WHY LAWYERS CHARGE BY THE HOUR(AND WHY COST IS IMPOSSIBLE TO PREDICT
*This is an excerpt from John Schuman’s book, Guide to the Basics of Ontario Family Law, available by clicking here. See the bottom of the page for a video that also explains lawyer’s fees.
Family Lawyers bill by the hour (or part thereof). That means that when they are working on your case or talking to you, they bill based on the amount of time it takes. Lawyers are selling their time as professionals (in much the same way that psychologists and many other professionals do). Except for very few instances, they cannot predict how much something will cost.
In my practice, we charge $1500.00 for a simple uncontested divorce. That covers the costs of serving the divorce documents on the other side, paying all of the court filing fees, paying for the clearance certificate from the federal government, paying the costs we are charged for the court forms and a bit of the salary for the person who does the work getting it all together. We can do that because there is nothing to fight about, and no variables. Everything is straightforward and predictable.
Some lawyers will also charge a flat rate to do one particular piece of work – such as draft a document or appear in court for one particular appearance. In these cases, the client is retaining the lawyer to do that one piece of work and nothing else. This approach is called a “limited retainer” or “unbundled services.” A lawyer can charge a flat fee because the amount of work is known and predictable. The retainer specifically limits the lawyer from doing any other work. So, the lawyer cannot be “forced” or “dragged into” longer involvement or “continuing the fight” without the client agreeing to a separate retainer to cover those separate steps. This approach is attractive to clients who have limited funds and want to chose how best to use them, or clients who want greater control over how much they spend. However, when a lawyer is on a limited retainer, that lawyer must tell the opposing lawyer, the judge, or the arbitrator that the lawyer is working on a limited retainer and will not be participating further. That can decrease the lawyers’ impact because there is no “threat” that the lawyer will take a further step for the client. There is a danger when a client has different lawyers from different firms do different parts of the case. That can lead to inconsistent, even contradictory strategies that cause the client more problems.
- how much the parties want to fight. The bigger the battle, the more costly the war,
- the complexity of the issues. If there a party’s financial situation is complex, it will take longer to figure out what the appropriate result should be. There are a lot of legal issues that come up just in determining the income of someone who is self-employed.
- whether court is required and what court. There are a lot of rules to protect people’s rights in fights before the court. While those rules ensure fairness, they also result in time-consuming and expensive procedures to follow. Add to this that some courts are very busy, so lawyers and parties have to sit and wait to be heard. When a lawyer cannot be working on other files because he or she is in court, then it is only fair that the lawyer bill for his or her time in court.
- if there is a lot of disclosure to be collected from you or the other-side, that can take a lot of time. The more your lawyer has to chase you to get required documents, the more time he or she will spend and the more it will cost.
- some clients want to speak to their lawyers frequently and for long periods of time. That can be important to allow the client to understand what is going on and what the options are. However, if you are speaking to your lawyer for long periods of time, that lawyer cannot get work done for other clients. If what you need is someone to talk to about issues that are not legal ones, then it is less expensive to get a counsellor than speak to your lawyer. Your lawyer should always listen to you, but remember that if you are taking up time, you will have to pay for it.
- custody and access disputes are very long, very complex, involve lots of witnesses, lots of professionals, lots of legal issues and therefore are very expensive. Sometimes you have to fight to look after your kids. But, keep in mind that those fights, which are very important, are by their nature very complicated and expensive.
Family Lawyers know that they are not working for corporations with lots of resources. They are working for people at a time when finances are often stretched already. Family lawyers know that their fees can cause additional problems. Good family lawyers are busy. They have lots of people who need them, so they do not need to make cases complicated. Good family lawyers know that it is better for the family to resolve the issues as quickly and inexpensively as possible – while still ensuring that their client is not sacrificing too much. That is what is best for the family -and is what is best for the lawyer, because happy clients refer their friends.
There are wide ranges in a lawyer’s hourly fees. Some lawyers are less than $100.00 per hour. Some are more than $1000.00 per hour. Usually, you get what you pay for. Lawyers who are more than $300.00 per hour are usually lawyers with experience and know how to deal with complex issues. They know how to get to a resolution. They also know good strategies that, in Canada, can result in the other side paying the legal bills. If you are self-employed, have a trust, have a complex custody issue, or have some wealth, it is worth your while to find a lawyer who knows how to address those issues. Having a good lawyer from the start, even at a higher hourly rate, will save you money in the end.
The lawyer should tell you what his or her hourly rate is when you first hire him or her. If the lawyer’s hourly rate is $500 per hour than $500 covers one hour of the lawyer’s time. Fifty dollars covers six minutes of the lawyer’s time (six minutes is one-tenth of an hour). How much a lawyer gets done in that time depends on many factors, but, for instance, if you speak to your lawyer about your file for 10 minutes, the charge will be $100. It may take her an hour or two, maybe three to do a brief for court (even longer for complicated cases). If you have a settlement meeting, that will take as long as it takes. If you are working with a law clerk on something, they charge less per hour. Many lawyers have clerks, students or junior lawyers do as much as possible on your file to keep your fees down.
There Are Expenses Other Than Hourly Rates
There are other expenses. There are photocopying and maybe fax charges. There are court filing fees and process server fees if you go to court. There can be courier fees. If you need an accountant to figure out how much your spouse makes, there will be fees for that. However, your lawyer should only involve such a professional if he or she feels that you will “make money” on it in the end by getting more support or a better result on the property issues. There may be fees for a mediator or arbitrator if you chose that route. (The fees for a mediator or arbitrator are often small compared to the expenses involved with going to court). If you are seeking support, or trying to enforce support, everything you spend in relation to support is tax deductible, which may make a big difference – especially if you are receiving spousal support because spousal support is taxable to the recipient. If you are defending a claim for support, then your fees are not tax deductible in Canada.
Keep the Legal Costs Down in Divorce and Other Cases?
You can keep your costs down by providing the necessary disclosure and providing the information we need. You can also keep your costs down by not calling us “just to talk” as we charge for our time. If you need some additional assistance with the emotions surrounding divorce, or some personal support, we can refer you to people who are excellent at that and charge less than we do. Avoiding unnecessary fights with your spouse will also keep your costs down, as will staying out of court if that is possible. The biggest way you can keep your costs down is to listen to your lawyer’s advice as his or her goal is to get you through your divorce or other legal matter as quickly and inexpensively as possible. Lawyers want you to be happy at the end so you refer other clients to them.
If you want yo keep your family lawyer’s fees down, watch this video for some important tips:
Almost all lawyers require an upfront payment as a deposit against the fees and expenses for looking after your case. At John’s law office, the retainer fee is applied against your last bill or bills. It goes against whatever fees are owing when we close your file and then if there is anything left over, we give back to you. For our work, we provide detailed monthly bills and our bills are due within 30 days. We do not charge an administrative fee for opening your file or having you as a client. All the money you give us goes towards fees and disbursements (such as copying, couriers, etc.). There is a disbursement for opening your file on the software that creates all the court forms, but no administrative fees, room fees, etc.
The retainer fee for John to be the “main lawyer” on your file starts at $5000.00 for all files except marriage contracts. (For marriage contracts, the retainer is $3000.00). How much the retainer is, depends on how complicated your matter is and how much your fees will be. For child protection matters, the retainer is usually at least $10,000.00. For John to do a trial, the retainer is usually at least $10,000 per anticipated day of trial. Some of the lawyers that John works with have retainers that start at $5000.00. You really need to meet with a lawyer to find out what the retainer will be. The lawyer may lower the retainer for simple matters or have to raise it if your matter is going to be in court and require a lot of work.
Can I be billed as a contingency fee or a percentage of what I get in my divorce?
The Law Society of Upper Canada does not permit contingency fee arrangements in family law matters. This is because in family law cases, the amount of money involved is often not related to how complex the case may be or how much time a lawyer must spend to complete it. First, in custody/access cases, what parents decide and how much they spend is not related to how much money they will recover in the end – it is based on what they believe is in their children’s best interests. Second, in family law and divorce cases, many separated spouses want to “teach the ex a lesson” and spend more to fight over things than those things are worth out of “principal.” Good family lawyers always advise against that, but separated spouses do not always listen. And, even if one spouse is acting completely reasonably, that does not mean the other spouse is also acting reasonably. Once all the facts are known, the determination of many financial issues is can be predictable and good family lawyers will know what the range of fair settlements will be. That is why disclosure is so important in family law cases. When two separated spouses act reasonably, listen to their lawyer’s advice, provide disclosure early and negotiate rather than litigate, they can finish of their separation or divorce for far less than a lawyer would charge as a contingency fee. On the other hand, if they litigate aggressively over small matters, the cost that they pay will be much more.
If you need to know more about the options after separation, and how they can vary in cost, then listen to the edition of the Ontario Family Law Podcast at left.
Other Lawyers and Professionals
The lawyer you retain to be your “main lawyer” should be the lawyer doing most of the work on your case. The lawyer’s law clerks may work on parts of your case, such as preparing your financial statement, disclosure or briefs. They charge a lower rate. Junior lawyers or articling students may do the first draft of other documents, answer some of your questions or do some other lower tasks at a lower hourly rate, but under the supervision of your main lawyer. If there is an emergency, and your main lawyer is not available, one of the other lawyers in the firm will step in – usually one who has heard something about your case.
At John’s office, you are not charged for speaking to our receptionist. Due to automation, we do not have any assistants doing Family Law or Education Law cases, we only have law clerks. Law clerks charge for their time when they are doing substantive work on your file, such as drafting documents, doing calculations, or talking with you about issues in your case. Law clerks do not charge for “administrative tasks” such as scheduling meetings, photocopying, etc.
What Happens If You Don’t Pay Your Lawyer’s Bills
Lawyers will not continue to do work on your file if you owe them money, unless alternative arrangements have been made in writing. In cases where a spouse is short on money after separation, one of the first goals should be to get that spouse the money he or she needs to pay ALL expenses. Grocery stores sell food. Lawyers sell legal services based on the time it takes to provide those services. Lawyers have to pay their staff, their rent, their utilities and equipment charges, other expenses, and then provide for their own family after paying all those expenses. There is not much room for them to work for free.
At John’s office, our goal is to make sure our clients have enough money. It is possible that if the circumstances merit it, we will give a client additional time to pay bills, but we would discuss that as the need arose.
Retainer Agreements Set Out How You Will Be Billed
Whenever you hire a lawyer, you should have a formal written retainer agreement that sets out what type of work the lawyer will be doing, what type of work the lawyer will not be doing, what you will be charged for, what the lawyer’s fees are, how you communicate with the lawyer and other people in the law office, what happens if special circumstances arise and how you can “fire” the lawyer or how the lawyer can stop working for you. At John’s office, we have a written agreement that we provide to you, and explain to you, before you decide whether to hire us. You should know exactly what the arrangements are before you and your lawyer start working together.
Your lawyer should explain to you how fees work at his or her office at the first time you meet with him or her. There should be no surprises about how you are billed for your divorce or any other legal matter. That is why John provides all the above information up front. Then as you make decisions about how to proceed with your case, you will have an idea about what each choice will cost.
In addition to the information above, John Schuman’s $25-easy-to-understand book on Ontario Family Law, gives many tips for keeping your legal fees down in family law matters. There are many mistakes you can make that will cost you a lot of money. The book goes into them in detail, but they are also summarized in this podcast and on this video. The Guide to the Basics of Ontario Family Law also explains how you can keep costs under control and save a lot of money using the alternatives to Family Court such as family mediation, arbitration or collaborative practice.
Doing your divorce right may mean spending a little money to protect yourself – but that will save you money in the end. In addition, acting reasonably, make smart decisions, and getting advice from an expert family law lawyer will also keep your costs down and save you money in the long run. At all of his consultations, Certified Specialist in Family Law, John Schuman, goes over all of the client’s options and explains what steps will put have the most money in his or her pocket when the divorce or family law matter is finished. You can reach him using the form below or the phone number at the top of this page.