Don’t Stay Silent: Court of Appeal Rules Lawyer Not Entitled to Certain Contingency Fees Following Termination
Some lawyers operate on a “contingency basis”. Generally, this means that the lawyer will not be paid for work done on a file unless it is successfully brought to completion.
In Wallbridge, Wallbridge v Poupore, 2026 ONCA 417 (“Wallbridge”), the Ontario Court of Appeal (the “ONCA”) found that a lawyer, who served clients on a contingency basis, was not entitled to compensation on contingency files that resolved after his termination of employment from a law firm. Although Wallbridge deals with a lawyer’s entitlement to contingency fees, this case should be of interest to any employer that pays its employees on a commission basis.
Facts
Wallbridge concerned a personal injury lawyer (the “Lawyer”) who had worked at a law firm (“Law Firm A”). The Lawyer did not have a written employment agreement with Law Firm A. Like other lawyers at Law Firm A, he represented clients pursuant to contingency fee agreements and was paid on a contingency basis.
After eighteen years working for Law Firm A, the Lawyer began discussions to join a new law firm (“Law Firm B”). On June 15, 2021, the Lawyer signed a contract with Law Firm B to commence employment on October 18, 2021. In the meantime, he continued employment at Law Firm A. On October 1, 2021, the Lawyer advised Law Firm A of his plans to depart for Law Firm B. After being advised of this, Law Firm A terminated the Lawyer’s employment immediately.
Following the Lawyer’s termination of employment, he commenced a claim alleging that Law Firm A owed him compensation for files he had worked on that resolved after his departure.
The trial court determined the Lawyer was entitled to compensation on files where he had performed work before his termination but where fees were not billed and collected until after his termination. Law Firm A appealed this decision to the ONCA.
Decision
The ONCA agreed with the trial court that Law Firm A was obligated to pay the Lawyer for files that settled prior to his departure.[1] However, the ONCA rejected the Lawyer’s claim for compensation for unbilled work in progress on unresolved files that remained at Law Firm A and which were resolved by other lawyers after the Lawyer’s termination.
Notably, the ONCA found that the Lawyer’s situation was unlike that of a commissioned salesperson (where obligations to pay commissions may survive the termination of employment). Here, the Lawyer’s oral agreement with Law Firm A was effectively an “agreement to the contrary” that ultimately reflected Law Firm A’s business model of working on contingency. In other words, the parties’ oral agreement was found to contemplate that not all of the Lawyer’s work would be compensated for if it did not result in a finalized judgment or settlement while he was employed at Law Firm A.[2]
In addition, the ONCA found that, since compensation under the oral employment agreement was not based on working a certain number of hours or completing certain tasks, the Lawyer could not claim he was entitled to compensation on the basis of unjust enrichment. File work was not directly compensated and the parties contemplated that the Lawyer would bring the file to successful resolution to earn the contingency fees. The oral employment agreement did not contemplate part-payment for work that contributed, to some degree, to work that was finished by others.[3]
Takeaways
Wallbridge serves as a reminder that parties to an employment agreement should expressly address what happens upon termination or departure, and that a court will not rescue a party or fill in gaps simply because an unfair outcome may result based on the circumstances. Although the law firm was ultimately successful in this case, asking a court to interpret an oral agreement between an employer and employee is inherently risky. It is always better to have a written agreement which clearly sets out the parties’ agreement.
McLennan Ross can provide legal advice in respect of drafting written employment agreements that contemplate how remuneration components (such as commissions that are not yet billed or collected) are to be handled in the event of a termination.
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