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Jun 20, 2018

6 Reasons Why You Should Not Get into a BC Family Law Contingency Agreement

Jun 20, 2018

6 Reasons Why You Should Not Get into a BC Family Law Contingency Agreement

My family law firm’s policy is to never enter into a BC family law contingency agreement. Family law contingency agreements are mostly shady business practices that end up having the client pay exponentially more to the lawyer than he/she really should for the work done.

A good family lawyer should always put the client’s best interests ahead of his/her own pocket. Family law contingency agreements can hurt the client’s emotional and financial well being and should almost always be avoided. They rarely benefit the client. They mostly hurt the client. If a client does not have the money to pay upfront, there are much more ethical ways to come up with arrangements for pay which I will discuss below.

Note: Leena Yousefi is responsible for the content of this blog. This blog reflects her opinion, which by the way is supported by the law of Ontario which has a total ban on family law contingency agreements; and BC laws which say the agreements are void unless you get a court order approving them. So if you are one of those greedy lawyers who doesn’t like my content, sue me 🙂

In this article I will tell you about 6 reasons why you shouldn’t get in to a BC family law contingency agreement. More importantly, I will tell you of the appropriate ways of hiring a family lawyer for your case even if you do not have the money to pay them immediately.

What Are Family Law Contingency Agreements?

BC family law contingency agreements are agreements entered into between a family lawyer and  client respecting the lawyer’s fees. The lawyer will generally agree to delay payment of his or her fees and disbursements in exchange for taking a percentage of monies from the client’s final settlement or court award. The percentage of fees taken generally cannot be over 33%. Family law contingency fees are void unless approved by the Court.

Consider this:

  1. you and your ex have $2 million dollars in assets to divide between you.
  2. You enter into a contingency agreement where you agree the lawyer can take a 20% cut from your ultimate settlement.
  3. If everything was to be divided 50/50 (which is the default law), you would receive $1 million.
  4. Your lawyer would then take 20% or $200,000 plus out of pocket costs out of your settlement.
  5. The actual fees of the lawyer may have been only $10,000 to $20,000 for the work done based on an hourly rate. But because you agreed to a percentage to be taken out, you literally benefited the lawyer an additional $180,000 to $190,000 because you signed a family law contingency agreement.

No Bueno.

Why You Shouldn’t Get Into a BC Family Law Contingency Agreement

That’s because you might:

  1. Pay more than 5 times how much you should really pay;
  2. Lose fortunes on an unfavourable settlement;
  3. Lose your peace of mind and part of your life because of over aggression and multiple court proceedings;
  4. Your case may not be prioritized and given attention; and
  5. The law does not like family law contingency agreements.

Let’s look at these factors below:

1. You Might Pay Exponentially More and for No Good Reason

Family law firms are businesses. Every business would like to make profits. And now. Every time you do not pay now, a huge premium is charged for the delay in payment and you may not be prioritized. But it gets way worse in BC family law contingency agreement cases.

Consider buying a house with a mortgage. Money from the bank is paid now but you have to pay sometimes hundreds of thousands of dollars in interest because of the loan. You may be paying the bank a 5% interest rate. At least interest rates are regulated. That is not the case in contingency situations. In contingency situations and at the end of your case, you might find yourself having paid up to 500% (if not) more for the actual work/charge. So if you had a choice to pay $50,000 for actual work rather than $200,000 because of a contingency agreement, which one would you choose? I know, I know, you are probably saying “but I don’t have the money to pay now”. I get it and I have a possible solution for that so read on.

And yes I know, personal injury or ICBC cases in British Columbia are almost entirely run based on contingency agreements and everyone is happy: the client doesn’t have to pay a penny until he/she receives a settlement. The lawyer will often makes much more money on the percentage of fees collected than if he/she charged as per his/her hourly rate. Everybody is happy. This doesn’t apply in family law.

In family law no one is injecting money in your case like personal injury law does. All you have is your life savings which are being depleted through legal fees and separation. The last thing you want to do is to lose your money on a BC contingency agreement.

2. Family Law Contingency Agreements Can Create Conflict

If you sign a contingency agreement, it means the lawyer won’t get paid until your case is settled either by agreement or through the courts. Your lawyer might be motivated to fight and take everything through the courts in hopes of getting the highest award possible because then he/she will get the most money. This can tear your family and every amicable resolution apart. Your children will suffer, you will experience a lot of anxiety and your ex will think you are his/her biggest enemy. You will end up losing more than you are to gain because your lawyer is motivated to make more money.

Family law is aggressive and emotionally charged as is. If your lawyer is not focused on fair settlement and instead thinks fighting will result in more money, you will end up losing your peace of mind, life and most importantly your children will be caught in a money motivated cross fire. No one wants that.

But the opposite can also happen as well:

3. BC Contingency Agreements Can Make You Lose Fortunes

Some lawyers will think getting into a quick and painless settlement means they can get their money as quickly as possible. That will give them the motivation to bypass financial disclosure, discoveries and due diligence. They might recommend that you get into a settlement which would mean you lose more than you need to just so that the money comes in and the lawyer gets paid.

I have met a lot of clients who have told me as soon as they got into a BC family law contingency agreement, their lawyer told them to get in to an unfavourable settlement so that the lawyer could be paid as soon as possible. This is obviously not good for your case.

There needs to be a cost/benefit analysis, a delicate balance between fully protecting your rights and compromising. That is not likely achieved with a BC family law contingency agreement in place, because your interests and the lawyer’s interest may get into conflict and you may end up losing at the end.

4. Your Case May Not be Prioritized

If a family lawyer has clients who pay their bill at the beginning of every month, that is timely money which is paying for the lawyer’s time. The lawyer might be motivated to prioritize the paying client’s case over yours. That is a natural human tendency because the rewards of the work done are immediate rather than post-poned. If you want a lawyer who pays careful attention to your case, is timely and does not delay tending to you, you can’t expect to pay later and be treated the same (in most cases).

5. Family Law Contingency Agreements are Void by Law Unless Court Ordered

For the reasons above and in BC, family law contingency agreements are void unless a judge approves them. This is because the law recognizes that these agreements are rarely appropriate and can take advantage of vulnerable family law litigants who do not have the funds to fight up front. For any lawyer to enter into a BC contingency agreement, they must first apply to the Court and get it approved. Otherwise the agreement is void.

Some lawyers will charge you for even applying to court to get the agreement court approved which will add to your costs. Judges are reluctant to grant such orders because of the reasons above. The law is by default against these agreements and so should you.

6. Courts Have Knocked Down Unfair Contingency Agreements

When contingency agreements are unfair and disproportionate to the actual work done, you can always challenge them through the courts. But that again will cost you money. The courts have said that lawyers are not venture capitalists and are not supposed to make a quick or disproportionate cut out of their client’s settlement. Specially in family law cases. In the Wills & Estate case of Wilson vs. Hungerford, the court knocked down fees payable under a contingency agreement from $17 million dollars to $5 million dollars and I wrote a blog about that too.

Now let’s talk about ways to have a family lawyer represent you when you do not have the necessary funds to pay them upfront:

Ways to Have a Family Lawyer if You Do Not Have the Money Now

If you do not have the money to pay for a family lawyer to represent your case, you can try the following options instead of getting in to a BC family law contingency agreement:

1. Apply for an Interim Advance for Legal Fees

If your wife/husband has all the money and you don’t, you can always apply to the court to get an interim advance to pay for your legal fees from the pool of family funds.

S. 89 of the BC Family Law Act allows you to apply to the court on a temporary basis and have your ex-spouse provide you with a lump sum amount to pay for your legal fees or mediation fees. This is the safest and most assured way to ensure you can be represented. Courts often grant these orders easily to make sure there is an even playing field between spouses specially if one stays at home and has no money and the other, is the financial controller of the family.

2. Have Your Family Lawyer Agree to be Paid at the End of the Case with Interest

This is the best arrangement you can get into if you do not have the funds to pay your lawyer immediately. You and your lawyer can agree that interest can accumulate on the amount owed. Once you get your settlement or award, the lawyer can take out his/her fees plus interest. As least you you agree on the amount of interest instead of getting into a contingency agreement that takes a whole cut out of your settlement. A contingency agreement can mean that you pay 100% more in interest on your unpaid bills. An agreement to pay interest limits the interest to the amount you agree to pay. It is fair all around and much less risky.

3. Have Your Family Lawyer Provide Consultation Instead of Representation

In many cases, if you do not have tens of thousands of dollars to spend, try to self-represent and have your family lawyer consult and guide you throughout the process. Instead of having them tend to everything, you just ask them about the most important aspects and steps of your case. You will then act on their advice and represent your case. It is not a perfect solution but at least you will have some legal advice and consultation along the way to make sure you do not lose fortunes.

Remember, the best and most assured way to be properly represented, is to pay your family lawyer like you pay for any other product or service. That way you will obtain the most honest and efficient service without risking more. At YLaw, we do not do contingency agreements but we fight tooth and nail for our client’s rights because every client is treated equally. We do not prioritize any client over another to ensure everyone is given our full attention. 

To contact or set up an initial consultation with our award-winning family lawyers, call 604-974-9529 or get in touch.