How Does This Legal Scam Work?

Location: Alberta, Canada. Hey there, me and my wife are about to settle on a personal injury case from a car accident that occurred about two years ago. The lawyer that we used charged a 33% fee plus expenses. When we originally signed the paperwork, the legal aid met with us at a coffee shop and walked us through the documents. Fast forward to today and we got our settlement disbursement agreement from the law firm and the agreement has a large deduction for “A.T.E.” or after the event insurance. I was confused by this because the accident never went through a lawsuit we settled out of court. It also doesn’t really make sense because coverage would’ve been totally unnecessary based on the fact that the case revolved around an incident where a drunk driver rear ended us on a highway and there was a police report supporting that therefore we would’ve had no legal exposure, even if it did go through a lawsuit as it was pretty cut and dry.

After the 33% legal fees, undefined “disbursements” and that insurance policy the law firm is keeping roughly 60% of the settlement. I asked the lawyer about it and he referred to a section in our contract that allows them to take out the policy on our behalf and then deduct it from the settlement amount. I asked them to explain why we had the coverage to begin with though since we had no risk exposure in the case and he told me that it’s a policy that they take out for every single client no matter what right at the beginning of the case. I asked for the policy documents and he sent them over to me, inside there is a section on the policy that said I would’ve been able to cancel it myself and get a prorated amount of the premium back within the first year, but that has since passed so it looks like none of that will be recoverable. I understand that this is my fault at the end of the day for missing that in the contract however, if it’s something that they take out on every single client I feel like that should be verbally disclosed upfront while they’re explaining the fees in the contract to you during signing. They also should be sending the policy paperwork out to the client upon opening the policy I think but I’m guessing they don’t because they don’t want the client reading and opting to cancel the policy.

Now obviously they are telling me that they don’t get to keep that money for themselves and it’s a true expense they paid to the third party insurance company but I’m trying to figure out how they are benefiting from doing this to every single client? They have to be getting some sort of kickback from the insurance company, or personally benefit somehow because why else would they add it on to every single case even when there is no lawsuit or even any real risk of losing the case if it did go to court.