Court sets out guidelines on contingency fee retainer in PI case
The Ontario Superior Court has disapproved a contingency fee retainer agreement in a personal injury case because it did not follow the required statutory form.
Emile Bellama was involved in a motor vehicle collision in 2012. The parties settled the tort claim arising from the accident in 2015. Due to concerns regarding Bellama’s capacity to execute the settlement, the insurer required Bellama to obtain court approval for the settlement.
Shortly after the accident in 2012, Bellama signed a retainer agreement with Langevin Moris Smith LLP to prosecute the tort action. In 2018, Aida Tarabay, Bellama’s spouse and litigation guardian, also signed an agreement with the same law firm regarding the settlement of Bellama’s accident benefits claim.
In Bellama v. Trafalgar Insurance, 2023 ONSC 172, Bellama brought a motion seeking approval for the contingency fee retainer agreement with Langevin Moris Smith LLP and the proposed solicitor-client account for services rendered regarding his benefits claim.
Defects in contingency fee retainer agreement
The firm explained that it entered into the 2018 benefits claim agreement because, by then, it was evident that Bellama’s capacity was declining. Ontario regulations provide a standard form for contingency fee agreements.
The court observed several deficiencies in the agreement that Tarabay and the firm have executed, including:
- The agreement does not state explicitly “that the client understands that all usual protections and controls on retainers between a solicitor and client, as defined by the Law Society of Ontario and the common law, apply to the contingency fee agreement.”
- It includes a statement “that informs the client of their right to ask the Superior Court of Justice to review and approve of the solicitor’s bill” but does not include the applicable timelines for requesting such a review.
- The agreement does not address the subject of disbursements with the degree of specificity required.
- A witness verified the party and counsel’s respective signatures, but the witness placed only their initials, not their signature, as evidence of verification.
- The lawyer and client’s names, addresses, and telephone numbers are not included in the agreement.
The court dismissed the request for approval of the contingency fee agreement because of the numerous deficiencies in the form. The request for approval of the proposed solicitor-client account is determined on a fee-for-service basis, according to the court.
Proposed solicitor-client account was approved
The firm’s actual fees, as docketed, total $223,135. The proposed $140,250 represented 63 percent of the actual fees. The court said that a discount of 37 percent from the actual fees is a significant discount, but not a determining factor when considering solicitor-client accounts.
The Law Society of Ontario Rules of Professional Conduct lists some factors, including the time and effort required and spent. The court considered that the firm has been representing Bellama for 10 years. In that decade, the firm assisted Bellama with his benefits claim, on an ongoing basis, carried out work to support his successful application for a determination as catastrophically impaired, dealt with the decline in his capacity to manage his property and negotiated a settlement of his Statutory Accident Benefits Schedule (SBAS) claim, and represented him in his motion for settlement approval.
The court further observed that Bellama was a challenging client because of his cognitive issues and his and Tarabay’s inability to communicate in and fully comprehend English. As a result, the court ruled that the proposed fees reasonably reflect the time and effort required and spent to carry out the work.
The second factor that the court considered was the matter’s difficulty and importance to the client. The court noted that Bellama had a significant and complex pre-accident medical history, which added to the complexity of his SABS claim. With Bellama declared to be catastrophically impaired and given his future needs, the court said that reaching a favourable settlement of his SABS claim was important.
The court further considered whether special skills or services had been required and provided, the amount involved or the value of the subject matter, and the results obtained. The court ultimately concluded that the 37 percent discount from the fees incurred to those proposed was reasonable and fair and approved the proposed fees.
