On December 9, 2002, Bill 213, the Justice Statute Law Amendment Act, 2002, overturned the previous prohibition in Ontario against contingency fees, the last province in Canada to do so. The history behind this introduction is detailed in the Supplementary Report to the Ontario Civil Justice Review.
The policy reasons for supporting contingency fees was that it would theoretically increase access to justice and save clients money by moving away from a billable hour system. The concerns included that the lawyer might become an “interested party,” there would be less incentive to settle, and there would be more frivolous suits.
Although a preliminary report and working group assessed whether criminal and family matters should be included in contingency fees, the explicit exclusion of both was considered a necessary safeguard for the introduction of this type of billing arrangement. Consequently, the Rules of Professional Conduct currently state,
2.08 FEES AND DISBURSEMENTS
Reasonable Fees and Disbursements
2.08 (1) A lawyer 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.
Contingency Fees and Contingency Fee Agreements
(3) Subject to subrule (1) except in family law or criminal or quasi-criminal matters, a lawyer may enter into a written agreement in accordance with the Solicitors Act and the regulations thereunder, that provides that the lawyer’s fee is contingent, in whole or in part, on the successful disposition or completion of the matter for which the lawyer’s services are to be provided.
Binyamin Appelbaum reports this weekend in The New York Times that some parties in matrimonial proceedings in the U.S. are turning to private companies like Balance Point Divorce Funding to offset the costs.
The article is the second in a series between the newspaper and the The Center for Public Integrity, and includes a timeline of lawsuit lending. It starts with William Blackstone’s 1765 condemnation of the practice as an offence against public justice in his Commentaries on the laws of England,
…the purchasing of a suit or right of suing a practice so much abhorred by our law that it is one main reason why a chose in action or thing of which one hath the right but not the possession is not assignable at common law because no man should purchase any pretence to sue in another’s right. These pests of civil society that are perpetually endeavouring to disturb the repose of their neighbours and officiously interfering in other men’s quarrels even at the hazard of their own fortunes…
An access to justice argument was advanced by Jeremy Bentham in his 1787 letter included in his Defence of Usury, where he references Blackstone’s sanctions against such participation,
…no man of ripe years and of sound mind ought out of loving kindness to him to be hindered from making such bargain in the way of obtaining money as acting with his eyes open he deems conducive to his interest…
Wealth has indeed the monopoly of justice against poverty and such monopoly it is the direct tendency and necessary effect of regulations like these to strengthen and confirm. But with this monopoly no judge that lives now is at all chargeable. The law created this monopoly: the law, whenever it pleases, may dissolve it.
…so long as the expense of seeking relief at law stands on its present footing, the purpose of seeking that relief will of itself independently of every other afford a sufficient ground for allowing any man, or every man, to borrow money on any terms on which he can obtain it.
I’ve noted here before that the problem self-represented litigants who cannot afford counsel is expected to grow in Ontario, with family law problems leading the priority list. Is it an appropriate time to reconsider contingency fees in family suits, especially when third-parties investors may already find ways to finance one or both sides in a dispute?
The risk for greater acrimony in family disputes is present where there are larger financial interests at stake. But it’s also not uncommon for one party in a family dispute to be more financially well-off than the other, especially if housekeeping and child rearing responsibilities have historically been placed on one to the exclusion of the other.
This automatically creates an imbalance in power, especially in the fortitude to engage in long and drawn-out litigation. Presumably situations are then created where the weaker party is compelled to accept a settlement offer that is less than favourable.
If the law has also created this monopoly of access to justice in family suits, should not the law also choose to dissolve this monopoly when such a substantial portion of society is being affected?