Michael Ford
Personal Injury

Fifteen per-cent contingency fee cap won't cover lawyers' costs

A 15-per-cent cap on contingency fees could harm accident victims by driving plaintiffs’ lawyers out of the business, says Ottawa personal injury lawyer Victoria Boddy

Earlier this year, Toronto MPP Mike Colle introduced a private member's bill, the Personal Injury and Accident Victims Protection Act, that, if passed, would enact amendments to Ontario’s Solicitors Act and its Law Society Act to limit lawyers’ fees to 15 per cent of the total settlement received by their personal injury clients. The bill, which passed first reading in the provincial legislature, would also ban referral fees paid between lawyers for files.

But Boddy, an associate at Yegendorf & Associates, says Colle’s suggested limit is unrealistically low.

"Lawyers normally put in much more work than the proposed cap would cover, which is problematic,” she tells AdvocateDaily.com. “If that’s the case, lawyers will be losing money on many cases, which will act as a disincentive to take clients on a contingency basis at all.”

For those who persist with plaintiff-side work, Boddy says lower fee caps will deter them from taking a risk on more marginal cases.

“The only way to make it feasible would be to accept files that you can get in and out of without doing much work,” she explains.

However, that type of straightforward case is becoming rarer as time goes on, she says.

“We often find that insurers are trying to drag things out as long as possible."

In a statement issued shortly after the introduction of Colle’s proposal, also known as bill 103, the Insurance Brokers Association of Ontario (IBAO) backed the move.

“A major cost driver on the auto insurance product has been zealous litigation incented by contingency and referral fees. IBAO is supportive of Bill 103, which would help to protect consumers and keep costs down,” said IBAO CEO Colin Simpson. “All other parties in auto insurance industries are already required to disclose their compensation — it’s time lawyers and paralegals do the same.”

But Boddy says those aims could still be achieved without resorting to a 15-per-cent cap, adding that she isn’t entirely opposed to an upper limit for contingency fees, so long as it’s a more reasonable figure.

“I would say 15 per cent is too low, and 50 per cent is too high, because that wouldn't leave accident victims with enough money in their pockets at the end of the day. Somewhere around 30 per cent is probably fair,” she says.

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