Taking the bite out of legal fees

Lawyers are expensive.  You hope you never have to hire one.  I hope I never have to hire one!  Why are lawyers so expensive?  Overhead is the main reason.  When you hire a lawyer you hire their staff as well.  You pay for salaries, rent, heat, light, computers, research, insurance etc.  That’s just for the legal fees.  In addition there will be disbursements – out of pocket expenses that include photocopies, filing fees, expert fees, couriers, long distance etc.  There is also the market – like any other service provider lawyers charge what the market will bear.  If you have to hire a lawyer how can you keep the cost down?  By becoming a savvy user of legal services.

First, understand the different ways to retain a lawyer.  There are three basic types of fee agreements and many lawyers will consider a hybrid arrangement.  You should have a discussion with your lawyer about what is appropriate in your situation.

1. Hourly rate – this is the most common type of fee agreement.  You can negotiate the rate and the use of people with lower rates such as junior lawyers, paralegals or legal assistants.  If you insist on having the most senior lawyer in the office work on your file you can expect to pay a high hourly rate.

2. Contingent fee agreement – this is frequently used for personal injury or wrongful dismissal claims; claims in which you are pursuing a lump sum settlement.  Contingent fee agreements pay the lawyer a percentage of the total awarded through settlement or judgment.  Disbursements are paid in addition to the percentage fee.  You can negotiate the percentage; some lawyers use a sliding scale.  Personal injury matters arising out of a motor vehicle accident are capped by legislation at 33.3%.  All other matters involving personal injury or death are capped at 40%.  There is no limit for matters not involving personal injury or death.  Lawyers do not have to agree to work on a contingent fee basis – it will depend on their assessment of the risk involved.

3. Flat fee – this is common for work such as conveyancing, wills and simple divorces.  Shop around and compare rates.

Next, consider ways to reduce your legal fees:

1. Be a good client – do what you’re asked to do the first time.  Assemble and deliver any documents that have been requested.  Write down your questions.  Don’t expect your lawyer to do administrative work for free – e.g. copying and sending documents to other people not connected with your file.  Be prepared to do some work yourself.  Pay a retainer up front.  If you cannot afford the retainer requested ask about paying on a monthly basis.  Do not use your lawyer or their staff as a therapist, medical practitioner or accountant.

2.  Be a proactive user of legal services – think “solicitors”.  I’m a litigator.  By the time you see me you’ve been sued or need to sue someone.  Often my commercial litigation clients could have avoided large legal bills by seeing one of our solicitors to have a contract drawn up for things like partnership agreements, shareholder agreements or employment agreements.  You should have a will and a representation agreement.

3. Think carefully about the cost of “having your day in court”.  Often a reasonable settlement will put you ahead in terms of time and money.  It might mean compromising on an issue that you feel strongly about but going to court is expensive, it takes a long time to get there and a judge, who may not see the case the way you do, makes the decisions for you.  Settlement strategies include negotiation, mediation and judicial settlement conferences.

4. Do it yourself – the Small Claims division of Provincial Court has a user friendly process for civil claims up to $25,000.  The new Civil Resolution Tribunal Act will provide another cost effective way to resolve some Small Claims matters.  Maybe you only need a lawyer to draft a claim or a response and give you some procedural advice.  Maybe you could handle a negotiation yourself with a few hours of legal advice.

If you need to hire a lawyer ask them how you can minimize your legal fees.

GMD
September 2012

The information provided above is for educational purposes only. This information is not intended to replace the advice of a lawyer or address specific situations. Your personal situation should be discussed with a lawyer. If you have any questions or concerns, contact a legal professional.

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