Hybrid fee agreements may not be permissible for personal injury claims in British Columbia
In British Columbia, Rule 8-4 of the Law Society Rules states that, subject to limited exceptions, a lawyer conducting a personal injury claim may charge a maximum of 33.33% of the amount recovered when the claim arises out of a motor vehicle accident, and 40% of the amount recovered when the claim does not arise out of a motor vehicle accident.
These rules may raise concerns whether hybrid fee agreements are permissible for personal injury claims in British Columbia i.e. it is possible that the fees paid to the lawyer according to the base hourly rate may exceed the permissible fee based on the amount recovered. Consider, for example, if a claim is expected to be worth approximately $20,000 and the lawyer is paid hourly fees of $5,000 to advance the claim through trail, but due to the judge finding the plaintiff not credible, only $10,000 is recovered on the claim. In that caes the $5,000 fee would then have been 50% of the amount recovered and in breach of the rules regarding maximum permissible fees set out in the Law Society Rules.
The lawyer and client could deal with this concern by agreeing that the maximum overall fee paid to the lawyer will be limited to the maximum permissible percentage specified by the Law Society Rules, and agree that following resolution of the claim the lawyer will refund excess fees to the plaintiff if necessary to ensure the maximum permissible limit is not exceeded. However, although it would provide the lawyer with the benefit of early payment of some amount of legal fees, such agreement would eliminates the certainty of minimum “base rate” payment to the lawyer and become more like a pure contingency fee agreement.
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