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Contingency Fee Agreement – How Does it Work?

There are two ways to hire an injury lawyer. You can: 1) pay by the hour; or 2) enter into a contingency fee agreement. Both arrangements work well, but for most, a contingency agreement is best.

 

Let’s compare.

 

With an hourly arrangement, the lawyer tracks his time in the form of dockets. Dockets are measured in tenths of an hour. It can take six minutes to read and react to a letter (.1 hour) or ten hours to read a medical chart (10.0 hours). The hourly rate for injury lawyers usually runs from $300 per hour to $900 per hour.

 

The law firm sends a bill to the client each month for the time expended on her file.

 

Some months, when very little is happening other than waiting for a deposition, a medical examination or a court proceeding, the bill will be very small. Other months, when depositions or document review is occurring, the bill can be exceptionally large – several thousands of dollars.

 

Like most hourly fee-based contracts, payment of the bill is due within thirty days of issuance of the account.

 

The second important feature of a monthly arrangement is how disbursements are treated.  There are many costs to proving an injury claim including medical records, expert reports, accounting fees, court filing fees etc. Our experience suggests that an injury law case worth pursuing will require between $5,000 and $400,000 in such disbursements. A client who hires a lawyer on an hourly basis is required to pay these expenses as they are incurred.

 

The legal fee in a contingency agreement is not payable until the end of the case, and even then, the fee is only payable if the lawyer has been successful on the client’s behalf.

 

Disbursements in a contingency agreement are sometimes (but not always) paid as they are incurred and then carried by the lawyer through the life of the file. If the claim is successful, the defendant is often required to reimburse for the cost of those disbursements. If the claim is not successful, the client is required to pay the disbursements.

 

There is an advantage to hiring a lawyer on an hourly basis. Hiring a lawyer and paying monthly can sometimes result in lower overall legal fees – not always, but sometimes, depending on the complexity of the case, the response of the defendant (willingness to work collaboratively toward settlement) and severity of the injuries and the resulting loss.  A straightforward crash where liability is clear resulting in serious injuries managed by an insurance adjuster willing to get the matter resolved may not take a great deal of legal time.

 

The disadvantages of hiring a lawyer on an hourly basis are obvious: the client pays the bill whether successful or not, the client is required to fund both fees and disbursements on a monthly basis as the case moves forward, and even straightforward cases can be time consuming and expense to prove. Challenges that need to be addressed often arise unexpectedly and increase the bill significantly (surveillance conducted by insurance company, negative and harmful medical reports from doctors hired by the insurance company, etc).

 

Very few people have the financial ability to pay tens of thousands of dollars for legal fees every few months, particularly when injury prevents them from working. Justice and the ability to pursue valid claims would be out of reach for most people if this were the only arrangement available for hiring a lawyer.

 

The advantage of hiring a lawyer on a contingency arrangement is not only that there are no interim or monthly bills needing to be paid but also what the British call ‘no win-no fee’. For many people, this arrangement is key that gives them access to the court system, without which they could not afford to pursue their claims.

 

The disadvantage of hiring a lawyer on a contingency arrangement is that the fee is locked in to a percentage of the amount recovered in the lawsuit. Most Ontario firms charge thirty percent of the overall award (excluding disbursements). This can sometimes result in a large legal bill.

 

There is a great deal of information available to help injured individuals and their families better understand contingency agreements. Start with Contingency Fees: What You Need to Know – A Guide From the Law Society of Ontario.

 

For specific questions regarding Bergeron Clifford LLP’s contingency agreement see FAQs: Bergeron Clifford LLP Contingency Agreement.

Contact Bergeron | Clifford LLP

Let us help you if you have been injured anywhere in Eastern Ontario. Contact us at 866-384-5886 or fill out our online form. We can meet at any of our office locations, including Kingston, Ottawa, Whitby, Carleton Place, Perth or wherever is most convenient for you.

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