Contingency Fees and Litigation: how much is this going to cost me?May 12 2022
The issue of the cost of legal services is a bit of a mystery to most consumers and, more importantly, often consumers cannot afford the price of a lawyer if they are required to pay the lawyer’s regular hourly rates.
For this reason, contingency fee agreements are sometimes used to allow potential clients access to justice where they may have been injured or are trying to pursue recovery of a financial loss or debt.
What is a contingency fee agreement? It is simply an agreement between a lawyer and client that the lawyer will only be entitled to charge a fee if and when a settlement or judgement is obtained on behalf of the client.
The Legal Profession Act of British Columbia and the rules governing how lawyers may charge for fees, permit lawyers to charge, as a fee, a percentage of an amount recovered.
In cases involving personal injury or wrongful death arising from the use of motor vehicles, the maximum amount a lawyer may charge is 33 ⅓%. In any other type of claim for personal injury, or wrongful death, the maximum amount a lawyer can charge is 40%. There is no prescribed limit on the percentage amount a lawyer may charge for all other types of claims involving monetary recovery. Examples include wrongful dismissal claims where a terminated employee may be entitled to wages in lieu of notice or variation claims where a disinherited child seeks to vary the terms of a parent’s will.
Lawyers are not permitted, however, to charge contingency fees for services relating to matrimonial disputes or relating to child custody or access to children.
The percentage amount different lawyers charge will vary, depending upon how the lawyer views the complexity of the case and risks relating to potential eventual recovery.
In motor vehicle cases, it is common for lawyers to charge the maximum amount of 33 ⅓% although lesser amounts are also commonly charged where cases are projected to settle without the need of a trial or at various stages along the way. For example, a contingency fee agreement may provide that a fee will be limited to as low as 15% if the claim can be settled at a very early stage. Conversely, the same contingency fee agreement may state that the maximum amount of 33 ⅓% will only be payable in the event that the matter goes to a trial or settles within a certain period of time before a scheduled trial.
It is important to understand that a contingent fee agreement is just that; the lawyer’s ability to charge a fee is “contingent” upon the successful conclusion of the case and the recovery of money on the client’s behalf. If no money is recovered, then it is presumed that the lawyer is not entitled to a fee for their services, regardless of how much time they may have spent working on the claim. Typically, out-of-pocket expenses incurred by the law firm on a client’s behalf (called “disbursements”) are owed regardless of outcome.
All of this comes with a qualifier: a lawyer is always required to ensure that, under the circumstances existing at the time the agreement is entered into, the agreement is fair and that the proposed compensation provided for in the agreement is reasonable.
If either the lawyer or the client later feel the agreement was not fair or reasonable, either party may apply to the court within three months after the fee account is rendered to have the contingency fee agreement reviewed by the court.
At RDM we strive to be transparent when it comes to fees and the expected costs of our legal services. In limited circumstances we will consider pursuing claims with a contingency fee agreement. This is something our team would be happy to explore with you at the initial consultation stages of your file.