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5. Issue: Safeguards

  • There are limits to which the regulation of contingency fees can be used to regulate lawyer conduct generally.
  • The Law Society's Rules of Professional Conduct are intended to protect clients. The appointment of a Complaints Resolution Commissioner by the Law Society is expected to provide more meaningful recourse for clients.
  • For example, a plaintiff may be protected from a dishonest lawyer who runs up disbursements by Rule 2.08(1), which states that "[a] lawyer shall not charge or accept any amount for a fee or disbursement unless it is fair and reasonable and has been disclosed in a timely fashion."
  • A client may also be protected from a lawyer trying to drum up disbursements for a non-arms-length person by Rule 2.04, which deals with conflict of interest. Conflict of interest is defined as an "interest that would be likely to affect adversely a lawyer's judgment on behalf of, or loyalty to, a client or prospective client, or that a lawyer might be prompted to prefer to the interests of a client or prospective client."
  • Although a maximum percentage is not recommended, the proposed draft regulation sets a cap that limits a lawyer's remuneration up to the amount of the recovery. This would prevent a lawyer from recovering more in fees than the client receives in damages.
  • The proposed draft regulation provides that if the fee is expressed as a percentage of recovery, "recovery" does not include costs and disbursements, if these are specified. For example:
    Agreement for 25% of recovery
    Damages: $100,000
    Costs: $10,000
    Lawyer gets 25% of $100,000, not of $110,000.
    Settlements, however, often do not distinguish between damages and costs; thus, this may not apply in settlements.
  • The form and content of contingency fee agreements could include requirements that clients are given as much information as necessary to make an informed decision. For example, the proposed draft regulation requires the agreement to include a statement that:
    • the client and the solicitor have discussed options for retaining the solicitor other than by way of a contingency fee agreement, including an hourly-rate retainer;
    • hourly rates vary and that the client is advised to check with other lawyers to compare rates;
    • the client has the right to ask the Superior Court of Justice to review and approve of the solicitor's bill.

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