fees for court appearances, and an automatic yearly increase of 15% with respect to those fees. The retainer agreement also provides for a “Results Achieved Fee”.

Following a lengthy trial, the Respondent is awarded sole custody of the child, half the proceeds from sale of the matrimonial home, and costs of $192,000. The Appellant receives $423,510.47 in trust. After deducting $132,597.74 to satisfy the outstanding account, the Appellant deducts an additional “Results Achieved Fee” of $72,433.24.

The Respondent disputes the “Results Achieved Fee” and seeks to have it assessed. The Assessment Officer concludes a judge must decide the matter as a question of law: is the “Results Achieved Fee” a contingency fee, a “premium”, or a “bonus”? The Application Judge determines the “Results Achieved Fee” is a prohibited charge – a contingency fee in a family law matter. The Court of Appeal agrees.

Importance:

Section 28.1 of the Solicitors Act, R.S.O. 1990, c. S. 15 provides 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 Court of Appeal highlighted “unnoticed” 2004 amendments to s. 28 of the Solicitors Act. (See para. 23). The phrase “contingent, in whole or in part” was included in the definition of contingency fee agreements. For the Court, this amendment means that a premium or bonus added on to a lawyer’s fee will be captured by s. 28.1(3)(b) of the Solicitors Act and, therefore, is a contingency fee prohibited for family law matters. (See para. 17, 21-24).

The Court of Appeal rejected the Appellant’s submission that what is included as a “contingency fee agreement” is limited to situations in which a lawyer’s fees are only payable in the event of success or where the lawyer’s fees are calculated by reference to the specific monetary result. (See para. 32). For the Court, a narrow interpretation of s. 28.1 does not adequately take into consideration the significance of the legislature including “…in whole or in part” to the definition. (See para. 29). Moreover, the Court emphasized that s. 28.1(2) of the Act links “contingent” to the phrase “successful disposition or completion of the matter”. (See para. 31).

With respect to policy concerns, the Court of Appeal stated that, in the family law context, it is simply inappropriate for any part of a lawyer’s fees to be contingent on success – for the Court there are no “winners” and “losers” in a custody decision:

In family law litigation, the emphasis is “on resolution, mediation and ways to save time and expense in proportion to the complexity of the issues”: Frick v. Frick, 2016 ONCA 799 (CanLII), 132 O.R. (3d) 321, at para. 11. A fee based on success risks detracting from, and indeed undermining, this emphasis. (See para. 46).

As such, since the “Results Achieved Fee”, which constituted “part” of the Appellant’s remuneration, was based on the “successful disposition” of a family law matter, the Court of Appeal determined it was prohibited by the Act. (See para. 50).

Counsel for the Appellant: Sean Dewart and Shoshana Bentley-Jacobs (Dewart Gleason LLP, Toronto)

Counsel for the Respondent: Michael Cochrane (Brauti Thorning Zibarras LLP, Toronto)

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Posted: Wednesday, May 09, 2018