While the law is clear that lawyers are not entitled to collect both costs and damages from settlements or judgments, there is still much confusion over cost agreements, says Toronto personal injury and employment law lawyer Kevin Marshall.
"Some lawyers receive the cost portion of a settlement or a judgment from court to cover their legal fees," says Marshall. "Other lawyers receive a percentage of the damages as their legal fees by way of a contigency fee agreement. In some cases, lawyers bill for both a percentage of the damages and some or all of the costs. That's where the controversy lies."
According to the Solicitors Act of Ontario, contigency fee agreements should not include payment to the lawyer "in any amount arising as a result of an award of costs or costs obtained as part of a settlement."
The issue of so-called "double-dipping" was covered by the Toronto Star, but Marshall says the story doesn't explain the full picture, including the risk lawyers take in working on on contigency. Marshall explains that the Toronto Star focused on a few court judgments of near or more than a million dollars, including clear breakdowns of costs, disbursements (expenses), and damages. In fact, the vast majority of personal injury cases are settled out of court for much small amounts, often in the thousands or tens of thousands of dollars. Read more