No win, no fee: How contingency fees work in Ontario

In Ontario, "no win, no fee" is more than a slogan: it describes the contingency fee arrangements lawyers and clients can use. This article explores contingency fee agreements, summarizes the rules the Ontario lawyers must follow, and highlights pitfalls to avoid.

What is a contingency fee in Ontario?

Under the Solicitors Act, any arrangement where part of the legal fee depends on the successful outcome of a case is a contingency fee. "A contingency fee is one way to pay a lawyer, where the lawyer is paid only if the case succeeds and is paid out of the client's recovery. This can either be from:

• a settlement award in favour of the client, or
• when damages are awarded by a court to the client

In a contingency fee agreement (CFA), the lawyer's fees come from a percentage of this amount that the client recovers. The percentage can also apply to the amounts that the client receives for costs. However, the percentage cannot apply to amounts allocated to disbursements or taxes.

These arrangements are common in personal injury cases. They allow injured people and their families to pursue claims even if they cannot afford lawyers' fees upfront.

Contingency fees vs. billable hours

Watch this video to learn about the differences between contingency fees and billable hours:

Bookmark our Personal Injury practice area page for more news, articles, and updates for Ontario's legal professionals.

What are the rules for contingency fees in Ontario?

Ontario lawyers and law firms must follow rules set by the following bodies when using CFAs:

• The Solicitors Act: this law, along with the Contingency Fee Agreements Regulations, governs the requirements when lawyers and firms use CFAs
• Law Society of Ontario (LSO): the LSO also has its own rules for its member-lawyers who enter in CFAs with their clients

We'll discuss these important rules below, which also apply to paralegals who use contingency fees in Ontario.

In any case, here's a video which also explains how contingency fees work in general:

Head over to our Legal Practice Management page for additional resources that can help law firms and legal practitioners practising in Ontario.

How to structure contingency fees

The LSO recognizes several ways to structure a CFA:

• fixed percentage: keeps the same rate of the contingency fee from start until the case is finished
• staged or graduated percentage: uses a lower rate if the case ends early, and a higher rate if it goes to later stages
• partial contingency: combines some upfront or ongoing payment with a lower percentage at the end of the case

Some agreements also provide a bonus or premium if the result is especially favourable to the client.

Maximum limits for contingency fees

Ontario's laws do not set a single maximum percentage for contingency fees, but they do set a hard limit on outcomes.

Primarily, the contingency fee cannot be more than what the client receives from the settlement or award. For this test, the client's recovery includes damages and any costs award, but it excludes any disbursements and taxes.

On top of that, the fee must always be fair and reasonable, in relation to the case. This test on fairness has always been the common standard when lawyers use CFAs for their clients.

Steps before a contingency fee can be used

Generally, lawyers and paralegals must use the Standard Form CFA when charging clients via contingency fees. Exceptions to this rule are the following:

• if the court approved the CFA
• if the client is an "organizational client"

An organizational client can either be any of these:

• if it employs more than 25 persons
• if it employs a lawyer on a full-time basis
• has assets or gross annual revenues of more than $10 million

Transparency requirements

Ontario's laws put strong emphasis on transparency. Before signing a CFA, the lawyer must explain the following main factors used to set the fee:

• chances of success
• the complexity of the claim
• the risks and expenses involved
• the expected recovery
• who may receive the costs

The client must also receive the LSO's Consumer Guide on contingency fees and be given a fair chance to read it before signing the agreement.

Exemptions for the disclosure and form requirements

Some clients and cases fall under special rules where certain disclosure and form requirements do not apply:

• client is an organization: when the client or the party paying the fees is an organization that meets the regulation's tests, the consumer‑style disclosures and form requirements do not apply
• class actions: in a class action, the Class Proceedings Act (CPA) governs the arrangement, and the court must approve the contingency agreement for the representative plaintiff

But even where exemptions apply, the fee charged must still be fair and reasonable.

Prohibited provisions in contingency fee agreements

The following provisions are prohibited in a CFA, even when the Standard Form is used or edited:

• requiring the lawyer's consent before a claim may be abandoned or settled at the client's instructions
• preventing the client either from terminating the CFA or from changing legal representation
• permitting the lawyer to split their fee with any other person, unless allowed by LSO's rules

When contingency fee arrangements are not appropriate

Contingency fees are allowed only in certain types of work, such as in civil and tribunal matters, where a client might receive money. A typical example is personal injury litigation.

However, contingency fee arrangements are not allowed in the following:

• family law cases
• criminal cases
• quasi‑criminal matters

Issuing a Statement of Account for the client

After a successful case, the lawyer must give a detailed Statement of Account to the client. This Statement must show these crucial details:

• the total settlement or award
• deductions (e.g., disbursements, legal fees, taxes)
• net amount that the client will receive

Unless a court has already approved the contingency fee, the Statement must also:

• explain why the fee is reasonable
• advise the client of their right to ask the Superior Court of Justice to assess the bill
• the deadline that the client can ask the Superior Court for the bill's assessment

Marketing rules for contingency fees

If a law firm advertises that clients may be charged on a contingency basis, LSO rules require disclosure of the firm's general maximum percentage, depending on whetherit has a website:

• if the lawyer or law firm has a website: the maximum percentage must be posted on the website, in a way that is easy for potential clients to find
• if the lawyer or law firm has no website: the maximum percentage must be given to potential clients at first contact, ideally with written acknowledgment

A lawyer can agree to a higher percentage than the published maximum only if:

• the client is told that the deal is above the posted rate, and
• the lawyer updates the published maximum to that higher rate

What are some pitfalls to avoid for lawyers who use contingency fees?

Lawyers who use contingency fees should be aware of the following pitfalls. Avoiding them protects both client relationships and compliance with LSO rules:

• charging more than the client's recovery: while there's no set fixed percentage, lawyers are prohibited from taking a contingency fee that is higher than what the client actually receives from the award or settlement
• misusing LSO's Standard Form: when required, the Standard Form must be used for CFAs; improperly changing the form can be a breach, as lawyers may only make limited changes to it
• violating the marketing rules: failing to post the maximum percentage, or charging above it without the required disclosure and an update to the lawyer's or firm's website
• clear terms on terminating the lawyer-client relationship: failing to include clear provisions on the lawyer will be paid if either party ends the relationship before the matter is legally resolved

It's also important to distinguish proper CFAs from champertous arrangements, as discussed in Nootchtai v. Nahwegahbow Corbiere Genoodmagejig Barristers and Solicitors, 2025 ONSC 6071. Here, the court disregarded a "hybrid contingency fee agreement," despite the lawyers' success in the case, and instead awarded a much lower fee for them based on quantum meruit.

Contingency fees in Ontario: When winning equals lawyer's fees

The "no win, no fee" agreement can open the courthouse door for many Ontarians, but it does not remove all risk, both for clients and their lawyers. CFAs still raise questions about costs, disbursements, and net recovery, but clear, plain‑language and legally compliant agreements can address most of these concerns.

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