8.5 Contingency Fee Agreements
A Contingency Fee Agreement is an agreement between a lawyer and client in which the lawyer’s fee is contingent in whole or in part on the outcome of the matter for which the lawyer’s services are to be provided.
Both the Code of Conduct and the Rules of Court apply to contingency fee arrangements. Rule 3.6-2 of the Code of Conduct and its commentary set out lawyers’ professional responsibility obligations with respect to Contingency Fee Agreements - they must be in writing and must comply with governing legislation. You should review this Rule and the Commentary when considering acting on a contingency fee basis.
Rules 10.7 and 10.8 of the Rules of Court provide the legislative framework. The requirements of these Rules will be covered in the next lesson.
While lawyers are generally free to withdraw from acting for a client if there is justifiable cause as set out in Rule 3.7, this is not the case when a lawyer agrees to a contingency fee retainer. The lawyer can only withdraw from representation in a contingency fee matter, other than as required pursuant to Rule 3.7-5, if the Contingency Fee Agreement specifically states that the lawyer has the right to do so. Accordingly, you should contemplate and address the events which would cause you to want to withdraw.
In Alberta, there is no cap on the percentage of the award that the lawyer may receive; the fee structure can be based on factors such as the likelihood of success, the nature and complexity of the matter, the expense and risk of pursuing the claim and the amount of the expected recovery.
However, Rule 3.6-1 of the Code of Conduct applies to all legal fees, including contingency fees. Rule 3.6-1 states that a lawyer cannot charge or accept a fee unless the fee is fair and reasonable. Therefore fees payable pursuant to contingency fee arrangements must be fair and reasonable.
A client who believes that the fee payable pursuant to a Contingency Fee Agreement - like any other retainer and fee payable pursuant to a statement of account - is unfair or unreasonable can have the fee reviewed by a Court Review Officer. This will be covered in more detail in the next chapter.