What is a Contingency Fee?
The idea is a simple one. You don’t have to pay any legal fees unless you receive money from the lawsuit. In other words the lawyer doesn’t get paid unless you get paid. The reason for this arrangement is the client’s inability to pay a legal retainer or they are not working due to serious injury or wrongful dismissal for example.
Pros & Cons of Contingency Fees
Like everything else in life there are advantages and disadvantages to contingency fees. The main advantage is the client has no risk in that if the claim fails they are not stuck with a huge legal bill. There is however a downside. If the lawyer sees a quick settlement for less money he or she may be tempted to take it, make their money and move on. This is not always to the advantage of the client. Having said that there are circumstances where the client needs to settle quickly even if it’s for less money.
How much are Contingency Fees?
Contingency fees aren’t regulated in Canada and so can vary from layer to lawyer. Contingency fees are usually based on a percentage of the money received and can range from 20% to 45%. The percentage is based on the amount of work needed to build a solid case and depends on the risk & complexity of the case. You should check the rules around fees in your province. A common provision in Canada is that, if you the client terminates, legal fees will be calculated on hourly rate for all work down up to termination but payable only upon the successful conclusion of the case. If it’s the lawyer terminates without cause, the lawyer receives no fee.
What are Disbursements?
Disbursements are the out-of-pocket expenses for things like, in a personal injury case, the cost of getting doctor’s records, court transcripts, expert witness, and hospital records etc.
Who pays for the Disbursements?
This is an issue you need to talk to your lawyer about. In the event that your case is not successful the lawyer may require you to pay for these Disbursements. In most cases these out-of-pocket expenses are paid by the client out of the proceeds from the claim.