Contingent Fee Agreements

Contingent Fee

Agreements

This section provides an overview of the Contingent Fee Rules under Section 83 of the Law Society Act, 1996.

Contract between Lawyer and Client

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A contingent fee agreement is a contract between a lawyer and a client where the fee paid to the lawyer is a percentage of the amount recovered for the client. The most common scenario involves a client who has suffered an accident, who may be entitled to receive compensation for his or her injuries.

Contingent fee agreements are not always permitted. For example, they are not allowed for family files or criminal matters.

A lawyer may not charge an hourly rate in addition to a contingent fee.

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Maximum Percentage and Standard Agreement

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There are limits on contingent fee agreements. These limits are set out in the Contingent Fee Rules. In addition to the Rules, a standard Contingent Fee Agreement has been adopted by the Law Society of New Brunswick.

One vital component of the Rules and the standard agreement deals with the percentage that a lawyer may keep as payment for his or her services. In New Brunswick, a lawyer may retain 25% at most of the amount recovered for the client, exclusive of costs, taxes and disbursements. However, if the matter proceeds to an appeal, the maximum percentage will increase to 30%. Again, this would be exclusive of costs, taxes and disbursements.

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Changing the Maximum Percentage or the Standard Agreement

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Sometimes a lawyer and his or her client will both agree they would like to either increase the percentage to be paid to the lawyer or change some other aspect of the standard agreement. There are various reasons why this might be reasonable and it is therefore allowed in some cases, but such agreements must be pre-approved. Lawyers and clients who wish to agree to a percentage greater than the 25%/30% allowed, or who wish to change some other part of the agreement itself, must apply to the Law Society to have their particular contingent fee agreement approved by a reviewing officer.

The procedure for applying to have a contingent fee agreement approved mirrors the procedure for the Review of Lawyers’ Bills. Usually the lawyer sends a copy of the proposed agreement to the Law Society along with both a deposit of $150 and the reasons that justify the increased percentage and/or other change(s) in the opinion of the lawyer and the client. The Law Society then appoints a reviewing officer from the list of officers approved to review lawyers’ bills. A meeting with the lawyer and the client is not normally required in order for the officer to complete his or her assessment of a contingent fee agreement.

Once the review has been completed, the officer will render a decision that approves or denies the changed amount and/or the changed provision(s). The officer will send a copy of the decision to the lawyer, the client, and the Law Society.

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Void Agreement

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As stated, an agreement that exceeds the allowable percentage or contains some other change must be approved by a reviewing officer. Any agreement that required approval, but which was not approved, is void and cannot be enforced, not even if the client agrees.

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Invoice and Review of Lawyers' Bills

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Once the work on a contingent fee file has been finished, the lawyer will provide the client with an invoice. The client will also be given a listing that shows how much money was received for the client, what was paid on behalf of the client, the amount kept by the lawyer for his or her fees, and the amount left over that is payable to the client. This breakdown may be listed within the bill itself or in a separate statement attached to the invoice.

Any lawyer’s bill, even one issued pursuant to a contingent fee agreement, may be reviewed in accordance with the procedures for the Review of Lawyers’ Bills. This is true whether or not the standard agreement was changed in any way.

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If You Still Have Questions

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If you have other questions or concerns, you are invited to communicate with us by telephone for further explanation. Please remember that we cannot give you legal advice, and we are not permitted to give our opinion over the telephone.

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