Contingency Fees
I take on files under Contingency Fee Agreements. That means that, if the lawsuit is unsuccessful and I’m unable to get you any money, there is no fee. If we are successful, I charge a percentage of your recovery, so you only pay me when the lawsuit is over.
The Law Society of Ontario has allowed lawyers to represent people based on a contingency fee agreement for many years but only recently changed the format of the contingency fee agreement so that all lawyers using contingency fee agreements are using the same contract. Part of that recent change includes that all lawyers must state, on their website, their maximum fee percentage and their maximum hourly rate.
The Law Society is responsible for regulating lawyers and they are the tribunal that would discipline a lawyer if they failed to use the standardized contingency fee agreement. Therefore, as of July 1, 2021, I have adopted the new standardized Contingency Fee Agreement.
Lawsuits are, however, still quite expensive since I must gather the evidence and hire experts so part of the risk I take on when I open a new file is funding the litigation. I pay for the records we need, the expert reports we need, court filing fees, etc. and these are called disbursements.
Contingency Fee Agreements were first permitted because people could not afford to hire a lawyer and pay a retainer to get access to justice if they had to finance both the disbursements on the file as well as the lawyer’s time. Contingency Fee Agreements make the lawyer take the risk of litigation with the client. If there is no recovery, the lawyer will not be paid. If there is a good recovery, they share in the success.
On an average file at the time of resolution, I have usually spent approximately $20,000 to $25,000 in disbursements. After a trial the disbursements can be double or triple that number. I carry those disbursements for my clients for years because litigation generally takes 3 to 4 years before its ready for resolution. I do not charge interest on the disbursements. In litigation, the loser pays a portion of the winner’s legal bill. This is called Costs. The loser also pays the HST on the costs and the loser generally pays most of the disbursements as a reimbursement.
Most of my clients have been injured in motor vehicle accidents or slip and falls and, if they have serious injuries, it can take up to 2 years before the doctors’ can say that they have stabilized or plateaued. That’s often-called maximum medical recovery. Right after an accident, clients are in pain and very sore and participating as much as they can in physiotherapy, chiropractic treatment, acupuncture, massages or recovering from surgery or preparing for surgery. I can’t assess the file for resolution until they’ve had an opportunity to heal as much as they can from the injuries sustained.
Meanwhile although I want to gather records I wait until my clients have completed their treatment, so we only need to ask once for the entire record. If a doctor or a treating healthcare practitioners suggest a certain type of treatment, I can often help find a treatment provider; hopefully local. The Pandemic is making it very difficult for clients to access treatment. Fortunately, many treatment providers have found ways to provide treatment virtually.
The Pandemic is also causing huge delays in the Court system. Every effort is being made to protect people who must attend the courthouse and Civil Jury Trials have become quite rare. Priority is given to criminal and family law matters. That leaves all the Civil Jury trials since March of 2020 on a list waiting for the Courts to have time to hear the Trial. Needless to say, those lists grow longer daily. The length of time it takes to get a matter to Trial has lengthen by years, literally. Instead, both insurance companies and injured victims must work hard to reach a reasonable settlement or sit in limbo far too long.
I charge the same rate on every file, so I charge 30% of the recovery and generally the Costs contribution from the defence covers about half of the legal fee including HST and covers all of the disbursements.
The other part of this legislation requires that I publish my highest hourly rate. The hourly rate is mostly irrelevant since I’m charging a percentage of the recovery. The more money I get for the client, the more I get paid and that makes it economically viable to pursue lawsuits and fund them under a Contingency Fee Agreement. I keep track of my time at the hourly rate of $450.00 an hour. The only time it really becomes relevant is after a trial or if there is some sort of break in the relationship and my client chooses to go to another lawyer. That rarely happens for me but, if it does, the contingency fee agreement provides that I’m entitled to be paid for the work I’ve done at my hourly rate. It is customary for a lawyer taking over a file to pay all of the disbursements up front and then pay any fee account when they resolve the action or finish a trial. The hourly rate is also important for trial purposes because at the end of a trial, there is a clear winner or loser and a judge will order that the loser pay either partial or substantial indemnity of the winner’s legal bill. Partial indemnity means they pay about 50%. Substantial indemnity means they pay about 75% or 80% but there is no hard rule. Part of the justice’s decision includes looking at how many actual hours were put in by the lawyer, looking at what they did and when, looking at the complexity of the action, any behavior that unduly lengthened the trial and of course the result.
Because trials can be very expensive, I have in place an insurance policy for adverse costs awards. It’s an option that is given in initial interviews on each file if the circumstances indicate that the client would qualify. That policy provides coverage to pay any Costs award against you up to a set limit. It can also be used to pay the disbursements if you get better and do not need to involve yourself in a lawsuit.
Starting litigation for a client is something I take very seriously, not just because that is my professional responsibility, but because I understand the stress and risk involved in litigation and I am undertaking to share that risk with you. Fortunately, the system is set up so that there are many opportunities to resolve a case short of trial and very few cases proceed to a trial. There is usually an attempt to resolve the action before a Statement of Claim is issued at the two-year mark when you are most likely to have plateaued in your recovery. A second attempt is made at the Examination(s) for Discovery are completed. A third attempt is made at a mediation on most files. A fourth attempt will be made at a Pre-Trial if mediation is unsuccessful. There are usually settlement discussions in between these four formal events and particularly in motor vehicle accident cases where the insurer is obligated to attempt to expeditiously resolve the matter.
If you have any questions about the Contingency Fee Agreement please let me know. Further particulars are set out in the Law Society of Ontario’s informational brochure or their website.