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Start: Tony Wilson

How legal fees work Add to ...

From the litigation side, if discoveries take four days rather than the expected two, or the other side is making protracted procedural or other applications before trial, or the trial goes on longer than anticipated, (to name only a few examples), this will lead to higher legal fees, because it’s a function of the lawyer’s time to deal with these additional complications.

Likewise, from the solicitor’s side, drafting or reviewing complicated documents will take longer than drafting or reviewing simple ones. Modified instructions from the client part way through the deal, or the deal going off the rails, or extensive negotiations to keep the deal alive, or legal requirements imposed by federal or provincials laws, or legal requirements imposed by previous judicial decisions, or an unreasonable lawyer on the other side of the file, or a multitude of other problems along the way will take longer to deal with and will cost more legal dollars than if the complications didn’t happen.

But $300 or $400 per hour doesn’t give the client much certainty in terms of what the final bill will be, does it? So the best thing to do is to try to deal with a lawyer who regularly does the kind of work you need done (in most provinces, we can’t say that we “specialize,” even though, in all practicality, many of us do) and ask the lawyer what the range of fees are expected to be for a particular function, agreement or transaction. If the lawyer has “done this kind of work before,” the lawyer should have a fairly good idea of the fees that can be expected at various stages of the engagement, and the things that, in his or her experience, can often send fees higher. I tend to give a range of what I expect for particular documents I draft or particular stages of the engagement, and because I’ve done it before, I generally know what to expect. But if it goes off the rails, or the matter involves more time than I expected, the fee may be higher. My clients will be informed of this hike in my engagement letter, so it’s totally transparent.

Engagement letters are the norm now in British Columbia and other provinces. It’s a contract which spells out what the law firm will do, what it won’t do, and what it will charge for its services. It will normally set out the hourly rates of the lawyer (or lawyers) doing your work, and it might include an estimate for handling the matter (or handling stages in the engagement).

Disbursements (that is, the law firm’s out of pocket expenses) will be accounted for, and added to the bill. If you have a problem with postage, photocopying, long distance telephone charges, and printing costs, deal with the lawyer at the time of the initial engagement so everyone knows what the deal is and what it isn’t. Frankly, the bigger your file is, the more clout you may have to negotiate these things. But remember, the lawyer you “negotiate” with can still say “no thanks, find someone else”.

A payment in advance or “retainer” is often requested if the client is new to the firm. It’s drawn during the engagement, and if the matter costs less than the retainer, the balance is returned. If it costs more, then the lawyer may well ask for the retainer to be replenished before doing any more work. If your legal bills are over the terms of the engagement letter or the invoice (i.e. net 30), the law firm will have the right to stop work until its paid unless other arrangements are made. If the accounts are over 60 or 90 days, law firms may well involve a collection agency or start an action to recover fees. You’d do the same thing with accounts receivable in your business, so why shouldn’t we do it in ours? You aren’t a bank and neither are we. Certainly an even better practice is for the lawyer to communicate with the client regularly about fees so there are no surprises, and for the client to deal with the lawyer over an account it doesn’t agree with so the issue doesn’t linger.

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