Contingency Fees

Contingency Fees

I have read some negative press lately about Contingency fee agreements between clients and lawyers.  I have been a personal injury lawyer for over ten years and I thought I would share my perspective.  I offer contingency fee arrangements for clients, but am not necessarily advocating for or against them per se.  I think it’s important for clients to have the option to choose from.

Why contingency fees?

If you have been seriously hurt as a result of an unexpected accident then chances are your life has changed dramatically.  There is an interruption in earnings that most people can’t afford for long.  Accident benefits and disability insurance proceeds may help to offset those losses but let’s not kid ourselves into thinking that there will be a total income replacement.  Just getting accident benefit carriers and insurance companies to pay basic benefits that people are entitled to can be challenging.  I have one case in recent memory where a young man lost the use of his right arm entirely.  His insurance adjuster put him in the minor injuries guidelines where his was only entitled to $5,000 in medical rehabilitation and no income replacement.  It took us months just to get him the basic coverage that he had paid for under his accident benefits policy.  Most, if not all, of the personal injury clients that have walked through my door are simply not in a position to pay the firm’s $3,000 retainer.  That’s just the retainer – regular bills for civil litigation will typically range between $20,000 and $50,000 per year.  In my experience personal injury clients are quite happy to have the case proceed on a contingency basis.

Lawyers prefer cash clients

From my perspective I would prefer a cash retainer from personal injury clients and have them take 100% of the proceeds of settlement.  I would issue monthly invoices and protect my cash-flow.  There would be no risk in the litigation for me.  I wouldn’t have to pay thousands of dollars regularly to fund the expert reports necessary to be successful in personal injury litigation.  I’ve invested literally hundreds of thousands of dollars in legal fees in cases that are by no means guaranteed to succeed.  I setup lines of credit to cover my overhead and to help manage my cash flow.  I’ve made close calls that didn’t work out – clients didn’t meet threshold or exaggerated their injuries only to be discovered with video surveillance by the defendant insurer.   I don’t recover any fee income from those cases – that work-in-progress literally disappears and I’m left wondering why I didn’t just spend time with my kids instead.

Should we cap contingency fees?

I take files on contingency because the reality is that there really is no other choice.  I’ve read recently that Mike Colle, MP from Eglinton-Lawrence put forth a bill that caps contingency fees at 15%.  That figure is completely ridiculous and shows a total lack of understanding of the issue from Mr. Colle’s perspective.  The reality of the situation is that if you capped contingency agreements at 15% you would be stripping disabled people of their rights and putting money into the pockets of insurance companies and their stakeholders.  That’s what we’re really talking about here:  how is it that we can take a vulnerable section of society, like a group of disabled people, and take advantage of them?  The answer: let’s hamstring the only people out there fighting for them so that we can keep more money in the banking and insurance industry.

Thankfully we have the Ontario Trial Lawyers Association out there who simply will not allow this to stand.  The contingency rates in Ontario are fair and in line with what lawyers across the globe are charging to assume the risks involved in personal injury litigation.  This bill will fail and the Association will continue to advocate for people that have been seriously injured and trying to get some semblance of their lives back.

If you are looking for the real story here – check out the deductible on awards for pain and suffering.  Basically a person who has suffered a permanent and serious impairment as a result of someone else’s negligence has to pay approximately $40,000 to the insurance company for absolutely no reason whatsoever.  Last I checked auto insurance profits in Ontario ranged between $3,000,000,000 and $4,000,000,000.  It’s pretty easy to figure out where that money came from..  and unfortunately it doesn’t seem to be enough.

Get rid of that deductible

I’m going to do my part and work hard and try to get as much as I can for people that have been hurt.  I can’t control what parliament does other than to cast my vote.   I hope that these issues raise awareness and that the Ontario government will look at getting rid of the deductible and standing up for the vulnerable people in this province that are being taken advantage of.  Like and share and create traction – these people really do need help and every little bit counts.