Is Your Contingency Fee Agreement Fair?

Contingency Fee Agreement

In a contingency fee agreement, the lawyer’s fee is, as the name suggests, contingent upon the outcome of the case. If the case is successful and the client receives compensation, the lawyer will typically receive a percentage of the amount recovered as their fee. If the case is unsuccessful, the lawyer does not receive payment for their legal services.

A contingency fee agreement should clearly outline the percentage fee the lawyer will receive if the case is successful, as well as any additional costs or expenses that the client may be responsible for. A contingency fee agreement should include provisions to protect the client’s interest, such as ensuring that they have the final say in whether to accept a settlement offer or proceed to trial.

Ontario Regulation 563/20 of the Solicitors Act, RSO 1990, c S. 15, helps to provide a framework for contingency fee agreements in Ontario and ensures they are fair and reasonable. For example, a lawyer is not allowed to recover more in fees that the amount recovered by the client from an award or settlement. As well, the percentage of the amount recovered from which the contingency fee is calculated shall not include disbursements. Furthermore, a person under disability who is represented by a litigation guardian with whom a lawyer has entered into a contingency fee agreement must apply to a judge to approve any settlement or consent judgment of the claim.

Where there are disputes regarding whether a contingency fee agreement is fair, the Ontario courts have established a legal test to determine reasonableness. The court must review the circumstances surrounding the making of the agreement, and the onus of establishing fairness and reasonableness rests with the lawyer. To determine the reasonableness of a contingency fee agreement, the court must consider the following factors: time expended by the lawyer; complexity of the matter at issue; results achieved; and risk assumed by the lawyer.

This issue was recently discussed in Firby v. Intact Insurance Company, (2021) ONSC 2096. The court noted that contingency fees related to representation in an accident benefits claim will necessarily be lower than a contingency fees for a tort claim, as accident benefits claims typically lack complexity and risk in comparison. As well, a premium that represents twice the actual docketed time of a lawyer will still satisfy the social objectives and issues with respect to reasonableness and fairness.

If you or someone you know has been injured in a motor vehicle accident, you may be entitled to compensation. At JEWELL RADIMISIS JORGE LLP, we offer contingency fee agreements where you do not pay fees unless we win you money. Please contact our team at JEWELL RADIMISIS JORGE LLP for a free consultation.

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