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Letter: More on the history of contingency fees

I read Prof. Philip Girard’s piece (“Debate over contingency fees goes back a long time”) in the Sept. 21 issue with interest.

It is the case that contingency fees, whereby a lawyer or firm can contract for a retainer that will pay it a percentage of a recovery, were only recently permitted by legislation in Ontario, the last province to do so. But contingency fees in personal injury cases in Ontario go back many decades, likely coincident with the coming of the motor car to Ontario roads, and perhaps even earlier. The contingency involved was that if there was no recovery of damages, the lawyer did not get paid and was out of pocket for the disbursements necessary to take the case to trial.

When I began practice in 1961, after clerking for chief justice James McRuer, a significant portion of the work at my firm was plaintiff’s personal injury, as it remains today. Virtually none of the injured people who sought to hire us could afford to pay disbursements, let alone our fees. None of them could retain us, or any other firm, on a fee-for-service basis (hourly rates, docketing, and interim billing were unknown in that segment of the bar).

What we told our clients when they retained us was that we were not permitted to charge them a percentage of the award or recovery, but we would not charge them anything if there was no award or settlement. But they were informed, often in writing, that if there was an award or settlement, they would be charged a fair fee that would depend on the degree of success achieved, the size of the award, and the amount of work done to achieve it and that it would consist of the party-and-party costs recovered from the defendant and some portion of the award itself that we could not commit to in advance.

We told them: “In our experience, in cases like yours, that figure usually is in the range of 10 per cent of the amount recovered.” And, they were told that if they were dissatisfied with our fee, it could be taxed (assessed) by a court official. No prospective client who could not afford to pay a lawyer ever had a problem with that arrangement.

Nor did any of the defence counsel complain. Personal injury cases in those days were defended by many of the most senior and respected counsel in Ontario, many of whom were benchers and subsequently became judges. They were well aware of how the system worked and had no issue with it. Personal injury defence work was an important part of the business of the many insurance defence firms, and it would have been devastating to their income if the area of practice did not exist.

The late Martin Wunder and I were counsel for Diane Teno, of Teno v. Arnold fame, who was catastrophically injured as a four-year-old in 1968. Her case was not resolved until it was dealt with by the Supreme Court of Canada in 1978, and no fees were charged to her until there was final recovery. In the meantime, our firms bore all of the disbursements.

Without the system that then existed, Teno and many others would have had no possibility to access the justice they most certainly deserved and needed. The system worked.

Contingency-fee legislation that permits a true contingency fee, properly regulated with full disclosure, was and is a welcome development. But it is not new.
Earl Cherniak,
Lerners LLP,
Toronto

Comments   

0 # BarristerMick Hassell 2016-02-17 21:44
This is great commentary on the importance of contingency fees and access to justice. So long as fees are fair and reasonable, they ought to be permitted.

The Solicitors Act and contingency fee agreements regulation under the Solicitors Act are well-intentioned yet still problematic in how they distinguish between damages and costs. While they guard against "double dipping", they fail to address how to separate an "all inclusive" settlement.

In that way, the Act and regulation solve one issue yet create another.

It should be left to fair and reasonable within the context of a straightforward retainer agreement.
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