One of the first things that you should ask the lawyer you are about to hire is how his/her legal fees are calculated. What you are going to pay a lawyer and how the fees will be calculated may depend on the lawyer's experience, the job that you need to have the lawyer complete, and how difficult the job will be. The following are answers to a number of questions that may help you understand how a lawyer calculates his/her bill.
Do I have to pay for the first time I talk to a lawyer?
The answer to this question depends on the policy of the lawyer and the law firm that you go to. Each lawyer and law firm sets their own policies regarding the "initial consultation". The only way to get an answer to this question is to ask your lawyer. This should be one of the first questions that you ask your lawyer.
What is a "Retainer"?
A "retainer" is an advance that you pay to a lawyer, usually before any work is done. Usually retainers are advances made to secure future payment of fees and disbursements your lawyer will charge you. For instance, if you pay a lawyer a $1,000 retainer and the lawyer does $300 of work in the first week of working on your file, the lawyer is entitled to issue you an account and credit to the account the $300 from the $1000 on deposit.
On the other hand, some retainers are paid as regular periodic payments to obtain services of the particular lawyer. If this is the case, the retainer will not go to cover any other fees and disbursements the lawyer charges.
What are "Disbursements"?
A disbursement is an actual cost the lawyer incurs on your behalf. Your lawyer will bill you for all items or services he/she pays to others on your behalf. Disbursements can include things such as long distance telephone charges, fees paid for expert medical reports, photocopies, taxes and fees for filing documents in court. These charges will be above and beyond the fee charged for your lawyer's time and effort spent on your file.
What types of fees to do lawyers charge?
Lawyer fees are determined in a number of different ways. The type of fee a lawyer charges depends on the lawyer and the type of work you hire him/her to do.
Some lawyers charge fees at an hourly rate. This means that you will pay your lawyer for the time he/she spends on your file. Lawyers who get paid by the hour are paid much like anyone who works for an hourly wage.
Some lawyers may enter into a written agreement with you to charge a contingency fee, the fee that you pay depends on the final outcome of the case. Usually, a contingency fee will be a percentage of money that you win in court. For instance, if you agree to pay your lawyer a 10% contingency fee and you are awarded $10,000, you will get $9,000 and your lawyer will get $1,000. The percentage and terms of contingency fee will be determined by you and your lawyer. Contingency fee arrangements must follow very precise rules which your lawyer must advise you.
Lawyers sometimes will charge you a set fee for a specific service such as the purchase and sale of your house, the administration of an estate, or the preparation of your will. A set fee is basically one flat fee that will not go up or down based on how long your lawyer spends on your file or based on what the outcome of the task may be.
When you hire a lawyer, make sure to ask him what kind of fee he will charge and why. You should also ask your lawyer's best estimate of what the legal service will cost you by various stages of you case to completion.
Do I have to pay GST?
Legal work is a service. You have to pay GST on legal fees.
What if I am late in paying?
Legal bills are like any other bill you receive. If you do not pay on time, your lawyer may charge you interest for any money that is overdue.
What is an "Interim Bill"?
An interim bill is a bill sent to you while your case is still in progress. Court matters may take years before everything is final. As a result, your lawyer may bill you while he/she is still completing work for you. This will allow you to pay your bill as your file is worked on instead of all at once at the end.
What is an award of "Costs"?
Another thing you should be aware of is what is known as an award of "costs". In Canada, if you lose a lawsuit (and sometimes, but rarely, if you win), the judge may order you to pay part of the other side's legal bill or "costs". If "costs" are awarded against you, you will have to pay your lawyer and part of the other side's legal bill.
The amount that you will have to pay will depend on a number of different things and I do not have enough space to discuss all of that here. Just keep in mind that you may end up paying some of the bills of the other side if you end up in court. On the other hand, if "costs" are awarded in your favor, the other side may have to pay part of you legal bill.
One of the reasons for an award of "costs" is to discourage people who do not have a valid claim from suing. An award of "costs" will only occur in specific matters that go to court. You will not be required to pay "costs" when you buy a house, or sell your business. (However, you may agree to pay some of the other side's costs as part of the deal.)
What happens if I think the fee I am charged is unfair?
All legal fees must be fully disclosed, fair and reasonable, understood and agreed to by you, the client. If you feel that the fee charged to you is unfair, there are two ways that you can deal with it.
One way is to go to "fee arbitration". In a "fee arbitration", if you and your lawyer agree, you will both appear before an arbitration board of the Law Society, the governing body of all lawyers in the province. This board will be made up of lawyers in the same field as that of your lawyer. If the board feels that the fee charged to you is unfair, they will determine what the appropriate fee should be.