What is a Contingency Fee?

What is No Win, No Fee?

Taken literally and with knowledge of what goes into every account “no win, no fee” is a legitimate statement. That means: Yes, the Lawyer will not get a fee if you don’t receive compensation. However, in addition to fees, there are also costs and disbursements.

Costs represent the defendant’s legal costs that are due if you get an adverse judgment. These fall on your shoulders and not your Lawyers. Costs insurance can be available in some cases and should be explored in your initial meetings. WVGB offers adverse cost insurance to its personal injury clients. The premiums are not paid up front and form part of your disbursements when the file settles. 

Disbursements are the funds paid upfront by your Lawyer to carry your file. They include things like photocopying, mail/postage, travel costs, filing costs and medical-legal assessments. A Lawyer can run up disbursements in the thousands and if successful, the defendant will pay the value of your claim plus these disbursements. However, if you’re unsuccessful, these disbursements are typically due and owed by you. Meaning, if you don’t “win” you owe the Lawyer what was spent to carry your file. Part of WVGB’s adverse costs insurance covers our clients for unpaid disbursements.

Our goal is for all clients to enter negotiations without the fear of  costs or disbursement consequences. We want our clients to settle for what their case is worth and nothing else.

Most personal injury Lawyers work off contingency, meaning that they are compensated based on the result. They take a percentage of your settlement. That percentage is typically 30-35% depending on the Lawyer.

The fee isn’t as simple as just taking a percentage of the overall settlement. It must be broken down in accordance with what a Lawyer is legally able to take. For instance, they cannot take more than the client receives. They cannot take “costs” which amount to about 15% of the value of your claim and are used to counterbalance your contingency fee.

Let’s say the value of your claim is $100,000. In addition to the value of your claim, the defendant will have to cover disbursements (what was paid to run your file) and costs. A typical settlement could be broken down as follows:

• Value of claim $100,000
• Disbursements $15,000 (including HST)
• Costs $12,319.37
• DEFENDANT’S PAYMENT: $127,319.37

The Lawyer’s fee is taken out of the value of the claim and not the defendant’s entire payment. So if the contingency is set at 30%, the Lawyer’s fee in the above example would be $30,000 + H.S.T.. The Lawyer will take the disbursements as well to cover the funds he or she spent on the file. You’re left with the remainder. Here’s how it works using the above example:

• Defendant’s payment $127,319.37
• Disbursements (-) $15,000 (including HST)
• Legal fee: (-) $30,000
• HST on legal fee (-) $3,900
• IN YOUR POCKET: $78,416.37

The exact calculation used could change depending on the facts of each case. As a note, claims are typically subject to pre and post-judgment interest at a variable rate. This will be added to the defendant’s payment.

The Law Society of Ontario’s Rules of Professional Conduct offers the following guidance when determining the proper contingency fee: 

[1] In determining the appropriate percentage or other basis of the contingency fee, the lawyer and the client should consider a number of factors, including the likelihood of success, the nature and complexity of the claim, the expense and risk of pursuing it, the amount of the expected recovery and who is to receive an award of costs. The lawyer and client may agree that in addition to the fee payable under the written agreement, any amount arising as a result of an award of costs or costs obtained as a part of a settlement is to be paid to the lawyer. Such agreement under the Solicitors Act must receive judicial approval. In such circumstances, a smaller percentage of the award than would otherwise be agreed upon for the contingency fee, after considering all relevant factors, will generally be appropriate. The test is whether the fee in all of the circumstances is fair and reasonable.

WVGB Law Group offers a flexible approach to fee structures. They are governed by what’s best for the client using our advice and their own discretion. We offer contingency agreements, estimated fee agreements and hourly agreements. If you have any questions about your case and available fee structures, please reach to request a free consultation. 

Justin A. Villeneuve

Partner

Justin A. Villeneuve

Partner

Justin is a fully bilingual lawyer and services clients in both French and English. He represents parties in insurance disputes, personal injury claims, and employment disputes at various levels of courts in Ontario. He was given early acceptance to the Common Law program at the University of Ottawa Law School. He obtained his Juris Doctorate in 2014 and was admitted to the Law Society of Upper Canada in 2016 after articling at Weaver Simmons in Sudbury, Ontario.

Education

University of Ottawa – Common Law