What Is Contingency Fee

Contingency fee is a fee for lawyer’s services that is paid only if there is a successful or favorable result of the lawsuit. Usually contingency fees are taken as a percentage of the client's recovery sum, mostly from 20% to 45%. In Canada contingency fees are legal only in some provinces (Alberta, British Columbia (except for family law cases involving child custody or access), Ontario and Quebec among others). In other provinces, an attorney may collect a percentage of recovery if the case was successful, but still needs to charge an hourly fee.

Contingency fee agreement is usually depending upon various factors related to the case like the nature and complexity of the matter, risks involved in the case, the cost in pursuing the matter, and the likelihood of a successful court verdict. This type of fee us very useful for situations when the client has little income or no income at all, like in serious injury claims or wrongful dismissal claims. It is a good solution for people who are sure that they will win the case, but don’t have enough money to fund the claim in court. Also cases related to accidents and insurance usually have lawyers working on a contingency fee basis.

While the contingency fee main advantage is that you don’t have to pay large monthly bills from your lawyer during all the court procedures, there are a number of disadvantages too. The first is the fact of signing itself. The court will be informed about this agreement and it will be definitely presented as evidence of your intentions about fees during the court procedures. During some cases the contingency fee will cost you more than a possible monthly fee, so be sure to get some additional consultations before you choose the type of fees. And the final disadvantage is disbursements. These are the extra expenses required in prosecuting a lawsuit, like obtaining copies of doctors' records and hospital charts, obtaining expert witness fees, court filing fees and transcript costs for example. The side that will cover the disbursements is specified in the initial agreement and very often though no legal fees are paid, the client remains responsible to reimburse the lawyer for the disbursements incurred by the lawyer.

The agreement can be terminated from any of the sides. In most of the provinces if the client terminates the agreement the fees will be based on hourly rates for all work done before the termination, but the fees will be payable only upon the successful conclusion of the case. If the lawyer terminates the agreement without any cause, he or she receives no fee. So as you see contingency fee is a useful thing for certain types of cases, but before you hire a lawyer on a contingency fee basis you should check the rules in your province in this regard. And remember if a professional lawyer agrees to work on your case on a contingency fee basis, it is the first sign of success.