Lawyers must be fair and transparent in the fees they charge. Learn about the types of fee arrangements lawyers use, and your options if you’re concerned about your lawyer’s bill.
Understand the legal framework
For lawyers, much like other professional advisors, fees are a market issue. There are no fixed rates for legal services, and the Law Society of BC (which regulates lawyers in British Columbia) has no authority to control what lawyers charge. (There is one exception: the Law Society sets maximums for some “contingency fees”, where a lawyer gets a percentage of the money the client wins in a lawsuit.)
That said, lawyers have an obligation to be fair and transparent in the fees they charge. What is a fair and reasonable fee depends on factors such as the time and effort spent, the difficulty of the matter, whether special skill was required, and the results obtained.
There are several types of fee arrangements lawyers use. Many lawyers charge by the hour. Some offer fixed fees. Others charge a contingency fee. We explain each of these here.
Most lawyers charge fees based on an hourly rate. The amount can vary from lawyer to lawyer. Hourly rates usually reflect the lawyer’s skill and experience — senior lawyers charge more per hour than lawyers who are just starting out in practice.
A lawyer charging by the hour keeps detailed records of all the time spent on your file. Then they multiply the total hours by their hourly rate to get your bill.
Fixed fees are commonly used for specific transactions such as purchasing a home or incorporating a business. The fee is fixed at a specific amount (a “flat rate”), regardless of how much time the lawyer spends to get the work done.
Many lawyers used fixed fees for preparing specific types of documents, such as a will, a representation agreement, or a separation agreement. Some lawyers use fixed fees for uncontested divorces or defending a client on a minor criminal charge.
Contingency fees depend (or are “contingent”) on whether the client wins their case. If the client wins, the lawyer gets part of the money awarded. If the client loses, they don’t pay the lawyer any fee (but the client still pays expenses, such as the costs to file documents in court or pay for expert reports).
Contingency fees are common in personal injury claims, product liability cases, and class actions. Contingency fees are not allowed in family law cases involving child custody or access. They are permitted in other types of family law cases, but must be approved by the court.
In personal injury cases involving a motor vehicle accident, the maximum contingency fee is one-third of the amount recovered. In all other cases involving personal injury or wrongful death, the maximum is 40%. These maximums are set in the Law Society Rules.
There are no maximum limits for contingency fees in cases not involving personal injury or wrongful death. Lawyers often vary their contingency fee rates depending on the amount of the claim, the degree of risk involved, and the stage at which the case is resolved.
Arriving at a contingency fee
At the start of your case, you and your lawyer agree on the amount of the fee as a percentage of what you win. The percentage might depend on your chance of success, the amount of your claim, and whether your case goes to trial or settles before trial. The percentage is typically lower if your case settles early, before the lawyer has done much trial preparation. The percentage is higher if your case goes to trial. Your agreement with the lawyer will typically have different percentages for different outcomes.
Contingency fee agreements must be in writing.
If you have a low income, and are facing some types of criminal, family, or immigration problems, you may be able to get a lawyer for free from legal aid. Contact the Legal Services Society by visiting legalaid.bc.ca or calling 604-408-2172 in Greater Vancouver or toll-free 1-866-577-2525 elsewhere in BC.
If you don’t qualify for legal aid, see our information on free and low-cost legal services (no. 430) for other options.
When you first meet with your lawyer, ask about fees and expenses. Lawyers have an obligation to be fair and transparent in the fees they charge.
Ask the lawyer to estimate about how much it will cost to fully deal with your legal matter — including fees and expenses (called disbursements). The lawyer might not be able to give you a firm estimate of the total cost because so much depends on factors outside their control, such as the behaviour of the other party. But they should be able to give you at least a ballpark estimate or range.
Ask the lawyer:
- How they charge — a flat rate, by the hour, or a percentage of what you win?
- How much is their retainer? (A retainer is the amount to pay before the lawyer starts work.)
- How they will bill you: monthly or at the end?
If you’re organized, it will keep your costs down by keeping your communication with your lawyer concise and focused. Before your first meeting with the lawyer, make a list of everything you want to say and ask. Make a point-form summary of your case in chronological (or time) order. Include the important details and names (with addresses, phone numbers, and other helpful information). Some lawyers will ask you to fill in a fact sheet before your first interview.
Make sure you have a written agreement with your lawyer that covers fees. If your lawyer doesn’t use a form of retainer agreement, ask for a letter confirming your discussion about their fees. A lawyer has a professional duty to provide the client with a written description of the lawyer’s fees, including the basis on which fees will be determined.
Ask the lawyer how they will tell you about the progress of your matter. Keep your own file with copies of all letters and emails, as well as any court or other documents. Make notes of things you want to bring up at your next meeting.
If you are in a dispute or a court matter, try to agree on the minor things that aren’t worth fighting about. Save your time and money for the important things.
Be realistic. Don’t spend $10,000 to recover something worth $5,000. Don’t count on the court ordering the other side to pay all your costs. It’s true that a court may award the successful party an amount to cover some expenses of a lawsuit. But when a court does this, the amounts paid are based on a fixed schedule and may cover only about a third of your lawyer’s bill.
Deal with any problems
If you have a problem with your lawyer’s bill, discuss it with the lawyer. Most lawyers want to clear up any misunderstanding over fees.
Ask your lawyer what services were performed, and why. Clarify how the lawyer’s fee was calculated: was it based on an hourly rate or calculated on some other basis? If you are confused about the disbursements charged, ask what they are for, and why they were necessary.
Once you have a good understanding of the bill, explore possible solutions. You may be able to talk about ways to reduce your bill or agree on a payment plan.
If you can’t solve the problem directly with the lawyer, you may be able to use the Law Society Fee Mediation Program. This is a free, informal service to help lawyers and clients resolve fee disputes quickly without having to go to court. It can be used where the amount in dispute is between $1,000 and $25,000.
The Law Society, the organization that licenses all BC lawyers, offers the mediation program as part of its commitment to protect the public. The program works only if your lawyer agrees to use it. If so, the Law Society appoints a private mediator to help you reach a settlement. The mediation can occur in person or at a distance. You do not need a lawyer to represent you.
For more information or to apply for fee mediation, visit lawsociety.bc.ca, or call the Law Society at 604-669-2533 in the Lower Mainland and 1-800-903-5300 elsewhere in BC.
If you are unable to resolve a dispute regarding fees by discussing it with your lawyer or through mediation, you can ask the court to review your lawyer’s bill to ensure the fees are reasonable. Under the Legal Profession Act, lawyers and clients have the right to have a lawyer’s bill reviewed by a BC Supreme Court registrar. This is a legally trained court officer.
The court’s website at courts.gov.bc.ca includes a package to make an “appointment” for a review hearing. There is an $80 filing fee. (Note that if you lose the review, you may also have to pay your lawyer’s costs.) You don’t need your lawyer’s agreement to use this process. There is no limit to the dollar value of the dispute.
You have one year from the date of the lawyer’s bill to apply to the court — if you have not already paid the bill. If you have already paid the bill, you must apply within three months of paying it.
The registrar holds a hearing where you and your lawyer each give your side of the story. Then the registrar decides whether to reduce the bill or leave it unchanged.
Clients and lawyers have the right to sue over fee disagreements. If the amount in dispute is under $5,000, the lawsuit would be brought in the Civil Resolution Tribunal. If the dispute is over $5,000 and less than $35,000, the lawsuit would be brought in Small Claims Court. A claim for over $35,000 can be brought in the BC Supreme Court.
Yes, you have to pay Goods and Services Tax (GST) plus provincial sales tax (PST) on lawyers’ fees and on most expenses.
A retainer is money you pay to your lawyer as a deposit at the start of your legal matter. The lawyer keeps this money in a trust account and uses it for fees and expenses. The lawyer bills you periodically and takes the amount you owe from the retainer. The lawyer may bill you monthly, or at the end of each stage of your legal matter, or at the end when everything is resolved. When the retainer falls below a certain level, the lawyer may ask you for more money to “top up” the retainer.
Disbursements are expenses your lawyer pays for you. You have to pay your lawyer for those expenses. They include costs of photocopies, long distance telephone calls, postage, couriers, experts, medical reports, and court filings. Disbursements can often add up — ask your lawyer to estimate how much they will be.
This information applies to British Columbia, Canada
Reviewed in March 2018
Time to read: 9 minutes