Legal Fees and Disbursements
Natalie Fraser for The Lawyers Weekly
Canadian Lawyers and Legal billing
Canadian lawyers bill their clients by sending a Statement of Account. The account should clearly and separately state the amounts charged as fees and as disbursements (see section on disbursements). The section of the account dealing with fees should include a detailed explanation of what work was done by the lawyer to justify the fee. The section dealing with disbursements should include a clear explanation of what the disbursement was for and its exact cost. The account should state the full amount of the bill, including taxes.
The Statement of Account usually includes a Trust Statement, showing all monies a Canadian lawyer received from the client or on behalf of the client prior to the date of the Statement of Account. The Trust Statement also lists the amounts and dates of all deductions the lawyer made from the monies received, with an explanation of what the deduction was for. Deductions usually represent payments to other parties or disbursements made on behalf of the client and based on the client's instructions. The Trust Statement then shows any money left after paying these deductions, which is first applied towards the Statement of Account. The client receives the remaining balance, if any.
The Statement of Account shows the amount paid towards the account as stated on the Trust Statement, and the outstanding balance, if any, owed by the client.
Canadian lawyers should discuss their retainers during initial meetings with clients. The retainer is a contract between the lawyer and the client, preferably in writing, in which the lawyer agrees to provide legal services to the client for a fee. The retainer includes a discussion of the amount of the fee and any additional expenses. If circumstances change and the fee will be larger than that discussed at the initial interview, the Canadian lawyer should advise the client immediately and obtain instructions before proceeding.
The retainer establishes the lawyer-client relationship, setting out the responsibilities and duties of each.
What can lawyers in Canada charge for?
Lawyers in Canada may only charge reasonable fees and disbursements (see section on disbursements) for their work. If clients believe that they have been charged an unreasonable amount, they can arrange for a court assessment of their Canadian lawyer's account.
Some Canadian lawyers charge block fees for their services. For example, a lawyer may charge a set fee for the purchase of a home. When comparing block fees from one Canadian law firm to another, clients should find out exactly what the fee includes to ensure they are making a fair comparison.
Some Canadian lawyers charge hourly rates for their services, the amount being based on experience, expertise and ability. As well as being advised as to a lawyer's hourly rate, clients should receive an estimate of the full amount required to complete the matter. Lawyers in Canada should inform their clients of any change in circumstances increasing that amount.
In some jurisdictions, Canadian lawyers can charge contingency fees. This means that clients only pay if their lawyers succeed with the claim being pursued. A percentage of the monies awarded the client by the courts goes to the lawyer as a fee. Contingency fee arrangements should clearly state the method by which the fee is calculated.
Canadian lawyers' bills include both fees and "disbursements". Disbursements are expenses incurred by a law firm on behalf of a client, in order for the firm to proceed with that client's matter. The Canadian law firm pays a third party for these expenses. For example, in a personal liability case, disbursements might include the cost of expert medical reports or private investigator reports. In most matters, disbursements also include costs such as photocopying, postage, and courier expenses.
In Canada, disbursements only represent expenses incurred on behalf of a specific client. They do not include the operational costs of a law firm such as rent or the receptionist's salary. The nature of the disbursement, its exact amount and the date it was incurred should be clearly stated on the lawyer's bill.
Natalie Fraser practised law in Whitby, Ontario for seventeen years and is now a freelance legal writer with The Lawyers Weekly.