Contingency Fees in Ontario - Canada

Clients seek out lawyers who will take on cases on a contingency fee basis. The author discusses the factors that both the client and lawyer should consider before choosing this payment scheme and the legislative and statutory governance of this practice in Ontario, Canada.

Every week clients call me and ask if I will take their case on a contingency fee basis. I almost always say no. Let me explain why.

First of all let’s define our terms. A contingency fee is where the lawyer is paid if and only if the plaintiff wins or there is a settlement. If the client does not get any money then the lawyer does not get paid a fee. How much is a contingency fee? That depends. Normally, it is a percentage of the winnings. For example, someone suing for $1 million dollars may pay $300,000.00 to his lawyer in contingency fees.

Why do clients want to hire a lawyer on a contingency basis? Every person is different. In my experience, some people are desperate and have no money. These people think that it is the only way to get to court. Other clients have money but do not want to take the risk. They are looking for lawyers to finance their case.

Why do lawyers accept contingency fees? Law firms have different business models. Some law firms only take files on a contingency basis. Others only work on a fee per hour basis. In my office we usually charge an hourly rate for our fees. I will accept a contingency fee rarely and only if the client has a good chance to win and the potential fees collected are far greater than warranted by the time spent on the file. Even when I consider such a step I warn the client that it is likely far less expensive for them to pay me my hourly rates.

What does the Law Society say? For those interested in the Law Society of Upper Canada regulations regarding contingency fees I refer you to subrule 2.08(3) and commentary of the lawyers’ Rules of Professional Conduct and the Solicitors Act and the regulations thereunder

For the clients who are considering hiring a lawyer on a contingency fee basis I have the following advice:

1. Don’t compromise on your choice of a lawyer because of contingency fee. When I need a lawyer I always choose the best qualified one available. I prefer one who charges an hourly rate over an equally or less qualified lawyer who would take a contingency fee. You almost never go wrong in seeking out the best qualified lawyer to handle your case. Unprepared unqualified lawyers can lose cases that should be won. Better qualified lawyers are worth the high fees they charge.

2. If a good lawyer is prepared to take a contingency fee maybe you should consider paying his hourly rate. It is a risk for a lawyer to take a case on a contingency fee. The lawyer can invest a lot of time and money in a case and if there is no settlement or victory at trial it is the lawyer who loses. The qualified lawyer who is prepared to take that risk does so because based on his expertise and experience the case likely has a very good chance to succeed. That means that for the lawyer’s investment of time he can make a great deal more money than if he just charged a fee for service.

3. Remember – even with a contingency fee there is always a risk. Even though clients who hire lawyers on a contingency fee basis only do so if they win, clients should consider what happens if they lose. If the plaintiff in a case loses the judge will likely make the plaintiff pay the defendant’s costs.

So when will I take on a contingency fee? I ask myself these questions. Is this a a solid case that is winnable ? If we win will we be able to collect? Is the client a stable reasonable person who really cannot afford to pay his or her legal fees? Does the client fully understand that it will be more expensive for them to take this route? Is this the only way they are able to get access to the justice system? If the answers to all these are questions are yes then I will consider taking the case. Even under these circumstances I always insist that the client thinks twice before I take on a contingency fee because if a case is so promising that it is worth the risk to me it probably means that the client is better off just paying the lawyer for his time.

ABOUT THE AUTHOR: Charles B. Wagner
The author is the senior partner at the Toronto firm of Charles B. Wagner & Associates. It is a boutique litigation law firm that has American and other international clients with commercial and estate litigation cases involving Ontario residents

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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.

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