A contingency fee basis agreement is a fee arrangement between a lawyer and client were typically the lawyer only receives a fee from the successful monies collected from a court action, with the usual motto being” no collection, no fees”.
Such an arrangement is typically satisfactory to the client who bears little risk in the litigation other than losing the case and having to pay the other party’s costs. The client is saved the often inordinate regular buildings that litigation lawyers send on a regular basis that are expected to be paid promptly should work be expected to continue.
In a contingency fee arrangement it can often be many years before the lawyer realizes his or her fee, even after the trial or settlement.
Contingency fees are often referred to as the poor man’s key to the courtroom, and the reality is is that many larger law firms do not allow their lawyers to handle fees on a contingency basis as they are simply risky and thus hard to account for in budgeting.
Disinherited.com on the other hand typically ask for those who have been disinherited and more often than not, is prepared to accept a case on the basis of a contingency fee arrangement.
Court disputes on occasion occur over the terms of a contingency fee, particularly where the success has been substantial and thus the fee accordingly may be deemed excessively high.
There has been a great number of cases litigated simply on the terms of the contingency fee itself, with the latest best-known Court of Appeal case in British Columbia being Mide-WIlson v Hungerford Tomyn 2013 BCCA 559, which is required reading for all lawyers performing legal services under contingency fee agreements. The plaintiff was the granddaughter of the deceased, Jack Cewe, who was a very successful gravel operator and road Paver, who died within estate worth perhaps $100 million.
After a long discussion with the client as to the possibility of potential fees being as high as $2 million if the case went to the Supreme Court of Canada, the client and the law firm settled on the basis that the firm’s fees would be 20% of any settlement entered into within the first year of the agreement being signed, and 25% settlement entered into within the second year or third year of any settlement or judgment obtained thereafter.
The law firm claimed a fee of $17 million based on the contingency fee
The registrar and a decision found in 2011 BCSC 1440 awarded $9 million to the law firm. Both parties called very senior lawyers to give expert evidence as to their opinion as to the proper quantum of the fee.
The firm appealed to the soup bream court and the Supreme Court judge reduce the fee to $5 million, calling the $9 million award excessive and one that would question the integrity of the profession.
The Court of Appeal reviewed the matter at 2013 BCCA 559 and upheld the award of $5 million
The Court of Appeals summary includes the following passage:
“Lawyers are not venture capitalists, and there exists a risk that the amount payable under a contingency fee agreement will be arbitrarily high, particularly where the underlying assets recoverable and therefore the fee payable may fluctuate greatly. In this case to come of the value is not a function of the work done by the firm. If the estate had been worth $200 million the firm would under the agreement be entitled to a fee of 40 million. There was an aspect of arbitrariness to such a result.