When you enlist the services of a personal injury lawyer, you will often be asked to sign a contingency fee agreement (CFA).

In general, CFAs are agreements that if your lawyer is not successful in your proceedings you will not have to pay them and that if your lawyer is successful, they will get a portion of what your claim resolves for. However, most CFAs contain more than that.

How do Contingency Fee Agreements Work?

CFAs allow those who may not otherwise be able to afford lawyers to seek legal aid while still ensuring that lawyers are compensated for their work. CFAs often mean that your lawyer will be more motivated to provide good representation, as their livelihood is also reliant upon the success of your claim.

CFAs work by placing most of the risk of your claim upon your lawyer instead of you having to take a large loan out to pay legal fees and risking losing it all. Your lawyer is taking the risk upon themselves if your claim fails.

Lawyers also benefit from CFAs. Because of CFAs, lawyers are able to represent clients who would otherwise be unable to afford their services even if they had a strong claim. Simply put, CFAs work because they are mutually beneficial to both clients and their personal injury lawyers.

Not all CFAs are the same, but there are many common features of CFAs such as:

  • Sliding scale clauses that base a lawyer’s fees on how far your claim goes;
  • Clauses on what will happen if you decide to switch lawyers;
  • When payments will happen; and
  • Agreements on who will pay certain costs such as money spent on getting a doctor’s report.

What is the Sliding Scale?

Many CFAs will have a sliding scale built into them. This is a scale which determines what the lawyer’s fees will be dependent on how far your claim goes. Many lawyers will base their fees on smaller percentages if your case is resolved in the early stages.

There are many benchmarks that can be used to determine what percentage a lawyer may charge. These can include:

  • A claim settling before going to court;
  • Documents being filed in court;
  • A claim going to court;
  • The length of time a claim spends in court; and
  • A claim being appealed.

Generally, the more time and effort your lawyer has to spend on your case, the higher their percentage will be. However, the variation between claims that settle at early stages and claims that have to be appealed is not usually very large.

What Happens if I Switch Lawyers?

What will happen if you switch lawyers is specific to each CFA, but there are some things which you should be aware of before entering into a CFA.

Some CFAs will have agreements that if you switch lawyers or decide to forgo your lawyer’s representation that they will be able to charge you for fees or expenses which they incurred. Alternatively, they may be able to sue you for their fees.

When you enter into a CFA you should be mindful that you may have to pay the hourly fee for the work the lawyer has already done on your claim if you decide that you no longer want to be represented by them. You may also be required to pay other costs above your lawyer’s salary, including disbursements.

Are there “Hidden” Costs to “No-Fee” Agreements?

Generally, your CFA or lawyer will outline any “hidden” costs that may arise during your claim, however there may be some expenses that you do not expect to be included in a “no-fee” agreement. There are two main categories of “hidden” fees: disbursements and costs.

What are Disbursements?

Disbursements charges from third parties which are required to resolve your claim. There are many forms of disbursements, but some of the common ones include:

  • Physicians’ fees for medical reports;
  • Court charges;
  • Long-distance telephone calls; and
  • Photocopies.

Some CFAs may require clients to pay for disbursements even if their claim unsuccessful.

What are Costs?

If your claim proceeds to trial and you lose, you can be required to pay costs to the successful parties despite having a CFA. This is because your CFA is an agreement with your lawyer regarding their fees only and has no impact upon court orders.

If your case is unsuccessful, you should be aware that you may be ordered to pay costs based on:

  • A fixed cost per day of trial, often up to $2,000;
  • The other party’s disbursements; and
  • A fee based on the amount involved in the trial.

Where does the Money Go if My Claim is Successful?

If you have never had a CFA before, you might not be aware of the common practice in the industry for dealing with settlements. You might expect to get a cheque in the mail, but this is not often the case. Most frequently, the money from your settlement will go directly to your lawyer, often in the form of a cheque, which they will hold in trust for you.

How Can NOVA Personal Injury Lawyers Help?

At NOVA Injury Law we will act on your behalf to advocate for you in your personal injury claim. Our legal team will help you to navigate through the law in and help ensure that injuries and damages are accounted for.

The whole idea behind an injury claim is to compensate injury victims for their losses – and this is a wide-ranging task with unique facts in each case.

To learn more about NOVA Injury Law’s approach to protecting injury victims’ rights, contact us now to book your free Case Review. During the free Case Review process, we will give you our honest opinion about your case, how much your injury claim might be worth, and what you should consider as your next steps.

If you are in need of legal advice or representation for your personal injury claim in Halifax, Nova Scotia, or anywhere in Atlantic Canada, our personal injury lawyers are here to help. Contact us today and tell us more about your claim – we are here to help!