Are you confused about legal fees and disbursements? Attorneys need to make sure they manage their client’s expectations. Let’s say you are a family attorney.
The client might think that you can walk into a courthouse and be heard right away. The judges and court staff are just standing by desperately waiting for someone to walk in the door. They are bored and haven’t seen a case in days. You get to walk into the courtroom and start your hearing.
Of course, in reality, this is nonsense. Often, an attorney will have to sit in court for days just to be heard on an issue. In Chambers, 30 attorneys might show up on the same day wanting to be heard. The hearings that are 10 minutes will go first. That normally takes up the entire morning. In the afternoon, there are 2.5 hours left for longer hearings.
If there are five attorneys wanting to be heard on a one-hour matter, only two of those legal issues will be heard.
One of the matters will make it halfway and be heard the next day. Therefore, the other two attorneys will have to try again some other time.
Legal fees and disbursements
The other issue is that the client might think that a trial will only take one hour to resolve. The evidence they have is so good, their attorney will only need to show it to the judge.
Once the judge sees it, there is no need to go on in the trial. The opposing party will, of course, have nothing else to say. They know the evidence is simply too good. So the whole trial should only take one hour max.
So let’s add up the legal fees. Maybe one hour to get ready for trial, and one hour during the trial. If the attorney charges $300/hour, it’s only $600!
Sadly, this is complete nonsense. Want to talk about legal fees and disbursements? Contact us.
Types Of Cases And The Fee Arrangement
There is a long process that needs to take place before anything ever gets to trial. Also, only 3% of legal issues make it to trial.
As a general guide, the average not litigation matter might cost around $2000. For litigation, you are looking at around $10,000. This depends greatly on the area of law. These prices are for family law. That’s the area I know best.
I know that for criminal law (if you don’t have legal aid) it’s normally much higher. That’s because the opposing party is the government. They don’t have to pay an attorney to go after you on the hourly rate.
For business lawsuits, it’s going to be much higher. During business litigation, I would expect legal fees of $50,000 – $100,000. Of course, if you win, you might be able to get your legal costs awarded to you.
Legal fees and disbursements
There are more problems besides client expectations around legal fees. Lawyers are often driven towards areas of law where they can learn a good income. For example, family law and corporate law can pay well. Bankruptcy law, however, is a challenge. Many people that are going bankrupt do not have enough money to pay legal fees and disbursements. For that reason, most bankruptcy lawyers only do corporate work. Individuals need to hire debt experts instead.
Can You Use Gofundme For Legal Fees?
This is a common question that is bouncing around the internet. I have a hard time believing that the average Canadian could not afford $2000 in legal fees. Canadians go deep into debt to buy cars, houses, and vacations. Canadians have some of the highest individual debt per person. However, when it comes to paying a lawyer to protect them, they would rather hope Gofundme comes through.
Canadians would rather risk losing access to their kids than pay a lawyer. It’s a massive problem. Maybe the issue is that Canadians are used to getting free health care.
Therefore, they believe they should get a free lawyer as well. Regardless of what Canadians think should happen, lawyers don’t work for free. A majority of lawyers in private practice also do not receive funding from the government.
When it comes to legal fees, there are all kinds of confusion.
Financial Aid For Legal Fees
Financial aid (legal aid) is the closest thing that Canadians have to universal health care (in the legal industry.) However, many of these legal aid attorneys have many clients. Very few attorneys in Canada take on legal aid. This is because they only make around $70/hour with the financial aid program.
After they pay their overhead, insurance, and law society fees, they are not left with much. So what ends up happening is that clients can a poor experience with legal aid. The lawyers can only devote two hours of work to each client per month.
The clients get upset and leave bad reviews for the attorneys. The attorneys get sick of the poor pay and bad reviews, and they leave the financial aid program.
Common Legal Fees
- hourly fee/ hourly rate
- contingency fees (often personal injury)
- consultation fee
- retainer fees
- flat fees
Legal Consultation Fee
If you are a client calling a law firm, do not complain about the legal consultation fee. If you make a big deal about paying $200 for the first hour, the law firm will try to get off the phone as quickly as possible.
It’s not the job of the law firm intake team to decide if you are going to be in trouble or not. Many people call law firms and demand free or cheap legal advice. This is the best way to make sure no lawyer will want to work with you.
Maybe you will find a law firm to do things on the cheap for you. However, this is probably a law office that is desperate for work. You should be curious about why they need to work so badly.
Legal Fee Financing
There are some litigation lending companies out there. If you have a big case, they might lend you money for your lawsuit. The terms are often 12% interest, and the money gets paid back at the end of your case. They will speak to the law firm you hire to see if the case is worth investing in.
You might be able to borrow money from the bank for the lawsuit as well. Also, you can try and borrow money from your friends and family. Further, you can always put the money on your credit card. Although, that should be avoided if possible due to the high-interest rates.
Author: Alistair Vigier is the CEO of ClearWay Law