A contingent fee agreement is one where your remuneration for services is contingent, in whole or in part, on the success of the matter (Rule 1901, Law Society Rules). Essentially, the lawyer agrees that they will charge no fees upfront and will work on the case until it is resolved. When the matter is resolved, then the lawyer takes a percentage of the settlement or judgment amount.
According to Rule 1902, a contingent fee agreement must be in writing and be signed by and delivered to each party. It must also meet several other requirements under Rule 1902. If you enter into a contingent fee agreement with a client, it is your responsibility to ensure that the agreement meets these regulatory requirements.
The agreement must:
The agreement must not purport to:
You must also be mindful that the Rules prohibit contingent fee agreements in child custody and access matters. If your proposed contingent fee agreement pertains to any other type of family law matter, you must submit agreement to the Court for approval (Rule 1903).
When the time comes to prepare your invoice for fees, disbursements and expenses to your client, you must ensure that the total remuneration invoiced does not exceed what was provided for in the agreement and that it is reasonable under the circumstances existing at the time that you prepare the bill (Rule 1904). This rule acknowledges that circumstances may change between the opening and closing of a file – sometimes drastically – but both your contractual obligations and your ethical obligation to ensure that fees are fair and reasonable remain intact. See Section 3.6-1 of the Code regarding your ethical obligations respecting reasonable fees and disbursements.
The Code also speaks directly to the matter of contingent fees and contingent fee agreements. Section 3.6-2 of the Code echoes Rule 1901 of the Rules and its commentary outlines some of the factors to consider in determining the appropriate contingency fee. The commentary to Section 3.6-2 also cautions lawyers to consider including a right to terminate the retainer in any contingent fee agreement. If you fail to do so, you will not be able to withdraw from representation unless:
Question: I drafted my contingent fee agreement in accordance with Rule 1902. Now my client wants to change lawyers or discontinue the action. How do I protect my fees?
Good question! In 2016, the Law Society of Saskatchewan Ethics Committee considered this very question. They looked at, inter alia:
According to the Committee, the best approach will be dictated by the circumstances of each case.
In the case of changing lawyers, approaches may include such options as:
When a client either abandons litigation or settles against his/her lawyer’s advice, the starting point will be negotiations between the client and lawyer as to proposed fees, likely based on terms of the contingency fee agreement that contemplate such circumstances. An account for time spent or a settlement percentage may be rendered at that time, to either be paid, litigated, or resolved in another way. Moreover, and beyond the language of the agreement, the court or a taxing officer may determine the matter.
See 2016 SKLSPC 5 for more detail.
A contingent fee agreement is still a retainer agreement. It should include most, if not all, of the same types of clauses as any other retainer. You will still want to address matters such as scope of services, timelines, communication guidelines and client responsibilities. In fact, these may be even more important in a contingent fee agreement as a method of client relationship management.
It is also important that you turn your mind to the sorts of issues that can arise in a contingent fee agreement (such as how/when major disbursements are to be billed and paid, how costs orders will be handled), and craft a retainer that takes these matters into account.
Tips for Contingent Fee Agreements
For example: you have taken on a client on a contingent fee basis and have conducted the file past questioning for discovery. Your client becomes displeased with you and decides to change lawyers. You have released the file to the new lawyer on her undertaking to pay your fees for work you performed to date out of the eventual settlement or award in the case. You have not tracked any of your time on the file. This puts you in a difficult position if there is a taxation of the file (where a client challenges the amount of your fee before the Court), and to a certain extent puts you at the mercy of the new counsel. If it were to proceed to taxation and you kept little to no record of the work you did on the file and the time spent, it would be very difficult to provide affidavit evidence.