Representing victims of medical malpractice across Ontario

Leduc v. Dufour – Ontario Court of Appeal Upholds Reduction of Contingency Fee in $14M Birth Injury Case

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Paul Cahill

Paul is a partner at Davidson Cahill Morrison LLP. He has proven himself a fearless advocate by a number of successful trial outcomes over the years, including a $11.5 million judgment for medical malpractice causing cerebral palsy against a negligent doctor as well as a judgment against a negligent emergency room physician who caused the death of a 34 year-old mother of 4 young children.
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In Leduc v. Dufour, the Ontario Court of Appeal dismissed an appeal by a plaintiff-side law firm and upheld a trial judge’s decision to significantly reduce a contingency fee in a major birth injury medical malpractice case .

Case Background

The case arose from a 2009 birth at Sudbury Regional Hospital that resulted in hypoxic-ischemic brain injury and later a diagnosis of cerebral palsy. The child’s mother retained counsel to investigate and prosecute a medical malpractice claim against the obstetrician, hospital, and nursing staff.

After years of litigation, expert evidence, and multiple pre-trial proceedings, the case settled in January 2023 for $14 million, inclusive of damages, costs, and interest.

The Fee Dispute

The law firm sought court approval of its 2018 contingency fee agreement, which provided for a one-third fee on settlement. This translated to a proposed fee of approximately $4.1 million (before HST).

The motion judge approved the settlement but refused to approve the contingency fee, finding that the agreement was:

  • Not fair when it was entered into, and
  • Not reasonable at the time of approval

Instead, the court substituted a reduced fee of $3.25 million, calculated using a graduated percentage structure.

Key Findings Upheld on Appeal

The Court of Appeal agreed that the contingency fee agreement was not fair, emphasizing several important principles:

  1. Vulnerable Clients Require Heightened Protection

The plaintiff’s mother was found to be a vulnerable client, given her limited education, lack of legal experience, financial hardship, and the extraordinary demands of caring for a severely disabled child. In such circumstances, strict compliance with contingency fee regulations is especially important.

  1. Regulatory Non-Compliance Matters

While technical non-compliance does not automatically void a contingency fee agreement, the court reaffirmed that Ontario’s contingency fee regulations serve a consumer protection function. Here, the agreement failed to include key disclosures required to ensure informed consent.

  1. Risk of Excessive Fees Was Not Properly Explained

The agreement contemplated scenarios where the lawyer’s fee could exceed the client’s recovery, which is prohibited under Ontario law. The court found it significant that this risk was never explained to the client.

  1. Court Approval Must Be Clearly Disclosed

The agreement did not adequately explain that court approval was required or that there were legal limits on contingency fees, undermining the fairness of the retainer.

Outcome

Because the agreement was not fair at the time it was made, the Court of Appeal held that it was unnecessary to consider whether it was reasonable, and the appeal was dismissed.

Why This Decision Matters

This case is an important reminder that in medical malpractice and birth injury litigation, contingency fee agreements will be closely scrutinized—particularly where:

  • A litigation guardian is involved,
  • The client is vulnerable, and
  • The potential damages are substantial.

Courts will intervene to protect injured plaintiffs and their families where fee agreements do not fully comply with Ontario’s statutory and regulatory framework.

Decision Date: January 8, 2026

Jurisdiction: Court of Appeal for Ontario

Citation: Leduc v. Dufour, 2026 ONCA 3 (CanLII)

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