Executive Summary: Key Legal and Evidentiary Issues

• Whether a law firm bound by a contingency fee agreement can properly withdraw where there is a breakdown in the solicitor-client relationship and disagreements over litigation strategy and financing.
• Treatment of Smart & Biggar’s invoices as disbursements exceeding $150,000, and the client’s refusal to pay them, as a central issue in the dispute over the contingency-based retainer.
• Compliance of the contingency fee agreement with the Solicitors Act regime, including the absence of a clause specifying the firm’s right to terminate and the consequences of withdrawal, and the decision to refer the firm’s accounts to assessment rather than approve the agreement.
• Characterization of “Escrow Agent Retainer Agreement” fees as non-legal services, in light of contract wording that separates escrow services from legal representation and states that escrow fees are not subject to HST/GST.
• The firm’s issuance of invoices totalling $938,020.71 and its plan to satisfy them almost entirely from approximately 635,000 Euros (over $1,000,000) held in an escrow account, prompting judicial scrutiny rather than automatic approval.
• Continued holding of the funds in trust or payment into court, instead of returning them to the client in France, to avoid the need to pursue judgment in another jurisdiction while the accounts are assessed.

Background and parties
The case involves an application and a motion in the Ontario Superior Court of Justice under court file CV-25-102265, Sicotte Guilbault LLP v. Leading Practice SAS, 2026 ONSC 1327. Sicotte Guilbeault LLP is the Applicant law firm, and Leading Practice SAS is the Respondent client. The presiding judge is C. MacLeod RSJ. In a related action, court file CV-19-79258, the Respondent client, Leading Practice SAS, is in litigation against the Attorney General of Canada. In that action, a statement of claim was issued on February 8, 2019, seeking damages of more than ninety-nine million dollars. The action had progressed and was listed for trial on the 2025 civil trial blitz in Ottawa, but the matter was removed from the trial list by the court because of the disagreement giving rise to the motion to get off the record and because, in the view of the court, the matter was not ready for trial.

Retainer and escrow arrangements
The law firm has represented the Respondent since 2019. The Respondent is a Danish corporation controlled by Mark von Rosing, a resident of France. The firm was retained to sue the federal government on behalf of the Respondent pursuant to a contingency fee retainer agreement dated January 22, 2019. The agreement was signed on behalf of the corporation by Mark von Rosing, who also signed as guarantor. Under the terms of this retainer, Sicotte Guilbeault was to receive 40% of a judgment or settlement and would otherwise fund the litigation. If no award or settlement was achieved, the client would pay no fee and its liability would be limited to paying the disbursements. The agreement provided that, should the client choose to change legal representation or otherwise terminate the contingency agreement, legal fees calculated on specified hourly rates (from $100 per hour for a law clerk to $600 per hour for Mr. Sicotte) would be immediately due and payable.
On January 1, 2022, the law firm and the client entered into a separate “Escrow Agent Retainer Agreement.” Under that agreement, Denis Sicotte agreed to act as an escrow agent and the firm was entitled to “fees for escrow agent services” based on the value of cumulative transactions in each calendar year. The agreement stated that escrow services were separate and apart from any legal services, and it provided that escrow agent fees payable under the retainer were not subject to Canadian HST/GST. The agreement also contained termination provisions. It allowed Denis Sicotte/Sicotte Guilbault LLP to terminate the escrow retainer by written notice for any reason, subject to professional and ethical obligations, including unpaid legal fees or conflicts of interest. In such an event, all amounts owing to Denis Sicotte/D M Sicotte Professional Corporation and Sicotte Guilbault LLP as of the date of termination would be due and payable in full as of that date, with interest at 1.5% per month, including interest on accrued interest, until paid in full. It likewise allowed LEAD to terminate the representation under the escrow retainer by written notice, with all amounts owing under that agreement due and payable in full as of the date of termination.

Breakdown of the solicitor–client relationship
The decision records that the relationship between the law firm and the client broke down. The only material before the court from the Respondent was an affidavit previously filed in opposition to the original motion to get off the record, in which the client opposed an order permitting counsel to withdraw and denied that there was a breakdown in the relationship. Without disclosing the privileged information contained in the unredacted affidavit provided by the firm, the judge found that it was clear the relationship had broken down. In his affidavit, the client was highly critical of the lack of preparation, lack of capacity of the law firm, and the ethics of getting off the record, which he regarded as a “calculated business exit” from the contingency model. There was also disagreement about litigation strategy, how to deal with an expert report, and the “outsourcing” to another law firm.
At some point, Sicotte Guilbeault decided to retain Smart & Biggar as co-counsel and to treat Smart & Biggar’s invoices as disbursements. The client was unhappy when he was billed on an hourly basis for what appeared to be outsourcing of services to a firm that billed hourly when he had retained Sicotte Guilbeault on a contingency basis. Disagreements about experts, litigation strategy, and these disbursements contributed to the breakdown in the relationship. The client declined to pay the disbursement invoices, which by that time exceeded $150,000.
On August 11 and 12, 2025, Mr. Morin-Pelletier, who had carriage of the matter, advised the client that the firm would be getting off the record and advised Mr. von Rosing to retain Smart & Biggar. He also advised the client that, given that the mandate had been terminated as a result of the breakdown of the solicitor-client relationship, the firm would be submitting as soon as possible its account for fees and disbursements in accordance with the terms of the retainer agreement.

Motion to get off the record
On the motion, the court considered that the dispute had become more profound after the firm purported to bill the client and the client refused to pay the disbursements, but concluded that it would nevertheless be inappropriate to force Sicotte Guilbeault LLP or the lawyers at the firm to represent the Respondent in its continuing litigation against the federal government. The judge held that the existence of a contingency fee agreement is not a bar to a lawyer moving to get off the record where representation of the client is no longer practical or appropriate. The trial had already been adjourned. An order was therefore permitted to issue in the form required by Rule 15, removing counsel and requiring the defendant in that action to take appropriate steps, and the order was to issue forthwith.

Application relating to the contingency fee agreement and accounts
The court then turned to the application to approve the contingency fee retainer agreement, approve the accounts, and permit Sicotte Guilbeault to deduct payment from the “escrow fund” held in trust. The judge emphasized that, even though the application appeared to be uncontested, the court was required to bring scrutiny to bear on the matter; otherwise, there would be no need for court approval. In this case, it was the law firm that decided to terminate the retainer. The judge found that it was entitled to do so because of the lack of confidence expressed by the client and disagreement over litigation strategy and financing. However, the optics of firing the client, issuing bills totalling almost the entire amount held in the escrow fund, and seizing the fund to pay those bills were described as somewhat troubling on their face.
There was also a question whether the fees billed for escrow services were legal fees. The escrow agreement distinguished escrow services from legal representation, and the funds appeared to be held in a separate Euro-denominated account rather than the firm’s mixed trust account. The judge concluded that, while a contract claim under the escrow agreement would be justiciable in the court, it did not appear that the fees for escrow services were subject to the special regime established by the Solicitors Act. He was not convinced that the escrow agreement should be treated as a retainer for legal services or that it could be assessed or approved under the Act.
By September 19, 2025, after the client had requested termination of the escrow agreement and return of escrow funds of 635,000 Euros (in excess of $1,000,000), counsel for the firm, Stephane Hutt, wrote to the client enclosing invoices totalling $938,020.71. Most of this amount consisted of legal fees calculated at the various hourly rates, with some amounts for escrow services and interest, as well as disbursements relating to the litigation.

Court’s treatment of the contingency fee agreement and assessment
The judge noted that the contingency fee agreement seemed largely unobjectionable on its face and that the proposed contingency of 40% of the recovery might or might not have been approved by the court. The basis for the contingency and the allocation of risk were clearly spelled out. Such agreements are now required to comply with a model agreement on the Law Society website. Although that regulation was not in force when the agreement was made, the agreement largely complied with the content requirements set out in section 7(2) of the regulation, except for a “glaring omission.”
The omission was that the retainer agreement did not contain a provision stating the circumstances under which the law firm has the right to terminate the retainer and the consequences of doing so, as required by section 7(2)(7) of the regulation. The judge observed that this provision in its current form came into force on January 1, 2022, and that there was a similar, if less specific, requirement in the previous regulation. In any event, the termination of the retainer by the solicitor because of a breakdown in confidence and failure to pay accounts could not be interpreted as the client firing the law firm.
The retainer as signed contained a specific provision permitting the firm to bill its fees at hourly rates if the client changed lawyers or terminated the agreement. Additionally, there was a provision permitting the firm to increase the rates if the client contacted the office excessively or acted or failed to act in a way that increased the complexity of the matter or the time required. The judge stated there was no suggestion that this latter provision had any impact. The firm was now purporting to charge fees based on the hourly rates set out in the agreement.
Because the agreement was silent about what happens if the lawyer withdraws from the contingency agreement, and because the firm was not seeking to recover a contingent amount, the judge framed the real question as whether the fees the firm proposed to charge were justified. It was therefore not necessary for the court to approve the contingency agreement or to determine if the proposed contingency was fair. The judge found that there was no doubt the client had retained the law firm and that the law firm was entitled to reasonable compensation for the work done. The hourly rates quoted in the agreement, while relevant, were not determinative of what was reasonable, particularly given that those rates were stated to apply if the client terminated the retainer.
The judge declined to approve the contingency fee agreement as such and declined simply to enforce the hourly rates set out as applying if the client terminated. Instead, he granted the alternative relief requested at paragraph 89 of the firm’s factum. He found that the firm had been retained to provide legal services in the litigation against the Crown and directed that the accounts for legal services—including fees, charges, disbursements, and interest—be assessed “in the ordinary manner.”

Need for assessment and treatment of escrow fees
The judge considered it reasonable for the accounts to be assessed because the court had not heard detailed evidence about the hours spent, who did what work, or whether the hourly rates were reasonable. Detailed docket entries and affidavit evidence setting out the work done, the value of the work, and the specific calculation of the proposed fees had not been provided. In addition, there had been a considerable amount of work done by Smart & Biggar, and those accounts were charged as disbursements, making it necessary to review them to ensure there was no double billing.
Justice MacLeod held that an Assessment Officer is in the best position to review these accounts and hear the necessary evidence. He agreed with counsel for the Applicant that a solicitor who obtains leave to withdraw from representing a client in litigation is “incapable of acting” within the meaning of section 29 of the Solicitors Act and, even if that were incorrect, that it was within his discretion to order assessment of any account for legal services covered by the Act.
The judge made clear that the assessment would not apply to the outstanding fees for escrow agent services. Those services were not structured as legal services, and the agreement stated that escrow agent fees were not subject to HST. He noted that HST applies to legal and accounting services. Sicotte Guilbeault was said to be free to sue for those fees in Small Claims Court should that be necessary.

Direction regarding trust funds and next steps
The judge observed that the client had not filed materials on the application and had not appeared at the hearing, although he had filed an affidavit in opposition to the motion to remove counsel from the record. Despite this, the judge stated that he was not prepared to provide a blank cheque or simply rubber-stamp the accounts as submitted. He ordered that Sicotte Guilbeault obtain and serve a requisition for assessment within 30 days. The client could then choose whether to appear before the Assessment Officer or permit the assessment to proceed on an uncontested basis.
The court directed that Sicotte Guilbeault would be entitled to continue to hold the funds in trust pending the outcome of the assessment. The judge noted that it would make no sense to return the funds to the client in France and then be forced to pursue a judgment in another jurisdiction. The funds were to be held in an interest-bearing account or alternatively paid into court.

Outcome and amounts ordered
In summary, the court ordered that counsel be removed for the plaintiff in court file CV-19-79258. The judge declined to approve the contingency fee agreement but found that the law firm had been retained to pursue the litigation and is entitled to reasonable compensation for the work done on the file. The amount owing to Sicotte Guilbeault for representation in the litigation was referred for assessment, and the Applicant law firm was directed to initiate the assessment process within 30 days. In the interim, the law firm was permitted to continue to hold the funds in an interest-bearing trust account pending the outcome of the assessment or to pay the funds into court. The judge concluded that the Applicant is entitled to costs of the motion and the application, which he fixed at $35,000.00, and ordered that this amount may be paid out of the trust funds. Thus, in this decision, the successful party is the Applicant law firm, Sicotte Guilbeault LLP, and the specific monetary amount fixed and ordered in its favour is $35,000.00 in costs, with the precise amount of fees, disbursements and interest to be determined later by assessment.