Lawyers generally get hired on a Contingency Fee Arrangement, which means that the lawyer receives a percentage of your overall recovery at the end of the case. The advantage of the Contingency Fee Agreement is that you only pay the lawyer at the end of the case once you receive your settlement/judgment from ICBC. If you pay based on an hourly rate, you would have no control over how much the lawyer fees will be relative to the size of the claim. Also, you have to pay the lawyer as the case is going along and so you need to have money saved up in a bank to do this.
What should you look for to ensure you are not over-charged for the work performed by your lawyer?
There are many law firms that charge a standard rate of 30-33% on all cases. The Contingency Fee Agreement is on a pre-printed form giving you the impression that the fee is standard and not negotiable. You should be very cautious about hiring a lawyer who is charging those rates regardless of the amount of work that is performed on the file.
The preferable system is to sign a Contingency Fee Arrangement where the lawyer’s percentage of recovery increases depending on how far along your case is when it settles. This is called a sliding scale Contingency Fee Agreement.
Where you have suffered serious orthopedic injuries, you should not hire a lawyer for 30-33% unless there is a liability problem. Shop around for a better percentage rate because the industry is very competitive and if a lawyer is not willing to charge a lower fee for a large claim then you will end up overpaying the lawyer for his/her services.
The only time you should accept payment of 30-33% to your lawyer is:
- Where liability is a serious issue;
- You suffered soft tissue injuries without a lot of time off work (a relatively minor claim);
- Your claim is arising out of a Low Velocity Impact (i.e. minor collision where ICBC says you cannot be hurt);
- The lawyer is offering you a sliding scale Contingency Fee Agreement and the 30-33% rate kicks in if the matter is going to trial.
Overall, you should be looking at a fee in the range of 20-30% for moderate type claims and 20-25% for severe injuries.
Other than the percentage fee to charge, Contingency Fee Agreement has numerous other clauses, many of which are generally not enforceable if the lawyer tried to pursue the clause in Court. There is a series of rulings out of the Court on Contingency Fee Agreements, which generally side with the injured person.
One of the clauses you should be cautious about is how disbursements are dealt with. If your lawyer is not prepared to pay disbursements as incurred on the file and expects you to pay them upfront before settlement then you should be looking to another law firm because that tells you this lawyer cannot bankroll your ICBC claim.
In that regard, your lawyer should have a large credit facility available to enable the lawyer to spend enough money on your case to insure that it is fully developed so that you can maximize your recovery.
In recent times, law firms are charging interest on the disbursements they incur before the case is settled. In some instances, the percentage charged by law firm makes the credit card interest charges look reasonable. You should be careful not to agree to pay a large interest percentage on the disbursement expenses.
On even the smaller cases, the disbursements are $3,000-$5,000. On larger cases, it is not unusual to have disbursements at $50,000-$70,000.
Therefore, if you are paying over 10% interest on disbursements over the 2-3 years of your claim, it is not hard to imagine that you will owe the lawyer a very large amount for interest at the end of the case. This interest charge is often not recoverable from ICBC.