Ontario judges cracking down on personal injury contingency fees
Proposed counsel fees rejected in at least four cases on rule 7 motions since the turn of the year
A recent spate of reported cases has seen four Ontario Superior Court judges reduce the proposed fees for personal injury lawyers representing disabled parties under contingency fee agreements (CFAs).
The judges were only able to intervene because Rule 7.08 of Ontario’s Rules of Civil Procedure requires court approval for settlements – including lawyers’ fees – in cases involving a party under a disability.
Naimark Law Firm founder Ryan Naimark was on the end of two of the judgments. The first, in Jones v. Belair Insurance Company Inc., involved a $1.3-million settlement accident benefit settlement for a man catastrophically injured in a 2015 car crash.
Justice Janet Wilson had previously rejected an initial $1.1-million settlement in the case, and was not happy with the law firm’s proposed fee of $253,000, representing 23 per cent of the original total, plus HST.
Even with the elevated settlement, Justice Wilson placed the result at the “low end of entitlement” and noted the law firm had already received $127,000 for its work on the client’s tort file, whose settlement was approved by another judge.
“In my view, taking into account the facts of this case, and the criteria to assess the reasonableness of fees charged to a person under disability, there is not any reason to award a premium for services rendered by Mr. Naimark,” Justice Wilson wrote, ordering payment instead for his docketed time on the file, a total of just under $54,000 before HST, along with $6,400 for disbursements.
Little over a week later, Justice Darla Wilson released her ruling in Brar v. Sran, involving a $1.485-million tort settlement Naimark achieved for the family of a three-year old infant injured in a collision.
In her decision, the judge said she took into consideration the $120,000 fee the firm had already been paid from the same client’s accident benefit settlement.
“A fee of 30% in addition to the 30% charged on the accident benefit settlement is not reasonable and it is excessive. This was a low risk case, a ‘slam dunk’ to use colloquial terms,” she wrote, setting the appropriate rate at 20 per cent, reducing Naimark’s fees from $445,000 to $297,000 (including HST).
Naimark did not respond to a request for comment.
In Firby v. Intact Insurance Company, Joseph Campisi of Campisi LLP sought a fee of $186,000 plus HST for its work on the accident benefit file of a female pedestrian in her 60s who was seriously injured in a hit-and-run incident in 2019.
The firm had already reduced its usual fee from 33 to 25 per cent in acknowledgement of the severity of the client’s injures when the CFA was signed, but Justice William Chalmers still found himself unable to approve the CFA.
“Although a good result was achieved, the matter was not particularly complex or involved a significant risk to the lawyer. The proposed fee is more than four times the value of the docketed time, and results in a premium of $144,154.07 for the counsel fee,” he wrote.
Instead, Justice Chalmers set Campisi’s fee for the accident benefit file at $125,000 plus HST, having earlier cut the firm’s fee in the tort action from $219,000 to $175,000
“When combined with the approved fee in the tort action, the counsel fee is $300,000 for both the tort and accident benefit settlements. The total premium is in excess of $200,000,” the judge concluded. “I am satisfied that the premium of over $200,000 satisfies the social objectives and issues with respect to access to justice.”
Campisi did not respond to a request for comment.
Finally, in Treleaven v. Kilgour,Justice Jamie Trimbleconcluded a CFA between Sokoloff Lawyers and its client – the passenger in a high-speed crash – setting a 33-per-cent fee was not enforceable.
The judge acknowledged the “significant” risk assumed by the firm as the third counsel to take on the case, as well as the considerable amount of work put into both the accident benefit and tort files.
However, taking into consideration his concerns over the CFA, he set the reasonable fee for the accident benefit matter at 17 per cent and the tort action at 25 per cent, reducing the firm’s fees from the $213,000 it proposed to $136,000 (including HST).
In a statement, principal Wendy Sokoloff maintained that her firm’s CFA is law-society compliant.
She also took issue with a report filed by the Ontario’s Public Guardian and Trustee in the matter, which suggested that contingency fees on accident benefit files should generally be around 15 per cent, with a 25-per-cent baseline for tort files.
“I think that this kind of statement from the PGT could hinder lawyers from taking on difficult cases where catastrophic is disputed and liability is an issue, especially when personal injury lawyers take huge risks and take on large disbursements for these cases,” Sokoloff said.
Plaintiffs with smaller cases requiring a significant investment of time could also suffer, she added.
“Who would take on those cases if lawyers are limited to 15% of a very small number,” Sokoloff said. “I think each case should be looked at on its own merits. Access to justice should be paramount.”
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