Understanding Lawyers' Fees
There is no standard fee schedule for legal services. The Law Society does not set lawyers’ fees.
Before you retain a lawyer, ask the lawyer for an explanation of their fees, and how often they will be sending you bills. This should be discussed at the first meeting you have with a lawyer.
Your lawyer may require that you sign a retainer agreement. This agreement should specify the fees that you are going to be charged, and how often you will be required to pay your lawyer. This agreement may also set out what will happen if you do not pay your lawyer when requested.
Billing Practices and Fees
Some common forms that a lawyer’s fee structure may take are:
- Fixed Fee or Flat Rate. This type of fee may be used for specific transactions such as incorporating a business or purchasing a house. Some lawyers also use a fixed fee for specific types of court appearances such as defending a client on a minor criminal charge.
- Hourly Rate. Hourly rates usually reflect the lawyer's skill and experience. Senior lawyers often charge more per hour than lawyers who are just starting out in practice. Hourly rates often include more than just the time the lawyer spends with a client. They could include time spent by your lawyer on the phone, in meetings, doing research, preparing documents, dealing with correspondence from others, appearing in court and anything else involving your file.
- Contingency Fee. This is where a specified portion of any financial award or settlement you receive as a result of your legal action is paid to your lawyer. It is typically a percentage of the award or settlement amount, and the exact percentage may be different depending on the stage at which your matter is concluded. If no money is recovered, the lawyer generally collects no fee for the time spent on your file, though you are usually responsible for disbursements, regardless of outcome. Contingency fee agreements are common in personal injury claims and class actions. If you have a contingency fee agreement with your lawyer, it has to be in writing and it has to be signed by you. The Law Society has some rules as to what must, and must not, be included in a contingency agreement. There are certain types of actions for which lawyers are prohibited from entering into contingency agreements, such as in family property matters.
- Retainer. This is a sum of money you pay to your lawyer as a deposit for the future services the lawyer will perform for you and the future expenses the lawyer will incur on your behalf. Your lawyer will send you accounts, which will be paid out of the retainer. You may be asked to “refresh” the retainer, meaning to provide a further deposit, if the retainer is used up before the matter is concluded. At the conclusion of services, if there is money left from your retainer, your lawyer is required to return it to you.
- Disbursements. These are expenses paid for by your lawyer on your behalf such as land titles fees, court filing fees, courier charges, photocopying costs or fees paid for expert reports from people such as doctors, psychologists or engineers that the lawyer is required to obtain for your case. You are responsible for these expenses and they will be included in your legal account. It is common for lawyers to ask for clients to provide the money to fund a disbursement before it is incurred, especially in relation to more costly expenses, such as expert reports.
- GST/PST. Lawyers are required to charge GST on all fees and GST and PST on most expenses.
Your lawyer should provide you with invoices detailing the legal work completed and the disbursements made, for which they are charging you. When and how often you receive invoices, and what level of detail will be included in the invoice, will depend, to a certain degree, on what you agreed to with the lawyer when you hired them, as well as on the fee structure agreed to.
Keeping Your Legal Costs Down
Lawyers most often charge by the hour. To help keep your costs down, be organized and ready when you meet with your lawyer, whether in person or by telephone. Lawyers will charge regular hourly rates for responding to telephone calls, emails, etc., so keeping your communications minimal and efficient will help to keep costs down
Be sure that when you make a decision about how you want your lawyer to proceed, you have thought it through carefully. Changing your instructions to your lawyer after they have already begun work on your file can also mean that your lawyer’s account will be higher. Also, consider carefully your lawyer’s advice about what you can realistically expect to achieve, as opposed to what your legal costs may be. You probably do not want to spend $2000 to recover $500.