Risk of contingency fee agreements (no recovery no fee) justify higher lawyer fees
Because of the risks involved in taking cases on contingency and possibly not getting paid at all, courts of have acknowledged that the compensation to the plaintiff’s lawyer in successful cases may be substantially higher than if the lawyer had been certain of payment under an hourly rate fee agreement:
An hourly rate of $300 would result in a fee of approximately $72,000. That hourly rate is what senior counsel might hope to bill on significant cases. To double that figure to account for the contingency risks must surely represent as much as any segment of the profession or the public would consider to be fair remuneration. I am of the opinion that a fair and reasonable fee is $175,000.
(Harrington (Guardian ad litem of) v. Royal Inland Hospital (1994), 89 BCLR (2d) 165, 22 C.P.C. (3d) 113 (S.C.)).
Courts have also acknowledged that the plaintiffs’ lawyers will look to successful cases finance the unsuccessful ones:
It is relevant, as the judge said in this case, that the plaintiff could not have proceeded without a contingency fee agreement, and that the successful cases finance the unsuccessful ones. However, degree of risk, the level of effort expended, and the nature of and complexity of the legal issues must also be considered.
(British Columbia (Public Guardian and Trustee) v. Ralston, 2008 BCCA 372 at para. 32).
A lawyer who takes a great risk for a client deserves to be handsomely rewarded if successful because, in another case, he may take a great risk but fail. By a great risk, I mean not only investing weeks, perhaps months, of work, but also putting up substantial disbursements in a case that is fought hard by the other side.
(Usipuik v. Jensen, 1986 CanLII 1076 (BCSC) per Southin J.).
The above confirms that a plaintiff’s lawyer who risks not being paid until the claim is resolved will be entitled to a higher fee than if the plaintiff had paid the lawyer by the hour as the case proceeded.
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