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Personal Injury

Contingency fees should be simple and standard: Spurgeon

After making changes to referral fees and advertising, the Law Society of Upper Canada (LSUC) is turning its attention to contingency fees, says Hamilton personal injury lawyer Andrew Spurgeon.

“The present system is archaic and needlessly complicated,” says Spurgeon, partner with Ross & McBride LLP.

“It’s very difficult to explain how it works to a client. So the first thing we have to do is simplify it,” he tells AdvocateDaily.com.

The LSUC’s Advertising and Fee Arrangements Issues Working Group recently released an interim report that came up with potential "options for discussion," which include caps, simplified calculations and independent legal advice requirements, says Spurgeon, who sits on the committee.

"The goal is to come up with an approach that protects the public by ensuring contingency fees are fair, reasonable and transparent, he says. 

The report says the society has found the “single greatest issue” with contingency fees is how they're calculated.

Spurgeon, a bencher with the law society, says the working group is considering a recommendation that would see contingency fee arrangements (CFA) based on a percentage.

“That percentage would be calculated on the all-in number of the settlement, less the disbursements,” he says.

Contingency fees are an important tool in the legal system that helps provide equal justice to those who may not be able to afford a lawyer, Spurgeon says.

“You want to give people, who otherwise couldn’t get into court and get compensation, access to justice,” he says.

But at the same time, he adds, lawyers need to be compensated for taking a risk on cases.

Contingency fees — or the you-don’t-pay-unless-we-win model — allow clients to have their cases heard without any money up front. But the bills — and the medical experts — still have to be paid.

“The presumption is when you hire a lawyer, you pay an hourly rate and pay the cost as you go,” says Spurgeon. “In that scenario, if your case fails, you bear the risk and the cost. That’s the normal course.

“But if you’ve been injured and you can’t afford to hire a lawyer, then you enter into an agreement and ask the lawyer to bear the risk of not getting paid — and incurring expenses — when the case goes badly.”

Spurgeon says personal injury lawyers are asked to bear the entire risk and pay all the bills for the case along the way.

“Yet, there's no guarantee on anything in respect to outcome.”

The working group acknowledged that certain cases come with a higher risk and lawyers should be able to tailor their rates to take on such cases.

“One option may be to have the lawyer and client jointly apply for approval to charge a CFA above a prescribed limit if the case goes to trial in order to ensure access to justice in such higher risk cases,” says the report.

Spurgeon says the working group is also considering a recommendation to create a new standard form for contingency fee agreements to ensure they're transparent and easily understood.

“Lawyers would be able to compete on price and percentage and all that sort of stuff, but the format would be the same for everyone. Right now, there is no standard form,” he says.

The working group has not finalized its recommendations and is asking interested parties to submit feedback by Sept. 29.

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