I, like many of us, have heard people sharing horror stories of how their lawyers cost a ton. Usually I hear this before people find out that I’m a lawyer…. but sometimes after people find out what I do each day, they look to me to explain the exorbitant cost of their past legal counsel.
What I’m hoping to do here is demystify the costs of hiring a lawyer.
Lawyers cost money. This is a known fact. There is the overall cost of your legal representation and the hourly rate of your lawyer. Your lawyer’s hourly rate will depend on their years of experience, their level of expertise, their location and obviously the complexity of your file. For example, a first year call – which is a lawyer who is in their first year of practice, will cost less per hour than a five or ten year call. However, you have to balance that against the reality that they also know less and may take a longer time to get to a given point. A lawyer who is a specialist in a particular area (like pension benefits for example) will likely have an hourly rate higher than a general practitioner.
The overall cost of your legal representation will be the final amount that you spend to achieve your objectives.
This could be based on an hourly rate multiplied by the hours spent on your file. If you retain a lawyer based on an hourly rate, their rate will be detailed in their retainer agreement. Often if there are junior lawyers or experienced support staff available in the office, the main lawyer in charge of your file may designate some work to them and bill you less for their work. Let a lawyer know that you are agreeable to them designating some of the work to these people if possible.
There are firms that offer flat fees for certain things – for example we offer flat fees for incorporations, wills, probate applications and powers of attorneys. These flat rates can increase if your file is more complex than normal, however this is generally discussed at the outset.
There are also areas of law where lawyers can take files on contingency. What this means is that you pay for the disbursements (costs associated with your file – like filing fees, long distance telephone costs and medical costs) but the lawyer agrees to take their fee as a portion of your final settlement. There are rules about what types of law can be done on contingency. There are also rules as to how great a percentage the lawyer can charge. If a lawyer agrees to take your file on contingency, you enter into a contingency agreement which would detail the disbursements you would be expected to pay and the percentage of the final settlement that the lawyer will take. You can always go to the law society website or get a second opinion to determine if the percentage to be taken is reasonable. Most contingency work is done in the areas of personal injury law.
The lawyer’s fee is not the only cost associated with hiring a lawyer though. Often there are added expenses called disbursements. As I stated above, these are the miscellaneous costs like filing fees, photocopying, courier fees, costs for service and other costs reasonably associated with your file. It is always helpful to discuss these in advance with your lawyer and be sure to review their retainer agreement to see what each firm’s policy is on disbursements. Knowing what to expect with your file will also help you get a better expectation of the disbursements you could expect. For example, if you are embarking on an acrimonious divorce – there are probably going to be significant court filing costs in your future. However if you are doing up a will, you will only likely have to pay about $13.50 to register the will with Vital Statistics.
Flat fee agreements can also be either inclusive or exclusive of disbursements, so be sure to discuss that with your lawyer beforehand. Disbursements can add up if you are doing a conveyance when buying a house or incorporating a business. Whether these costs are included in the fee could mean a difference of $400 – $500!
Hiring a lawyer is rarely cheap, however the amount of time and emotional stress saved now or in the future generally makes the decision worthwhile. As well, no matter what I may write about costs – I still stand by my original position that the most important thing is to hire someone you like, feel you can get along with and trust. A cut rate price will not help you if you don’t trust that you will be getting good legal advice.