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What is a contingency fee?

A lawyer spells out "victory" in block letters. Stock photo by Getty Images

Since legal help is often unaffordable for some clients, most provinces allow lawyers to work some types of cases on a “no win, no fee” basis.

This payment arrangement, more formally known as a contingency fee, is usually available for criminal, quasi-criminal, and family law cases. Under these plans, a lawyer takes an agreed-upon percentage of the damages or other court winnings.

If they lose the case, they may instead get a flat fee or sometimes nothing at all.

This fee system aims to make legal help more accessible and affordable to people who otherwise wouldn’t have the resources.

Contingency fees are available in most provinces and territories, but with some limitations. British Columbia prohibits them in cases relating to child custody or access.

Saskatchewan, New Brunswick, and the Yukon require court approval of contingency-fee plans for family law files.

Ontario does not allow contingency fees for any criminal, quasi-criminal or family cases.

Most jurisdictions require a contingency fee arrangement be in writing, and lawyers are usually required to offer an estimate of the final amount.

Fees can vary greatly, anywhere from 10 to 45 per cent of the total award. Some provinces allow certain maximum percentages according to the type of case, the length of the case, and whether it goes to trial or appeal.

Disputes sometimes emerge when clients choose a fixed percentage regardless of the time involved. In one example, a B.C. woman sued her own lawyers because they demanded the agreed-upon 20-per-cent fee — which would have totaled about $17 million — when the case was abruptly settled after a few months of part-time work. She felt they hadn’t earned that amount for so little work. A judge agreed and reduced the fee to $5 million.

As in that case, contingency fees are often subject to “reasonableness” as determined by a court.

Many clients will arrange a smaller percentage in case of a quick settlement with increases if there is a trial or other extended proceedings.

When making an agreement with your lawyer, you must decide if the percentage is appropriate. In deciding whether the percentage is acceptable, it’s good to consider: 

  • What the estimated costs would be based solely on an hourly rate or fixed fee.
  • The complexity of the legal matter.
  • Who pays for any up-front expenses.
  • What, if anything, you may be required to pay if the case fails.

Read more:

Canadian Bar Association (B.C. Branch)

Contingency Fees LSUC