Contingency fees are a type of legal fee arrangement where a lawyer’s payment is contingent on recovering money in their client’s claim. These fees are a percentage of the amount recovered through a settlement or monetary award.
Contingency fees are commonly used in personal injury cases, medical malpractice, workers’ compensation, and other cases where a monetary settlement or judgment is expected. They are used for several reasons:
- They allow individuals who may not have the funds to pay a lawyer upfront to retain access to legal representation.
- The lawyer’s payment is tied to the success of the case, aligning their interests with those of the client.
- The client is not burdened with legal fees if the case is unsuccessful.
In Ontario, contingency fee agreements must adhere to specific rules and regulations governed by the Solicitors Act. Some key provisions include:
Lawyers who are offering contingency fees have a responsibility to structure an arrangement that is fair and reasonable, and clearly communicate it to the client. That structure will depend on factors such as: the likelihood of success, the complexity of the claim, the expense or risk carried by the law firm, the potential amount of the award, and to whom it is to be distributed.
It’s also important to note that contingency fees may not always be structured as a fixed percentage of the award. Some may be staged (meaning the percentage paid is lower if the case is resolved at an earlier stage in the process), partial (the client pays for some legal services at the outset of the matter to lower the percentage paid as a contingency fee), or with a bonus (a client pays an additional premium on top of the contingency fee if a desirable result is achieved).
Contingency fees can provide essential means of access to justice for many individuals, particularly in cases where monetary awards are sought. Like any fee arrangement, they come with both benefits and potential drawbacks, and clients should fully understand the terms and implications before entering into an agreement of this nature.
If you have more questions, or are seeking legal representation you can trust, contact our team today.
* Please note that the information in this article is not intended as legal advice, but rather as a general overview on the subject. If you are seeking legal advice, please consult with a lawyer.
