Contingency Fees in Ontario Car Accident Cases: What You Actually Pay

After months of battling the effects of your car crash — the anxiety, the never-ending pain, the sleepless nights, the financial trouble, you’ve gone from trusting to cynical.  You trusted your insurance company to help, but that hasn’t really happened.  You suspect that the system is stacked in favor of the insurer, not in your favor as the insured.

With your regular flow of income at a standstill, how will you ever cover the cost of all those medical and psychological tests and treatments? Since the accident itself was not your fault, you expected help from your insurance company. Instead, it feels as if you’re getting the runaround. The tone of the emails and letters you have received is upsetting – they seem to imply that you’re exaggerating your issues in order to avoid going back to work.

You’re being asked to sign forms you don’t understand, friends are saying you should hire a lawyer to fight for your rights, but you’re worried that even if you were to “win” your case, the lawyer ‘s so-called “contingency fees” would end up “eating up” the majority of those “winnings”.

 As an honest, responsible person, you’re not looking to “cash in” on your accident. You simply want what’s fair — the financial support you desperately need while you work to regain your health and to  put your  life back together.

You’ve read the insurance contract over and over and don’t really understand your rights. You’re certainly not eager to be trapped in another contract with a lawyer. If only you could  find someone who is willing to talk calmly, without giving you a sales pitch or hurrying you to sign on the dotted line, explaining what your options are.

In an Ontario car accident case, a contingency fee means your lawyer is paid a percentage of the money recovered for you, plus HST, and you usually don’t pay legal fees if there is no recovery. You keep more than your lawyer, and Ontario rules say a lawyer cannot recover more in fees than you receive from your settlement or award. 

How do car accident lawyer contingency fees work?

If you hire a lawyer to assist you with a legal matter for which you could receive money, you pay legal fees only if and when:

• you win your case
• a settlement is negotiated.

The percentage that goes to the lawyer must be told to you up front, and must be clearly defined in a written Standard Form Contingency Fee Agreement. When and if money is awarded to you, you must be given an account statement explaining the itemized costs, legal fees, and taxes that are charged to you, plus what course of action you can take if you wish to dispute any of those fees. The lawyer is required to give you the Law Society of Ontario’s guide: “Contingency fees: What you need to know.”

Can there be any other charges in addition to my Ontario accident lawyer’s contingency fee?

Yes, there can be two costs that can be charged to a Canadian acident client:

• Tax

 A 13% HST (Harmonized Sales Tax) is added onto the cost of legal services rendered in Ontario. This tax is charged on top of the lawyer’s contingency fee.  To use an example, in a case where the contingency fee is $10,000, the client would pay $1,300 in tax. If the lawyer wins the case, the tax can be deducted from the settlement.

 If the case is lost, the tax is still owed, and the retainer agreement must state whether the lawyer will absorb that cost or not.

• Expenses (disbursements)

In the course of working on your case, the lawyer will often need to pay certain expenses out-of-pocket, including medical reports, court filing fees, copying documents, courier services, travel expenses, postage, travel expenses, consultant and expert witness and private investigator fees.

Law firms often pay these expenses, then deduct the amounts from the client’s final settlement. It’s important to note that HST taxes apply to these disbursements as well.

What topics should you be prepared to discuss during your visit with a personal injury lawyer in Ontario, Canada?

    You share with the lawyer:

• What, exactly, happened during your car crash.
• What has happened since then (your work situation, medical visits and treatments).
• All the correspondence with the insurance company (emails, letters, any forms you’ve been asked to sign .

Your lawyer should share with you:

• What accident benefits you have.
• Whether a lawsuit is available in your situation.
• What timelines and steps apply in Ontario, Canada.
• Exactly how the lawyer’s fees work.
• How often you can expect updates on your case.
• Precisely who in the law practice will be responsible for handling your file.