Providing expert legal services for civil, family, construction, wills and estates and business law.

Contingency Fees and Litigation: Everything You Need to Know

Providing expert legal services for civil, family, construction, wills and estates and business law.

hammer

Contingency Fees and Litigation: Everything You Need to Know

In Canada, litigation can be a costly process that often discourages individuals from pursuing legal action. However, contingency fees can provide an alternative option for individuals who cannot afford to pay upfront legal fees. Now, we understand if you don’t know much about this. To help clear things up, we’ve put together a brief discussion on contingency fees. This article will explore what contingency fees are, how they work, and their benefits and drawbacks.

What Are Contingency Fees?

Contingency fees are a payment arrangement between a lawyer and their client. In a contingency fee agreement, the client agrees to pay the lawyer a percentage of the recovery if the case is successful. If the case is unsuccessful, the client does not have to pay their lawyer any fees. Contingency fees are most commonly used in personal injury cases, but they can also be used in other types of cases such as employment law, class actions, and medical malpractice.

How do Contingency Fees Work?

The percentage that the lawyer receives is agreed upon in the contingency fee agreement. In Canada, the percentage typically ranges from 20% to 40% of the recovery, depending on the nature of the case and the risk involved. The percentage may also vary depending on the stage of the litigation, as it may increase if the case goes to trial.

Before taking on a case on a contingency fee basis, lawyers will typically assess the merits of the case and the likelihood of success. If the case is weak or has a low chance of success, the lawyer may decline to take it on a contingency fee basis.

What Are the Benefits of Contingency Fees?

One of the primary benefits of contingency fees is that they provide access to justice for individuals who cannot afford to pay upfront legal fees. Without contingency fees, many individuals would be unable to pursue legal action, and wrongdoers would go unpunished.

Contingency fees also incentivize lawyers to work hard on behalf of their clients. Since the lawyer’s fees are contingent on the success of the case, they have a vested interest in obtaining the best possible outcome for their client.

Another advantage of contingency fees is that they can align the interests of the lawyer and the client. In a traditional fee-for-service arrangement, the lawyer is paid regardless of the outcome of the case. In contrast, contingency fees motivate the lawyer to work towards a successful outcome, which benefits both the lawyer and the client.

What Are the Drawbacks of Contingency Fees?

One of the main drawbacks of contingency fees is that they can be expensive for clients. Since the lawyer’s fee is a percentage of the recovery, clients may end up paying a significant amount of money if the recovery is large. For example, if a client recovers $1 million and the contingency fee is 33%, the lawyer’s fee would be $330,000.

Contingency fees also create a conflict of interest between the lawyer and the client. Since the lawyer’s fee is contingent on the success of the case, they may be inclined to settle the case quickly rather than pursuing the best possible outcome for the client. This can be particularly problematic in cases where the client has suffered significant harm, as a quick settlement may not adequately compensate the client for their losses.

Contingency fees can also lead to some cases being over-litigated. Since the lawyer’s fee is a percentage of the recovery, they may be inclined to pursue a case even if it has a low chance of success. This can result in cases being dragged out unnecessarily, which can be a drain on the client’s time and resources.

Conclusion

All in all, contingency fees can provide an alternative option for individuals who cannot afford to pay upfront legal fees. They allow individuals to pursue legal action without the financial burden of paying for legal services upfront. However, contingency fees can also be expensive for clients and create a conflict of interest between the lawyer and the client. It is important for individuals to carefully consider the pros and cons of contingency fees before entering into a contingency fee agreement with a lawyer. If you are considering a contingency fee arrangement, it is essential to speak with a lawyer who has experience in this area of law.

If you’re in need of a civil lawyer in Abbotsford, then you’ve come to the right place. Pathfinder Law is committed to upholding our client’s best interests and helping them obtain positive and timely results. Contact us now to schedule your complimentary consultation!

Disclaimer – The information contained herein is of a general nature. It is not intended to be legal advice and it is not intended to address the exact circumstances of any particular individual or entity. You should not rely on or act upon such information without receiving appropriate professional advice and without a thorough examination of your particular situation.