Legal fees can feel like a complicated and stressful topic. But knowing a little bit about how legal fees work can help avoid a lot of confusion.
VIDEO: How Do Legal Fees Work?
Lawyers charge for their services in a lot of different ways. Most of the time, the type of case you have will determine the way your lawyer will charge for his or her services. For example, if you were injured in a car accident, your lawyer usually won’t charge any up front fees, but your lawyer’s fees will be paid from a portion of the money that your lawyer is able to win for you, usually from your insurance company. This type of fee arrangement is called a “Contingency Fee”. Many people prefer to pay their lawyers in this way because it is a more affordable option. However, the type of case that you have will often determine whether or not a particular lawyer will accept a Contingency Fee. As a general rule, contingency fees are only appropriate in only certain types of cases, and the vast majority of cases will not be charged in this way.
In fact, there are many different reasons to hire a lawyer, and your legal bill will be different in those situations. For example, if you are separating or divorcing from your spouse, most Family Lawyers will charge a one-time, flat fee for a simple divorce. However, if your divorce is complicated, and you can’t agree with your spouse about child support, what to do with the family home, or how often your spouse will see the kids, then your family lawyer will usually charge an hourly rate and send you a bill for the number of hours that he or she worked on your case. It is often difficult to know how many hours your lawyer will actually work on your case, or how long the case will continue, because that depends on whether you and your spouse can agree about major issues, and it also depends on the availability of Judges and Court dates at your local courthouse.
Another type of legal fee are what lawyers call “disbursements”. A disbursement is not actually a fee at all, because disbursements are expenses that your lawyer pays when he or she is representing you. Disbursements come from things like Court fees, photocopying expenses, courier fees, hiring an expert witness to testify in Court, and many other things. Your lawyer must pay for these expenses out of his or her own pocket, and then your lawyer will require you to reimburse him or her for those expenses. Again, every case is different, and your lawyer may be able to tell you what your disbursements will be up-front, but that’s not always possible.
At this point, you might be wondering how lawyers and their clients deal with the mystery and uncertainty about the total cost of a case. That’s why lawyers use something called a “Trust Account”. A trust account is a bank account where your lawyer will hold your money, and you can ask for it back at any time. As your lawyer incurs expenses, and provides services to you, he or she will send you a bill from time to time. If you already have money in your trust account, then that money will be used to pay your legal bill. The money in your trust account is transferred directly to your lawyer’s General Account, and you are not required to do anything during that transaction. When you first hire your lawyer, he or she will usually ask you to pay something called a “Retainer Fee”, and that money will go straight into the trust account.
If you require the services of a lawyer, but you cannot afford a lawyer, you may qualify for financial assistance from Legal Aid Ontario. To learn more about Legal Aid, you can check out our video called “How Does Legal Aid Work in Ontario”.