How Much Does a Lawyer Cost?

One of the first questions clients ask is “How much is this going to cost?” This is a fair question, as you rightly should consider the financial costs of hiring a lawyer, prior to doing so.

If the lawyer charges by the hour, your matter will cost you the lawyer’s hourly rate, and their assistant’s hourly rate, plus tax, for every minute the lawyer or their assistant spends. In addition, you will have to pay for disbursements as well, which are described later in this article.

What exactly does your lawyer do with their time and for what services will they charge?

What Lawyers Charge You For:

• thinking about your matter (Really! This is a necessary part of it!)
• researching the law that applies to your particular facts and realistically assessing the view the court will likely take
• receiving or sending emails and faxes related to your matter
• on the phone with you or anyone else about your matter
• writing correspondence or drafting documents related to your matter
• traveling to and from court and attending court on your matter
• communicating with third parties like experts, witnesses, people with documents or other evidence your lawyer requires on your behalf
• attending mediation or settlement
• drafting settlement agreements or court orders

Lawyers on Contingency:

This is when you only pay your lawyer’s fees if you win your case.

If the lawyer charges on contingency, your legal fees will be a fixed percentage of what you are awarded by a court or what you receive in a settlement. Contingency fees are usually around 25% to 30% (plus tax) at the outset of your matter but steadily increase up to 40% (plus tax) as the lawyer invests more time and work.

For example, if you win your case and the judge awards you $100,000, and if your lawyer’s contingency fee is 30%, your lawyer will receive $30,000 from the $100,000. In addition, if tax in your province is 9%, your lawyer’s bill will show $30,000 in fees + $2,700 in taxes (9% of $30,000) for a total of $32,700. So, you will have to pay the lawyer $32,700.

Lawyers’ contingency fees are lower at the beginning and increase as your matter progresses through court because the lawyer incurs more financial risk as he or she continues advancing your case through the stages of litigation.

On a contingency fee arrangement, if you lose your case, the lawyer does not get paid his or her fees; this is why it is a risk for the lawyer to act on contingency. No matter how strong your case is, judges and juries can and do at times get it wrong.

However, even if you lose your case, you will still have to pay the lawyers disbursements, or “out of pocket” expenses, incurred on your behalf. These are described below.

Disbursements:

In addition to legal fees, lawyers who charge by the hour and lawyers who charge on contingency ALSO charge for disbursements or “out of pocket expenses” such as photocopying, printing, long distance phone and fax charges, courier charges, and payments to third parties such as court filing fees, payments to experts for their reports or to process servers who “serve” court documents on the opposing party.

Before you hire a lawyer, keep in mind these tips:

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ASK: Make sure you understand the lawyer’s billing terms. The lawyer should provide you a copy of their retainer agreement, which should describe their billing terms in detail. Take this home, read it a few times, and allow yourself time to fully consider it. If you do not understand any part of the retainer agreement, ask the lawyer to clarify until you do understand.

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NEGOTIATE: Remember that a law firm is also a business. If you have a reasonable proposition regarding fees, your lawyer may consider your proposition if they wish to have, or keep, you as a client.

Terms You Should Know About Legal Fees:

Some important terms to become familiar with are:

1. Retainer Agreement – the contract you sign to hire the lawyer.

2. Retainer Fee – This is a fee you pay in advance to ensure the lawyer will act on your behalf.

3. Billable Hours – Lawyers, and often their staff, keep track of the time ( down to the minute ) that they attribute to one case and bill the client for it. As mentioned above, this includes research on the client’s file, phone calls, writing correspondence, preparing court documents, notarizing documents. Billable hours capture almost all the time the lawyer and their staff spend on your case and you are billed for this time.

4. Hourly Rate – This amount varies according to the location of the law firm, the size of the firm, the experience and expertise of the lawyer, the area of law your case is about, competition in the legal market, and more. In Canada, hourly rates tend to range from $150 for a brand new lawyer to over $1,000.00 for a lawyer at their top of their profession, with significant expertise in one or more areas.

5. Flat Rate – Lawyers sometimes charge a fixed rate for certain services such as completing a transaction, preparing a single document, notarizing a document, or any similar tasks where the lawyer can predict the time and risk involved in acting for you.

6. Contingency Fee – The lawyer’s fee which is calculated as a percentage of the client’s judgment awarded in court or agreed upon in settlement, usually between 20% – 40% percent. If the client wins, the lawyer gets paid the agreed upon percentage, and if they lose, then the lawyer does not get paid for their fees.

7. Blended Fee – A combination of hourly rate and flat rate. For example, the client is billed a flat rate for a document or transaction prepared by the lawyer, but is billed an hourly rate for court appearances by the lawyer.

8. Disbursements – These are “out of pocket expenses” such as photocopying, printing, long distance phone and fax charges, courier charges, and payments to third parties such as court filing fees, payments to experts for their reports or to process servers who “serve” court documents on the opposing party.