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Ontario|Personal Injury / Lawsuits
471 Contingency Fees: Can you pay your lawyer a percentage? Contingency fees are tied to the success or failure of your lawsuit or other transaction. If your lawyer is successful in winning your claim or negotiating a business deal, he or she receives a fee calculated as a percentage of what you are awarded in a court ruling or the value of what you gain in a deal. If the lawsuit or transaction fails, your lawyer may receive an agreed-upon flat fee or disbursements only or perhaps nothing at all.
Contingency fees can be a good thing for the client but this type of fee arrangement should be considered carefully. While contingency fees are quite common in the United States, they are a recent innovation in Canada. For many years, lawmakers in some provinces have been reluctant to allow contingency fees. Among their fears are that it will encourage frivolous lawsuits since clients pay nothing at the start and that some lawyers may only take on cases that they are reasonably certain will win.
For these reasons and others, contingency fees must be set out in advance in a written agreement between the lawyer and client - with court approval required in some cases, such as large class action lawsuits. Also, contingency fees are usually not allowed in criminal or family law matters.
If you or your lawyer proposes a contingency fee arrangement, investigate whether it truly is the best deal. The typical contingency fee may be anywhere from 10% to as much as 30% of what you may be awarded. You must decide if this is a fair amount in your situation. If your chances of winning are good, will the lawyer be unfairly enriched? Ask your lawyer and at least one other lawyer what the estimated costs would be based solely on an hourly rate or fixed fee. Also, find out who pays for any up-front expenses and what you may be required to pay if the case fails.