Only insurance industry would benefit from contingency fee cap

Few lawyers would take on cases if contingency fees are capped at 15 per cent, as suggested by a private member’s bill, Toronto critical injury lawyer Patrick Brown tells The Lawyers Daily.

In effect, the cap on fees would cut off legal services to injured people, says Brown, partner with McLeish Orlando LLP.

“Few, if any, decent lawyers would be able to operate at such a rate,” he says, pointing to overhead costs which would have to be paid out of that 15 per cent.

As the article explains, Bill 103, introduced by Mike Colle, a Liberal MPP for Eglinton-Lawrence, would amend the Law Society Act and the Solicitors Act to cap contingency fees at 15 per cent of the total damage award in personal injury claims.

That is far below retainers in the U.S., which are closer to 30 per cent, says Brown. A standard retainer in Ontario is more like 25 per cent, he says.

Capping fees would mean most lawyers could not afford to pay staff, have articling students, clerks or associates, he adds.

Would create system lacking quality representation

“It will create a system that simply lacks quality representation. It would create a system where the lawyers practising under it operate on volume, put in little effort and settle their cases for a fraction of what they’re worth.”

Alternatively, the insurance industry may benefit from the cap on fees, Brown says, because “it would effectively remove good lawyers from bringing meritorious cases. They can deny proper claims and know full well few, if any, lawyers will take on the case since their margins are too low. The ones left will be the volume operators.”

In the end, the most vulnerable people would be affected, he adds. “All for the benefit of the hugely profitable insurance industry. No person can afford hourly rates. If there is a cap then the percentage ought to be fair and reasonable and ought to be done via consulting with the bar.”