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Contingency fees, explained

What is a contingency fee?

Contingency fee arrangements play an important role in the Canadian civil justice system. If you’ve researched personal injury lawyers in Ontario, you’re likely familiar with the term: contingency fee arrangements stipulate that lawyers will not receive payment until their client’s case has been successfully resolved.

Despite their prominent place in the legal system contingency fees are controversial and were prohibited in Canada until October 2004. Some critics believe contingency fees encourage lawsuits; others wonder whether personal injury lawyers should have a financial stake in the success of their clients’ disputes. Historically, contingency fees were banned in England, Scotland, Wales, and Canada due to the principle of ‘champerty and maintenance’: that strangers to a dispute should not fund legal costs as an investment for future rewards, according to a recent Ontario Trial Lawyers Association (OTLA) article. In some jurisdictions, including the Australian state of New South Wales, contingency fees are still banned.

The OTLA and the Law Society of Ontario (LSO) allow contingency fees based on the belief that they expand access to justice. The decision to permit them in 2004 was motivated in large part by the legal relationship between motor vehicle accident victims and insurance companies. Prior to the decision, plaintiffs were at an acute disadvantage in legal disputes involving complex issues – very few Canadians have access to the resources necessary to fund a lengthy legal battle with an insurance provider. The new rules allowed personal injury lawyers to take on complicated, arduous cases without accepting payment at the outset.

So, how exactly do contingency fees work? Simply: the client agrees that their lawyer will recover a percentage of the final settlement or award as payment. The percentage depends on the complexity of the case but should not exceed 50 per cent; the LSO prohibits lawyers from recovering more from the settlement than their clients.

Complex personal injury lawsuits are expensive to pursue. Contingency fees allow lawyers to work without cost restrictions; encourage lawyers to secure the maximum reasonable compensation for their clients; and allow the client to fund their recovery without the financial burden of simultaneously funding a lawsuit. Will Davidson LLP’s team of Oakville personal injury lawyers offers contingency fee arrangements for complex cases and believes the system provides improved access to justice for Ontario’s most vulnerable injury victims.

If you or a member of your family have been injured in an accident, contact the personal injury lawyers at Will Davidson LLP to arrange a free, no-obligation consultation. Our experienced team will assess the validity of your claim and provide guidance throughout the legal process.

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