This section describes in general terms a Contingent Fee Agreement and the amendments made to the previous Contingent Fee Rules to the current Contingent Fee Rules, 2021.
The appendix, Schedule A in Form 1 provides a more in-depth glossary of terms used in a Contingent Fee Agreement and provides more detailed information with respect to those agreements.
Important Update: On September 24, 2021, Council of the Law Society of New Brunswick adopted amendments to the Contingent Fee Rules. A new Form 1 – Contingent Fee Agreement was also adopted adding to this form an appendix, Schedule A. These amendments came into force on October 1, 2021. These amendments modified some of the former Contingent Fee Rules from January 1, 1997. As of October 1, 2021, Contingent Fee Agreements are governed by the Contingent Fee Rules, 2021.
Frequently asked questions:
What are contingent fees?
Contingent fees are fees for a lawyer’s services that are charged to and payable by a client only if you receive money. That is, if the matter is settled or there is a final judgment. Payment of the fee depends on, or is contingent upon, the outcome. Contingent fees are most often calculated as a percentage of the total amount of damages and costs recovered in a settlement or awarded at a proceeding, plus disbursements and HST. Disbursements and HST are typically paid by the client in addition to the contingent fee.
What is a contingent fee agreement?
A contingent fee retainer agreement is a legal document that sets out the terms and conditions of the relationship between the client and the lawyer when the lawyer is charging the client on a contingent fee basis (i.e. when the fee paid to the lawyer is a percentage of the amount recovered for the client).
What are disbursements?
Disbursements are expenses that a lawyer has paid on a client’s behalf to others who have provided services in support of the case. Disbursements are not included as part of an hourly rate or a contingent fee but may be included in a fixed fee. Lawyers are also permitted to charge clients for other ongoing disbursements such as photocopying costs to provide documents for use by a court and supplied to the opposite party, copies of records, costs of transcripts, and court filing fees.
For what matters are contingent fees permitted?
Contingent fees are permitted for all matters except for family law and criminal or quasi-criminal matters. If your matter relates to family or criminal law, a lawyer is not permitted to charge you a contingent fee.
Do I have to pay for legal fees on a contingent fee basis?
No, there are other options, and your lawyer is required to tell you about them. One option is for a lawyer to charge you for the time they spend working on your case at an hourly rate plus disbursements. Another less common option is a fixed-fee agreement.
Is there a maximum that a lawyer can charge as a contingent fee?
Yes. In New Brunswick, a lawyer may retain 33%, at most, of the amount recovered for a client for legal fees, plus HST but excluding disbursements. However, if the matter proceeds to an appeal, the maximum percentage increases to 38% for legal fees, plus HST but excluding disbursements incurred on behalf of the client. That is, the disbursements (and HST on disbursements) are paid first, and the lawyer receives the agreed percentage of whatever it left.
Highlights of the amended rules and the new Contingent Fee Agreement:
1. There has been an increase in the cap from 25% to 33% of the amount recovered; and from 30% to 38% in cases that go to appeal.
2. There is now a much clearer and easier to read standard Contingent Fee Agreement with the addition of a “Know Your Rights – Schedule A” document to be given to clients. This document is a Schedule A to the Form 1 – Contingent Fee Agreement. This appendix provides a better understanding for the client at the outset on how much the client is going to pay in legal fees based on a given recovery, and how disbursements and interest will be calculated.
3. A streamlined process for reviewing and approving non-conforming Contingent Fee Agreements.
The procedure for requesting an exemption from the fee cap of 33% or the standard form Contingent Fee Agreement was made simpler by requiring only a written justification for the proposed agreement and to have a more transparent standard of review, that the agreement between the lawyer and client be approved unless it is unreasonable or not in the interest of the administration of justice.
For lawyers who wish to amend the standard Contingent Fee Agreement or the percentage, they must submit the following:
1. A single comprehensive application for review;
2. The proposed Contingent Fee Agreement underlining any changes, additions or deletions from Form 1;
3. A written certificate that the lawyer has explained to the client the proposed agreement, the Reviewing Officer procedure, and the right to have the final fee reviewed pursuant to section 85 of the Law Society Act, 1996; and
4. Written justification of the proposed Contingent Fee Agreement.
Reviewing Officers
All applications to amend the standard Contingent Fee Agreement or the percentage are to be sent to the Law Society of New Brunswick. A Reviewing Officer will be assigned to conduct the review of the agreement.
The new procedure establishes an explicit test to be applied by the Reviewing Officer in considering non-standard Contingent Fee Agreements:
- From the current, “shall advise the member and client as to its acceptability on the basis of its fairness and reasonableness”, to the proposed, “shall… approve the proposed agreement unless the Reviewing Officer finds that the proposed agreement is not reasonable as between the Lawyer and Client, or is not in the interest of the administration of justice”.
- The Reviewing Officer has the jurisdiction to “vary, add or delete any of the provisions of a Contingent Fee Agreement, provided that the Lawyer and Client agree to such variations, additions or deletions”; and providing that the Reviewing Officer retains jurisdiction to reconsider the Contingent Fee Agreement if variations, additions or deletions are made; and
- The fee to have a Contingent Fee Agreement amended or to have the percentage increased has changed from $150 to $250. This fee must be paid by the lawyer and not the client.
Please find at the links below the amended rules and the new Contingent Fee Agreement: