The Court of Appeal for British Columbia released a scathing judgment in Mide-Wilson v. Hungerford Tomyn Lawrenson and Nichols on New Year’s eve, upholding a Supreme Court decision earlier in the year which had reduced legal fees in a contingency arrangement from nearly $17 million to $5 million, in the interest of maintaining the integrity of the legal profession. The decision has implications for the understanding and application of contingency fee arrangements, which should be reviewed for contingency lawyers when evaluating the monetary worth of work in progress on their files.
The matter dealt with the million dollar estate of the defendant’s grandfather, who had suffered macular degeneration and other health issues towards the end of his life. The defendant’s grandfather made a number of testamentary changes transferring most of his assets between 2007-2008, prior to his death that same year. The plaintiffs attempted to have these revised testamentary instruments enacted. The defendant alleged these changes to the estate had occurred as a result of undue influence exerted upon her grandfather, and sought to oppose it.
The contingency fee agreement entered into by the defendant was on a progressive scale based on timelines and stages in the action as follows:
a) 20% of any settlement entered into before December 9, 2009; or
b) 25% of any settlement entered into after December 8, 2009 and before December 9, 2011; or
c) one-third of any settlement entered into on the earlier of:
a. December 9, 2011 or thereafter; and
b. six weeks before the first day of trial of any issue; or
d) one-third of any judgment.
The file was ultimately settled in 2009 for a payment of $8 million by the defendant to the plaintiffs. A proposal of $12 million in fees was made to the defendant by her lawyer, based on an estimated value of the estate of $100 million, less the settlement and $12 million in taxes owing, was rejected by the defendant. Following reports made by expert valuators the firm issued a final bill of $16,971,015, with total fees of $19,044,549.78 once disbursements and GST were included.
The defendant sought a determination under ss. 68, 70-71 of the Legal Profession Act, S.B.C. 1998, c. 9, of an appropriate fee, and review of the fairness and reasonableness of the arrangement. The firm had the view that the contract was made by sophisticated parties in objectively fair circumstances, and submitted that parties should be held to their bargains given the risks undertaken by the firm. The defendant client proposed that contingency arrangements, although used to facilitate access to justice, was a contract governed by equitable, fiduciary, and public policy considerations that can and should override the terms of the agreement where the circumstances are warranted.
The Registrar initially upheld the arrangement, on the basis that the client was a sophisticated business woman who knew what she was getting into, and the firm risked up to $2 million in expenses by taking on the file. The Registrar reviewed the value of the estate and identified $10,180,325.81 with taxes and disbursements as a fair and reasonable fee amount based on the agreement.
The Supreme Court decision by Justice Goepel did not find that the arrangement was unfair or unreasonable under s. 68, but instead scrutinized whether it was fair under the ss. 70-71 provisions, finding an error by the lower court decision on the basis that legislative changes allowed the Registrar to properly review the contents of the agreement. Justice Goepel reduced the fees to $5 million by recognizing that lawyers are entitled to larger fees in contingency fee arrangements and takes into account the risks the lawyers undertook in the file. He stated,
 A client need only pay a proper fee. I agree with Registrar Cameron’s comment in Parpatt that there is a point when the differential between the work done and the fees payable under the contingency agreement must be adjusted to maintain the integrity of the profession. In such circumstances the terms of the contract must be sacrificed to insure that the client pays no more than a proper fee.
 In order to maintain the integrity of the legal profession, a legal account must have some relationship to the actual work carried out. To allow the fees awarded in this case given the work the Solicitors actually did would call into question the integrity of the profession.
 A contingency fee agreement is not a lottery ticket. Success in the action does not guarantee a fee in the amount set out in the agreement. Even if the agreement was neither unfair nor unreasonable at the time it was entered into, the final account must be reasonable and proper given the services provided and the risk undertaken.
Justice Newbury of the Court of Appeal reviewed these decisions and said,
 In summary, if and to the extent that the chambers judge intended to approve a departure from Commonwealth No. 2 or to suggest that a registrar under ss. 70-71 should put the agreement in question to one side, he was, with respect, in error. But the chambers judge was here an appellate court, and he was not determining the proper fee anew or in so doing, adopting a “top-down” or “bottom up” approach. That was for the Registrar, who did take the terms of the CFA as her starting-point and to that extent followed Commonwealth No. 2. The task for the chambers judge, from whom this appeal is taken, was to decide whether the Registrar had erred in failing to consider or to give sufficient weight to all relevant factors…
Justice Newbury examined the background behind the integrity principles at stake, while emphasizing the need for contingency fees to facilitate access to justice, stating,
 This court’s reference in Commonwealth No. 2 to the integrity of the profession in the context of lawyers’ fee agreements has very deep roots. It has informed the matter of lawyers’ fees for centuries. In the dim mists of the common law, a barrister could not sue for payment of his fees and indeed could not make an express contract with a client for the payment of future fees…
 Historically, contingent fee agreements in particular were considered inherently incompatible with the integrity and honour of the legal profession…
 Leaving aside the various means available to the courts to prohibit contingent fee agreements, lawyers’ contracts of service, whether based on a contingency or otherwise, have long been reviewable by the courts in their supervisory capacity over lawyers. Since fee agreements became lawful, courts have had jurisdiction to tax (i.e., review and set) fees, as well as to interfere with or modify contracts between solicitors and clients: see Re A Solicitor 1 D.L.R. 315 (Ont. S.C.) at 316, per Middleton J.A.; Tweten v. Nichols 1985 CanLII 395 (BC SC), (1985) 61 B.C.L.R. 225 (S.C.) at 230-31. Equity also imposed a duty of fairness on solicitors in contracting with clients, requiring the solicitor to establish, for example, that the client understood the agreement, that the price was reasonable, and “that the transaction was in all respects fair, and such as an independent solicitor who had performed his duty, would have advised his client to enter into.” (Per Mowat, V.C. in Oakes v. Smith (1870) 17 Gr. 660 (Ont. Ch.) at 673-74.)
 A variety of objectives that are now subsumed in the phrase “integrity of the profession” have animated courts’ attitude to lawyers’ fee agreements generally and contingent fee agreements in particular. Early common law courts were concerned to forestall abuses of the legal system that could be perpetrated by lawyers on clients and on the court system in which lawyers held (and continue to hold) a special place of trust. Sharing in the proceeds of litigation could tempt lawyers to exaggerate their clients’ claims, to suppress evidence, to modify advice given to clients, or otherwise to depart from the professional attitudes and conduct expected of them.
 Nevertheless, the practical demands of “access to justice” have led courts and legislatures to recognize that the old rules and assumptions must give way, at least in part. Contingency agreements are obviously an important means by which not only “the poor” (see Minish, at 71) but the middle class may be enabled to bring their causes, public or private, to courts of law…
The firm submitted that there should be some predictability in contingency fee arrangements, instead of what they characterized as an “arbitrary compensation rule.” They suggested that contingency arrangements should be perceived as a joint venture with a client, and indicated that allowing the decision to stand would deter other lawyers from taking on large, complex or risky files.
Justice Newbury rejected this argument, finding that the arbitrary nature of the case was that the facts were unusual as the compensation would be based on the value of the estate, which was not based on any skill of the lawyers involved. There were no natural limits on recovery as in personal injury which could provide estimates of compensation. A contingency arrangement was not a true joint venture because the parties are not equal and the lawyer owes a fiduciary duty to the client. He concluded,
 I believe most members of the public would think it sensible for “services actually provided” to be accorded importance in any fee review. At issue here, after all, is a fee for service − not, as Mr. Macintosh observed, a winning lottery ticket. The Client was led to believe she would be treated fairly if her claim against Mr. Cewe’s estate settled quickly. Counsel seem to have agreed it did not settle “quickly”, but it did settle within eight months and with much less effort than anyone could have expected. No discoveries were held; no document exchanges took place; and any trial was far in the future when Home and Gibson “caved” on the second day of the mediation.
 The chambers judge found that the Registrar had given too much weight to the terms of the CFA and, at least implicitly, that she had failed to give sufficient weight to the integrity of the profession. Again, I am not persuaded he erred in so holding (and I would add that she overemphasized the importance of holding parties to their bargains in this context) or in finding that a fee of $9,000,000 did not strike the right balance between an amount that handsomely rewarded the Firm and one that grossly over-rewarded it. The chambers judge’s choice of $5,000,000 does in my view strike a reasonable balance, and I would not disturb it.
The implications for the bar is that where a lawyer charges a contingency fee as a percentage of a settlement which does not have a relationship to the work done, the difficulty of the file, the skill involved, or the experience of counsel, they should be aware that the fee may come under scrutiny and found to be unreasonable given the professional relationship between the lawyer and client. Although the risk of no recovery and an expectation of higher compensation than fee-for-services will still be applied, but courts will look at the entirety of the circumstances in evaluating such agreements.