“You don’t pay unless we win!”
You’ve probably heard this phrase, or something like it, in a personal injury lawyer advertisement before, but what does it mean and how does it work?
A “you don’t pay unless we win” contract for legal service is called a Contingency Fee Agreement (CFA). This is when a client hires a lawyer for a case but does not pay the lawyer until the case resolves, either through settlement or at trial. When the case resolves, the lawyer receives their fee based on a percentage of the settlement funds or trial award. The amount of the lawyer’s fee is therefore ‘contingent’ on the outcome of the case.
While every province has different regulations, lawyers in Ontario are almost always required to use a Standard Form CFA. This form contains easy-to-read language which clearly sets out expectations and boundaries for the client and the lawyer.
While CFAs can be valuable for some looking for legal representation, it is important to have a good understanding of them before making the decision to sign!
How does a Contingency Fee Agreement work, and what are the advantages?
In personal injury cases, the client is often unable to earn their pre-disability income and cannot afford to pay for a lawyer.
A contingency fee agreement allows clients to access legal services without paying money upfront. While some lawyers require an initial retainer and charge clients per hour worked, a contingency fee agreement is based on a percentage of the result achieved. If the case is completely lost and no money is collected, the client does not owe the lawyer a fee, giving the client a layer of risk protection.
In determining the percentage rate, lawyers should exercise their knowledge and experience to ensure that the fee is reasonable and fair. This percentage should take into account the complexity of the claim, how long it could take, the likelihood of success, and the expected value of the result.
Lawyers must inform their clients of all the factors considered in determining their contingency fee, so do not hesitate to ask your lawyer questions or for clarification during the agreement process!
With Ontario’s regulations on CFAs, it is important to know that lawyers cannot prevent you from abandoning your claim or from changing legal representation midway through your case if you choose to do so. The Standard Form CFA spells out how fees will be calculated on the work done by the lawyer up to that point.
What are important points to consider before signing a Contingency Fee Agreement?
While a CFA can be ideal for client looking to avoid the significant upfront cost of hiring a lawyer, it is important to note that not all legal expenses in a CFA are determined on a percentage rate.
Disbursements are the out-of-pocket expenses that your lawyer encounters throughout the process of getting a client’s case to where it needs to be. These expenses include court filing fees, fees to access medical records, and the cost of hiring experts. Under a CFA, clients are usually not charged upfront for disbursements, just like the lawyer’s fee. That said, disbursements are usually in addition to the lawyer’s CFA fee percentage, so this is something to keep in mind when signing a contract.
Finally, when deciding if you should go forward with a CFA, it is important to consider all the possible outcomes. While your lawyer may be fully transparent in all the factors they considered when offering you a percentage in your CFA, a case can sometimes resolve earlier than expected. In these situations, the amount of money that you agreed to pay your lawyer may end up being higher than if you had chosen to pay through an hourly rate. Regardless, contingency fee agreements can offer much security, ease of mind, and financial protection for clients, and are an excellent approach to have available!
Why Choose Us?
At White Macgillivray Lester LLP, we strive to make quality legal representation accessible for people in Northwestern Ontario. We want our clients to feel informed and empowered from the very beginning of their case, which is why we offer free consultations and full transparency in our agreements. Our clients can feel secure knowing that we always work with their best interests in mind, and to get them the best possible result in their claim.
Contact us at any time to set up a free consultation with one of our lawyers.