Q: I am concerned about the cost of legal services. Recently, a friend
had to see a lawyer about a situation. Two letters and a telephone call
later she
received a bill for $2,000. Legal education involves extensive training
but not nearly as much as that required for a doctor. Taking this into
account, no lawyer deserves an income more than that earned by a
physician. And if a lawyer makes a mistake, he goes on his merry way.
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A: Legal fees are a matter of negotiation between client and lawyer and
are subject to how many other lawyers are in the area and what they
charge.
Contrary to popular belief, lawyers cannot get together and all agree
to charge the same fee. This would violate federal competition rules. A
more experienced lawyer will charge more than a lawyer new to the
profession.
There are four main ways in which fees are charged.
In many instances, the bill will be based on the lawyer’s time spent on
behalf of the client, including meeting with the client, telephone
calls, writing letters, drafting documents and researching the law.
Lawyers keep a time sheet listing work on a file.
Legal fees in the $100-$250 an hour range are not uncommon.
In addition to paying for time, a client will be charged for court fees
for filing documents, hiring experts such as an appraiser to value land
in a matrimonial property dispute, photocopying,
long distance charges and other out-of-pocket expenses. In most cases,
a lawyer will ask for a deposit in advance, called a retainer, to
ensure payment of fees.
In some cases, such as real estate transactions,
estates and debt collection, the legal fee may be a percentage of the
value of the transaction. For example, the fee for an estate might be
two percent on the first $100,000 value, then 1.5 percent.
In some provinces the court sets a maximum fee for estates, unless the
beneficiaries agree to a higher one.
In Saskatchewan, the suggested fee for an estate is $300 for the first
$10,000, then two percent on the next $90,000, then 1.5 percent on the
next $400,000 and so on.
Another way that lawyers charge is a flat fee. The fee for a will might
be $50-$200.
Finally, a lawyer advancing a claim for damages might do so on a
contingency basis. A lawyer working on a lawsuit for an injured
motorist may say she will only be paid if the claim is successful.
Often contingency fees are higher, based on the assumption that the
lawyer is taking a risk, since if the case is unsuccessful, there will
be no fees.
Legal fees to a lawyer are not pure profit. Expenses must be paid,
including secretarial and paralegal salaries, insurance fees and all
other costs associated with running a small business.
Every client is entitled to ask his lawyer to document how the fee was
calculated. In most provinces, there is also a formal process for
reviewing legal bills, which is done by the registrar at the local
courthouse. In addition, grossly excessive bills may amount to a breach
of professional ethics and can be reviewed by the provincial law
society. A lawyer can be sued for professional negligence and as a
condition of having a licence to practise law, all lawyers must have
such insurance.
Are legal fees excessive? This is a philosophical question. How do we
as a society decide what a hockey player is worth, what a teacher
should earn, what an MLA should be paid and what farmers should get for
their produce?
Next week: another view of the practice of law.
Don Purich is a former practising lawyer who is now involved in
publishing, teaching and writing about legal issues. His columns are
intended as general advice only. Individuals are encouraged to seek
other opinions and/or personal counsel when dealing with legal matters.
