Likes: 
Lawyer contingency fees.
Ontario’s legal regulator is contemplating major changes to the contingency fee system — “you don’t pay unless we win” — in an effort to stop “double dipping,” a practice in which lawyers take more money from their clients than the law allows.
A Law Society of Upper Canada working group is considering a variety of recommendations, including capping lawyers’ fees, introducing a mandatory standardized contingency fee agreement, and requiring independent legal advice before fees are paid.
“The working group is concerned that there appears to have been widespread non-compliance with the current regulatory requirements governing Ontario’s contingency fee regime,” says a report by the working group.
“Change is necessary in order to protect consumers.”
The recommendations come on the heels of a Star investigation that found that personal injury lawyers in the province routinely take two portions of money from their clients’ settlements, a practice known as “double dipping” in legal circles. In simple terms, lawyers working on contingency cannot take a sum of money called “costs” in addition to an agreed-upon percentage fee from the final settlement.
The Star found that many Ontario residents have been overcharged thousands of dollars and likely do not know it.
Earlier this month, Ontario’s Court of Appeal upheld a class action certification enabling a possible 6,000 accident victims to try to get their money back from personal injury law firm Neinstein & Associates, which is accused of double dipping into client settlements.
In April, the law society made changes to the referral fee system and the way lawyers can advertise their services, issues that were part of earlier stories in the Star series.
The working group’s latest report shines a spotlight on the remaining piece of the puzzle — contingency fee agreements. The report says the law society has found that the “single greatest issue” with contingency fee agreements is how fees are calculated. As part of its current review, the working group said it has considered academic and media reports, and is reaching out now for more advice.
“Contingent fees are an important way of ensuring access to justice,” said Malcolm Mercer, chair of the working group. “But ensuring they are fair is complicated and we look forward to assistance and thoughts from those involved.”
The report recommends changes to the Solicitors Act, which governs lawyer conduct, to “ensure that fees are clear, fair and reasonable.”
Because contingency fee agreements are “unduly complex,” the working group says, it recommends requiring a mandatory standardized agreement.
The report says that will make it easy for clients to understand what they’re signing and compare the cost of legal services.
Under the current system, when a lawyer completes a case with an insurance company, the settlement amount is divided up into costs, damages and disbursements — legal out-of-pocket expenses. The working group has recommended that the only fee the lawyer will be able to take is an agreed-upon percentage of the full settlement, minus disbursements.
The provision in the Solicitors Act that gives “costs” to clients in contingency fee cases not only makes fee calculations more “difficult,” the report says, but can lead to miscommunications and create “inherent conflict between the licensee’s interest and the client’s interest.”
At times, the report said, the cost issue has “enabled unprofessional conduct by licensees putting their interests above their client’s interest.”
Simplifying the fee calculations should be accompanied, the report says, by safeguards that could include requiring that clients get independent legal advice before paying their bill and telling clients exactly what they are paying for by disclosing — before the fees are paid — “the value of the time actually spent on the matter at the licensee’s agreed hourly rates.”
But the working group feels that lawyers should be able to tailor their contingency fee rates — most lawyers take between 25 to 35 per cent — in order to take on higher risk cases.
The working group is considering a variety of options, including setting a sliding scale contingency fee lawyers for cases that settle at various stages prior to trial to a maximum fee for matters that go to trial.
Regardless of changes, the report said that lawyers and clients should still be able to jointly seek court approval to allow a lawyer to charge above contingency fee limits, in order to ensure access to justice for higher risk cases.
Clients would still be able to get their fees assessed, the report said.
The working group is seeking lawyer feedback on its ideas until Sept. 29 before formulating final recommendations.
Reply With Quote
