Clients are often concerned about whether a contingency agreement is a good deal. The answer depends on you, the client. A contingency agreement lets you shift most of the risk to the lawyer: he or she doesn’t get paid unless you get paid. However, in general, the party that takes the risk also reaps the rewards. There is nothing stopping you from hiring a lawyer to work for an hourly fee, and then
if you win a huge settlement, you keep it. The problem is that you have to pay the fee, even if you win nothing.
However, in BC, clients have protections when they enter into contingency agreements with lawyers. Under the Legal Profession Act, if you believe that the contingency agreement was unfair, you can ask to have it reviewed by the Court. This unusual protection derives from a historical distrust of contingency agreements.
A century ago, contingency agreements were illegal, under the doctrines of “champerty and maintenance”. These doctrines prohibited a party from ‘encouraging’ litigation by funding it. In effect, a contingency agreement is a method of funding someone else’s litigation. Therefore anyone who entered into a contingency agreement could be prosecuted for champerty and maintenance. (As an aside, the author thinks that “champerty and maintenance” would be an excellent name for a legal rap duo).
Over the last hundred years, legislators, judges and lawyers have concluded that contingency agreements can improve access to justice: clients who cannot afford to pay a lawyer (not to mention expert witnesses and court fees) can hire a lawyer on contingency to handle their claim. In order to ensure clients are not taken advantage of, the BC government and the Law Society have setup protections for clients who enter contingency agreements. These protections include the right of review, as well as limits on the amount of contingency fees (40% for personal injury and wrongful death actions, and 33% for motor vehicle actions) that lawyers can charge.
(written by Troy McLelan)
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