Rule 5: Fees and Retainers

Rule 5 Fees and Retainers

5.01 FEES AND RETAINERS

Reasonable Fees and Disbursements

5.01 (1) A paralegal shall not charge or accept any amount for a fee or disbursement unless it is fair and reasonable and has been disclosed in a timely fashion.

(2) What is a fair and reasonable fee will depend upon such factors as,

(a) the time and effort required and spent;

(b) the difficulty of the matter and importance of the matter to the client;

(c) whether special skill or service was required and provided;

(d) the amount involved or the value of the subject matter;

(e) the results obtained;

(f) fees authorized by statute or regulation;

(g) special circumstances, such as the loss of other retainers, postponement of payment, uncertainty of reward, or urgency;

(h) the likelihood, if made known to the client, that acceptance of the retainer will result in the paralegal's inability to accept other employment;

(i) any relevant agreement between the paralegal and the client;

(j) the experience and ability of the paralegal;

(k) any estimate or range of fees given by the paralegal; and

(l) the client's prior consent to the fee.

(3) No fee, reward, costs, commission, interest, rebate, agency or forwarding allowance, or other compensation related to his or her employment may be taken by the paralegal from anyone other than the client, without full disclosure to, and the consent of, the client.

(4) In a statement of account delivered to the client, a paralegal shall clearly and separately detail amounts charged as fees and as disbursements.

(5) A paralegal shall not appropriate any funds of the client held in trust, or otherwise under the paralegal's control, for or on account of fees, except as permitted by the by-laws under the Law Society Act.

(6) If the amount of fees or disbursements charged by a paralegal is reduced by a Court Order, the paralegal must repay the monies to the client as soon as is practicable.

Contingency Fees

(7) Except in quasi-criminal or criminal matters, a paralegal may enter into a written agreement that provides that the paralegal's fee is contingent, in whole or in part, on the successful disposition or completion of the matter for which the paralegal's services are to be provided.

(8) In determining the appropriate percentage or other basis of a contingency fee under subrule (7), the paralegal shall advise the client on the factors that are being taken into account in determining the percentage or other basis, including the likelihood of success, the nature and complexity of the claim, the expense and risk of pursuing it, the amount of the expected recovery, who is to receive an award of costs and the amount of costs awarded.

(9) The percentage or other basis of a contingency fee agreed upon under subrule (7) shall be fair and reasonable, taking into consideration all of the circumstances and the factors listed in subrule (8).

Joint Retainers

(10) If a paralegal is acting for two or more clients in the same matter, the paralegal shall divide the fees and disbursements equitably between them, unless there is an agreement by the clients otherwise.

Division of Fees

(11) With the client's consent, fees for a matter may be divided between paralegals or paralegals and lawyers who are not in the same firm, if the fees are divided in proportion to the work done and the responsibilities assumed.

[Amended - October 2014, April 2017]

Fee Splitting

(12) A paralegal shall not,

(a) directly of indirectly share, split, or divide his or her fees with any person who is not a paralegal or lawyer, including an affiliated entity; or

(b) give any financial or other reward to any person who is not a paralegal or a lawyer, including an affiliated entity, for the referral of clients or client matters.

(13) Subrule (11) does not apply to multi-discipline practices of paralegal and non-licensee partners where the partnership agreement provides for the sharing of fees, cash flows or profits among members of the firm.

[Amended - October 2014, April 2017]

Referral Fees

(14) In this rule and rule 5.01(15), 

"referral” includes recommending another paralegal or lawyer to do legal work for anyone except where the work is done through the same paralegal firm in which the referring paralegal primarily practices; 

“referral agreement” means a signed written agreement between the referring paralegal or lawyer, the paralegal or lawyer who receives the referral and the client, in the form provided by the Law Society from time to time, which includes:

(a) confirmation that the client has been advised and understands that the client has no obligation to accept the referral;

(b) confirmation that the client has been provided with information about the Law Society’s requirements for payment and receipt of referral fees and a reasonable opportunity to review and consider that information;

(c) confirmation that the referring paralegal or lawyer has recommended at least two paralegals or lawyers to the client and, if not, disclosure of the reason that it has not been reasonably possible to do so;

(d) a provision that the client is free to retain a paralegal or lawyer other than the one who receives the referral;

(e) the reason(s) that the referring paralegal or lawyer has recommended the specific referee to the client;

(f) full and fair disclosure of the relationship between the referring paralegal or lawyer and the paralegal or lawyer who receives the referral;

(g) confirmation that no referral fee will be paid or payable unless and until the paralegal or lawyer who receives the referral is paid his or her fee for legal services for the matter; and

(h) full and fair disclosure of the referral fee including the circumstances in which the referral fee is payable and the basis upon which the amount of the referral fee is determined. 

“referral fee” includes any financial or other reward for the referral of a matter whether the referral fee is direct or indirect and whether the referral fee is past, current or future.  However, a referral fee does not include a referral of other work by the licensee who received the referral. 

5.01(15) A paralegal may accept and a paralegal may pay a fee for the referral of a matter provided that:

(a) the referral fee is fair and reasonable and does not increase the total amount of the fee payable by the client;

(b) a referral agreement has been entered into at the time of the referral or as soon as practicable after the referral;

(c) the paralegal or lawyer who receives the referral has the expertise and ability to handle the matter;

(d) the referral was not made because the referring paralegal or lawyer;

(i) has a conflict of interest;

(ii) was a paralegal or lawyer whose license was suspended when the referral was made and who was accordingly not permitted to act on the matter;

(e) the amount of the referral fee shall not exceed fifteen percent (15%) of the fees paid to the paralegal or lawyer who received the referral for the first fifty thousand dollars ($50,000) of such fees for the matter and five percent (5%) of any additional fees for the matter to a maximum referral fee of $25,000.

(16) The paralegal who received the referral for which a referral fee is payable shall note the referral fee on the account sent to the client at the time the referral fee is paid or payable and obtain the client’s acknowledgement of the referral fee failing which acknowledgement the paralegal shall confirm in writing to the client that the client has been asked to so acknowledge but has declined to do so. 

Transitional Requirements

5.01(17) The provisions of subrule 5.01(15) do not apply to the payment of a referral fee pursuant to an enforceable agreement to pay and receive referral fees that was entered into before or on April 27, 2017. 

In these circumstances, a paralegal who refers a matter to another paralegal or lawyer because of the expertise and ability of the other licensee to handle the matter and where the referral was not made because of a conflict of interest, the referring paralegal may accept and a paralegal who receives a referral may pay a referral fee provided that

(i) the fee is reasonable and does not increase the total amount of the fee charged to the client; and

(ii) the client is informed and consents.

(18) A paralegal who is entitled to receive referral fees pursuant to an unwritten agreement that was entered into before or on April 27, 2017 shall confirm in writing the terms of that agreement as soon as practicable to the other party to that agreement and shall provide a copy of such confirmation to the client. 

(19) Where a referral was made before or on April 27, 2017 but there was no enforceable agreement for the payment of a referral fee as of that date, the requirement that the agreement has been entered into may be met by entering into a referral agreement at any time prior to payment of the referral fee. 

(20) A paralegal shall not do indirectly what the paralegal is prohibited from doing directly under Rules 5.01(11), (14) and (15). 

[Amended - October 2014, April 2017]