Let’s face it; nobody wants to pay for legal services if they do not have to, but if you have been injured in an accident you may have thought about hiring a lawyer to help you navigate your claim. If you have not hired a lawyer, one of the reasons might be that you think that lawyers are expensive. So, what is the cost of hiring a personal injury lawyer anyway?
There are two ways personal injury lawyers typically charge for their services: 1) contingency fee agreements; and 2) hourly rate agreements. The majority of personal injury claims are done on a contingency fee basis (where your lawyer’s fee is contingent on the result obtained) because most clients who are injured cannot afford to hire a personal injury lawyer by the hour. Without the option of contingency fee agreements, there would be very little access to justice for those injured through no fault of their own.
The Law Society of British Columbia regulates contingency fee agreements. The maximum remuneration your lawyer can charge you for injury or death related to a motor vehicle accident is 33 1/3% of the amounts recovered. For any other personal injury or wrongful death claim (i.e. medical malpractice, slip and falls, assaults, product liability, etc.), the maximum amount your lawyer can charge you is 40% of the amounts recovered. Some lawyers will charge a flat percentage whereas other lawyers will charge different percentages, on a sliding scale, depending on the stage of the lawsuit. The amounts charged by different lawyers may vary but they are all subject to the rules of the Law Society.
If your claim is high risk or collection may be an issue (i.e. assault claims), you may only be offered the option of an hourly rate agreement. According to a poll by Canadian Lawyer Magazine in 2013, national hourly rates ranged from about $193-$375 or more. If you have to pay by the hour, yes, hiring a lawyer can be expensive but in some cases, it is more cost effective then hiring a lawyer on a contingency fee basis.
In addition to your lawyer’s fee for the work performed, in both contingency fee agreements and hourly rate agreements, your lawyer will also charge for disbursements. These are the firm’s out-of-pocket expenses required to pursue the claim. Some lawyers charge disbursements on a monthly or intermittent basis but with most contingency fee agreements you are charged for disbursements at the end of the claim. If you are billed at the end, you are usually charged interest. Disbursements include things like: photocopying, scanning, the cost of filing the claim with the court, the cost to obtain medical records and reports, courier charges, transcripts, legal research, etc. The most expensive disbursements in personal injury claims are typically the cost of hiring experts (medical and liability experts) and their reports. In high risk claims, you may be required to pay for certain disbursements up front.
The good news is that the successful party in a lawsuit is entitled to recover “costs and disbursements.” An award of “costs” is a partial indemnity of your actual legal costs. An award of “disbursements” is reimbursement for those disbursements that are considered to be necessary and reasonable in pursuing your claim. Therefore, when your lawyer is attempting to settle your claim, in addition to the damage portion of your claim, your lawyer will also attempt to maximize recovery of costs and disbursements. An award of costs is estimated using a court tariff system (a point system for each step taken in the lawsuit). Unfortunately, it is only partial compensation of your actual legal costs. In most cases, the majority of the disbursements are recovered, but not 100%. In cases where liability (who is at fault) is a significant issue, the amount of costs and disbursements recovered will vary significantly. The bad news is that the government charges tax on legal fees and most disbursements.
Every claim is different, so it is difficult to say with any degree of certainty what hiring a personal injury lawyer will cost you. However, as an example in a contingency fee arrangement, if ICBC offers to settle your claim for $10,000 plus disbursements, you will likely end up with between $5,800 and $7,200 in your pocket after payment of legal fees and disbursements. If ICBC offers to settle your claim for $100,000 plus $10,000 in costs, plus disbursements, you will likely end up with between $67,000 and $80,000 in your pocket after payment of legal fees and disbursements. The variation will depend on the percentage charged and whether there are any disbursements ICBC is refusing to pay. In my opinion, you will almost always end up with more money in your pocket with the assistance of a knowledgeable personal injury lawyer then without. Settlement offers made to you without legal counsel are typically, although not always, significantly lower in value. In some cases, the settlements offered are dramatically lower (i.e. more than 5-7 times lower) than what is obtained through competent counsel work. Most personal injury lawyers do not charge for initial consultations. So, if you want to know if it would make sense to hire a lawyer in your case and what it will cost you, I recommend booking an initial consultation.
*Important Note: The information contained in this column should not be treated by readers as legal advice and should not be relied on without detailed legal counsel being sought.