Understanding Contingency Fee Agreements

December 19, 2023

By: Dallas Lee

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While many lawyers bill clients by the hour and require a cash retainer up front before doing any work for a client, this system does not typically work well when dealing with people who have suffered serious and often life changing injuries as a result of accidents, abuses or other wrongdoing.

In Ontario, lawyers are permitted to enter into contingency fee agreements with clients. These agreements play a pivotal role in ensuring access to justice for individuals who may be hesitant to pursue a legal claim due to financial constraints. These agreements serve as a mechanism to allow clients to retain legal representation without the immediate burden of upfront costs.

What is a Contingency Fee Agreement?

A contingency fee agreement is a financial arrangement between a client and lawyer wherein the lawyer's fees are contingent (i.e. dependent) upon the successful outcome of the case. Essentially, the client pays legal fees only if the case is won, and the lawyers fees are then calculated as a percentage of the settlement or court award.

Advantages for Clients

One of the primary advantages of contingency fee agreements is that they provide a risk-free option for clients seeking justice. Clients can pursue legal action without worrying about the financial implications of hiring a lawyer, making legal representation more accessible to a broader spectrum of individuals.

Additionally, these agreements help clients feel like they are “on the same team” as their lawyer, who is only paid if the case is won, and whose own compensation is tied directly to the ultimate result of the litigation. Several clients have said to us over the years that they enjoy knowing that “the better the case does, the better we both do.”

Regulation in Ontario

It's crucial for clients to be aware that contingency fee agreements in Ontario are subject to specific regulations outlined by the Law Society of Ontario. These regulations aim to protect clients by ensuring that contingency fees are fair and reasonable. Lawyers are required to provide clear and transparent communication about their fees, ensuring that clients fully understand the terms of the agreement.

The Law Society’s website outlines the rights and obligations of clients and lawyers using these agreements and the lawyers at Beckett go so far as to send every single client that we work with a Law Society-created information package to review before the agreement is signed.

Percentage and Disbursements

Contingency fee agreements in Ontario are very heavily regulated by the Law Society to ensure that clients and lawyers are protected and treated fairly. These regulations, for example, ensure that lawyers are prohibited from charging a contingency fee that exceeds the amount the client receives under an award for damages or by way of settlement. Lawyers must also ensure the contingency fee is fair and reasonable and disclosed to the client in a timely fashion.

Choosing the Right Legal Representation

When entering into a contingency fee agreement, it's essential for clients to carefully choose a reputable and experienced law firm. Thoroughly discussing the terms of the agreement and ensuring clarity on all aspects can contribute to a positive lawyer-client relationship. Clients should be given time to carefully review the proposed agreement and to ask as many questions as necessary to ensure an understanding.

Conclusion

Contingency fee agreements are a crucial tool in providing equal access to justice for individuals facing legal challenges. By understanding the regulations in Ontario and choosing a trusted legal representative, clients can navigate the legal landscape with confidence, knowing that their pursuit of justice is both feasible and financially manageable.

The lawyers at Beckett have considerable experience in all areas of personal injury law, including representing individuals seriously injured in accidents and survivors of abuse. We always provide a free initial consultation and would be happy to discuss your legal issues and whether a contingency fee agreement is right for you

Published on December 19, 2023

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