I have often seen a comparison between personal injury lawyers and real estate agents because of the way that they bill their clients.
Both realtors and personal injury lawyers take on files on a contingency fee basis. That means that they only get paid, unless there is an element of success (financial recovery) in the case. It has never made sense to me that personal injury lawyers and real estate agents are both paid on a contingency fee basis when the deals, the circumstances of the clients, and degree of difficult are so different when comparing the two industries.
Personal injury lawyers don’t need to take cases on a contingency fee basis. But, in the overwhelming majority of cases, we need to do so because our clients can’t afford to pay the high cost associated with modern day litigation. Even the most modest hourly rates are expensive. Even Court filing fees being charged by the Ministry of the Attorney General are expensive. The Court filing fee for a Statement of Claim is $243, which does not cover the cost of serving it which will tack on an extra few hundred dollars. The cost of filing a trial record with the Court is a staggering $859. On Court filing fees alone for a Statement of Claim and for filing a trial record, without taking into consideration any costs for a lawyer’s time, or the cost of a process server to get these documents served, an innocent accident victim has to pay to the Court a whopping $1,102! How on earth would a person who is too injured to work from their accident be able to afford that, let alone a lawyer’s time in preparing these documents or fighting the case on its merits.
Allowing clients to take cases on a contingency fee basis provides access to justice for people who otherwise would not be able to afford a lawyer, or bring their cases before the Court.
The same cannot be said for a real estate transaction; particularly with commercial or affluent clients. When you have a buyer, presumably, that client has the money, or access to money to purchase a property. When you have a seller, you have a client with an asset to sell on the market. So, you are not dealing with clients who don’t have the means to buy or sell a property. They have access to money to presumably pay for a realtor’s hourly rate.
In real estate there are two parties whose interests are aligned with respect to transacting on a property of interest. One party wants to buy a property. Another party wants to sell a property. The major part of the negotiation (with certain exceptions), comes down to price. Sure, there could be other sticking points such as the closing date, number of inspections, or whether or not there are any chattels included in the deal. But, the primary sticking point is generally the sale price. The buyer wants to get the highest price. The purchaser hopes to buy the property for the lowest price possible. Nonetheless, the interests of the parties are aligned in the sense that they both wish to make a transaction on that specific property.
Personal injury law is very different. A Plaintiff wants compensation for their injuries sustained in an accident. A Defendant does not want to pay any compensation for those injuries. A Defendant does not want to be a part of the case at all, and will go to great lengths to shelter themselves from any exposure. They will deny that the accident took place; will deny that they are at fault for the subject accident; will deny that they caused said injuries; and will deny that the injuries are even legitimate. A Defendant will put up as many road blocks in order to obstruct the case from moving forward.
You don’t see this sort of obstruction, conflict or this degree of denial in a real estate transaction. Has a buyer ever denied that the property they wish to buy even existed? Of course not. In a real estate transaction there are two willing participants in the buyer and the seller. In a personal injury case, there is one willing participant to a settlement (the Plaintiff) and an unwilling participant to the entire lawsuit (the Defendant).
The duration of a real estate transaction, from the time a property is listed on the market to the time that the property is sold can vary. Quick deals can take a few days from the time which the property was listed on the market, or may a week or two. Longer deals can take months. But, it would be very rare for a property to sit on the open market for years.
Personal injury cases take years from the time of the accident, up to the time the case settles or goes to trial. Cases don’t settle within days or weeks from their opening. They take a lot of time, and a lot of work, over a very long period of time.
The final point I wish to make is on the ceiling of these cases. The vast majority of personal injury cases are capped by the policy limits of an insurance policy responding to the claim. Those limits for a typical car insurance policy are $1,000,000. There are also limits on the figure which a Court can award a Plaintiff for his/her damages in pain and suffering. Those limits were established by a trilogy of cases from the Supreme Court of Canada. While, there are no limits to income loss or future care costs; the prospect of recovering beyond the policy limits is remote, unless the Defendant is independently very wealthy.
In a real estate transaction, there are no limits with respect to the value of a transaction. If a buyers wishes to over pay on a property by a billion dollars, then so be it. There is no law which will prevent your home from being sold well above market value if there is a willing buyer prepared to pay that price. The chances of that happening in a personal injury case when dealing with a sophisticated insurer who has to report to its stakeholders are remote.