By Sheryl Smolkin
Read this article and comments at Moneyville.ca
If you were in a car accident or recently lost your job, you may need a lawyer to take your case to court, but you don’t have thousands of dollars to spend on legal fees.
Many lawyers will accept a contingency fee paid out of any settlement or judgment you receive at the end of the proceedings.
Some of the kinds of cases in which lawyers commonly accept contingency fees are car accidents, wrongful dismissal, debt collection, product liability, medical malpractice and sexual abuse claims.
The fees are usually based on a percentage and can range from 15 per cent to 40 per cent of the amount you are awarded. While there is no cap on permissible contingency fees in Ontario, it is common for the Superior Court to review contingency arrangements, and any fee over 40 per cent almost certainly will fail.
Related: Ontario judges can set lawyers fees
“The rates I have seen floating around have gone down,” says James Morton with the Toronto firm of Steinberg Morton Hope & Israel “They used to be around 33 per cent but 15 to 25 per cent is now more typical,” he says. There may also be a graduated fee schedule, depending on the size of the award.
The advantage of a contingency arrangement is avoiding a “pay-as-you-go” situation. You also are assured that if your case is not successful, any fee is waived. The major disadvantage is the amount you pay may be higher, because lawyers accepting contingency fees are unsuccessful from time to time and the winners have to cover the costs of the losers.
The contingency fee agreement is generally a very carefully drafted document, and it is important that you understand the terms before you sign on the dotted line. For example:
- Ask who pays for expensive things like court costs, investigators, expert witnesses and transcripts. Many contingency arrangements stipulate that even if you don’t win, you will still have to reimburse your lawyer for these expenses.
- Find out if the percentage paid to the lawyer is reduced if the case is settled before trial.
- Be careful of an “assignment of costs” clause. This means any costs ordered by the court in your favour must be directly paid to your lawyer. Instead, stipulate that whatever legal costs are awarded reduces the percentage you have to pay.
How do you find a good lawyer who accepts contingency fees?
Morton says you should just do your research and find a lawyer you like, without worrying how the fees are charged. In areas of law like personal injuries and wrongful dismissal contingency arrangements have become the norm, so the majority of lawyers specializing in these matters will accommodate you.
You should also consider alternatives to contingency agreements. For example, some lawyers may be prepared to defer invoicing you until your case is resolved but will bill you only for work actually done.
Ultimately, hiring a lawyer is a business arrangement. You need to understand what you are getting into, and whether it makes good business sense. It is important to the success of your case that you and your lawyer have a clear understanding so you can function together as an effective team.