Estate Planning

Contingency Fees Revisited

By Hull & Hull LLP

In Re Cogan, the Ontario Superior Court of Justice addressed the issue of contingency legal fees. The lawsuit involved the claim of a minor suffering from cerebral palsy, with the plaintiffs alleging that the obstetrician and nurses attending at the child’s birth were negligent.

The case settled for the sum of $12,543,750.  The lawyers for the plaintiffs wanted to be paid $4,174,928.45, or roughly 33.33%, on the basis of a contingency fee agreement between them and the minor’s litigation guardian. A contingency fee agreement is an arrangement whereby a lawyer agrees to be paid a percentage of recovery in the lawsuit. Where there is no recovery, the lawyer works for free. Where there is a substantial recovery, the lawyer benefits accordingly.

The Court was asked to rule on whether the contingency fee agreement should be allowed. In its lengthy weighing of both sides, the Court found, among other things, that: The agreement was obtained in a fair way; 2. The agreement was reasonable; 3. The risk to the lawyer of not getting paid and not getting reimbursed for disbursements was high; 4. The case was complex and required significant time commitment and delayed payment; and 5. The result achieved by the lawyer was exceptional. 

The Court also commented on the importance of access to justice for vulnerable plaintiffs like the minor and the role contingency agreements can play in fostering that goal.

Therefore, the Court upheld the agreement.

Thanks for reading.

Sean Graham

Full post as published by Toronto Estate Law Blog on April 16, 2008 (boomark / email).