Make sure you discuss fee arrangements before you retain the lawyer. In particular, you need to know whether the lawyer will charge fees based on (1) percentage of the recovery, or (2) hours worked. You also need to know who will fund the disbursements (expenses to process the claim) before your case settles, the amount of interest charges, and other hidden charges. You need this information to make an informed choice about your lawyer, and it will help avoid disagreements later on.
Contingency Fee Agreement
The vast majority of personal injury lawyers in BC handle ICBC claims pursuant to a contingency fee agreement. This means the lawyer will charge fees based on a percentage of the total recovery after the claim has been settled or judgment pronounced. If there is no award, the lawyer cannot charge a legal fee. This type of arrangement offers you many advantages, including:
- You only pay fees at the end out of the settlement or judgment monies received. This is a significant benefit as many individuals do not have the means to pay lawyer bills before the case is concluded;
- You have relative certainty about the amount of legal fees being charged, which may not be the case with hourly rate arrangements;
- You do not have to worry about being charged for the time the lawyer spends on the file (eg. you will not be charged for calling your lawyer). Again, this differs from hourly rate arrangements;
- The bigger the settlement/judgment, the bigger the fee, so the lawyer has extra motivation to get the best possible result for you; and
- If there is a significant chance you could lose your case, the lawyer assumes the risk of working on your file and receiving no fees. This gives you the opportunity to advance a difficult claim that you may not otherwise pursue.
Maximum Remuneration Amount
Our Law Society Rules (Part 8) regulates contingent fee agreements. The maximum remuneration for a motor vehicle accident-related personal injury or wrongful death claim is 33.3% of the amount recovered. Many lawyers charge a rate of 30-33.3%, other lawyers charge a percentage that increases incrementally as the case progresses (often referred to as a “sliding scale” contingency fee agreement). We charge a lower flat rate that does not increase as the case proceeds (say, for example, going to trial). We do not want our client’s decision about settling or going to court to be influenced by the amount of the fee. With a flat rate, the fee percentage remains the same.
Other Things to Consider
There will be other terms in the contingency fee agreement that you must consider, such as who will fund the disbursements while your claim is ongoing. Most lawyers will cover the disbursements, and get reimbursed by ICBC (on top of the settlement), when the case settles. However, some lawyers will expect the client to pay for disbursements or secure their own funding. This can be very onerous and it is not recommended that you agree to this kind of arrangement.
Most lawyers also charge interest on the disbursements incurred to offset the credit facility charges, but the rates charged by law firms vary.
Before you retain a lawyer, make certain that you go over the contingency fee agreement and have all the provisions explained to you in detail. Are there other hidden charges? Does the law firm apply the fee on your out-of-pocket expenses or Part 7 benefits paid? Make sure you understand what you are signing.