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Saturday, August 19, 2017

I'm shocked at what my lawyer charged me for estate work - what can I do?

Unfortunately, legal services are expensive. This reader wrote to me about his situation in which he was taken surprise by his lawyer's bill. Is the bill reasonable? It depends. Can he do something about it? Probably. Below is his question followed by my comments.

"I have an estate matter worth $350,000 and the matter is a little complex. Now my lawyer wants $80,000. There was no retainer, nothing, and I'm very shocked for an estate matter to cost me $80k. Is  this reasonable? Should I challenge this legal fee? My lawyer isn't talking to me anymore."

Let's start with the question of whether $80,000 is reasonable. The answer, of course, depends on what work the lawyer did for you. You haven't said you're the executor but it sounds as if you are so I'll proceed on that assumption.

Did the lawyer ONLY apply for probate or administration? If so, did you supply all of the information yourself or did the lawyer contact banks, insurance companies, etc to obtain information and values? Did the lawyer call family members to get information such as addresses and dates of birth or did you provide that? Did you provide the original will or did the lawyer have to obtain it? Did the lawyer have to hunt down witnesses to the will? All of this makes a big difference if the lawyer is charging by the hour.

If the only thing the lawyer did for you was apply for probate, then $80,000 in fees seems high. It's about 23% of the estate.

After the lawyer obtained the grant of probate or administration from the court, did you just take the document and go work on the estate by yourself, or did the lawyer do some of the work for you? Work done on the estate such as dealing with beneficiaries, negotiating with creditors, paying estate bills, handling estate funds in trust, etc are all over and above whatever you paid for probate. Again, those tasks would be on an hourly rate.

You mentioned that the estate is a little complex. This could mean anything from  a business to wind up to a court challenge of some kind. If the lawyer dealt with any land transactions (transfer to beneficiaries or sale to third parties) or sale of a business, that's over and above probate fees too because that's different work entirely.

Usually on an estate, the big cost is litigation. If there was any kind of court application, that would be a big expense. The lawyer would have to prepare documents, perhaps do legal research, exchange information with other parties, negotiate on your behalf, attend court, and so on.

So, since I don't really know how much of this work the lawyer did for you, I can't say whether the fee portion of the bill is reasonable.

Let's take a look at the structure of the bill itself. The bill should break down the items into three categories, those being fees charged by the law firm, disbursements, and GST/HST.

I am assuming that the $80,000 includes disbursements. Those are out-of-pocket expenses that the lawyer pays on your behalf. The biggest one is probably the probate fee that the lawyer would have paid at the court and billed back to you. Another large one would be the fees that the lawyer paid at the land titles office to transfer any real estate for you. If the lawyer had to do searches, those cost money too, as do things like service of documents on people. If your lawyer charges (as many do) for every disbursement including photocopies, printing, postage, couriers, etc on top of the court and land registry fees, that could easily make up $10,000 of the $80,000 bill. Particularly once you add in GST or HST.

Before you decide about challenging the fee, make sure you know how much was actually fees and how much is something else.

It seems unbelievable to me that you would have had no discussion of any kind with the lawyer about what he/she charges or what he/she was supposed to do for you. Even if your lawyer charges $300 an hour, that's more than 200 hours (assuming $10k in disbursements/tax). Were you not aware of what the lawyer was doing? I assume you must have gone into the office at least occasionally to sign things and see what was happening.

When you say there was "no retainer", I am not sure whether you mean there was no money requested up front, or whether you mean the lawyer did not give you a retainer letter. I suspect it's the latter. If so, that's the lawyer's omission. It doesn't mean that the lawyer can't charge you, but as you can see, it leads to disagreements over the bill.

Normally I would suggest that when there is a dispute over the bill, you start by discussing it with the lawyer. However, it seems that ship has sailed, since you said you and your lawyer are no longer speaking.

If you are considering challenging the bill, I suggest that you decide what it is about the bill that is wrong. Just saying "it's too high" is not enough. Why is it too high? Was work done that you didn't ask the lawyer to do? Is the hourly rate higher than the lawyer told you it would be? Was the number of hours put in excessive? Was something billed twice? Remember that if you challenge the bill, you have to make your case as to why it's too high, and the lawyer gets to argue the other side of the story. So make sure you can make a good case.

If it's an error that can be corrected, write to the lawyer and ask that it be corrected. What have you got to lose? If that doesn't work, you can participate in a process called taxation of your bill. This is a process whereby an officer of the court called a Taxing Officer or Taxing Master will call a meeting of you and the lawyer, and you will explain to the Taxing Officer why it's too high. The lawyer will be present. Once the Taxing Officer has examined the bill, looked at any supporting material (such as a retainer letter where there is one), and has heard both sides, he/she will decide whether or not to reduce your bill. There is no guarantee that your bill will be reduced.

As I've said so many times in so many situations - good communication is the key. This is why I bill my estate clients every two weeks, and send a retainer letter. Nobody can then say they didn't know what my bill would be.

3 comments:

  1. This is a very timely letter.
    I have a similar situation but a lot, a lot more work was done. I had to chase my first lawyer to get his bill. I never received an interim bill in 5 years. I now know what he was doing. He did get off the record. I took him to Assessment Court (On) and sent my excellent presentation/ documentation to the Assessment Officer. I paid a fee. My new young lawyer did not represent me. He was afraid I guess. He later, curiously left the firm. I have a new lawyer. The first lawyer did not present anything. I got 15% knocked off the legal bill of $33k. The Assessment Officer told me after that I had an excellent presentation. Prior to my presentation there was another case and the Assessment Officer gave us both a preamble as to what we could expect. Don't even consider getting 50% off he said. He asked me who my lawyer was, the young one. He no doubt wondered why he was not present to represent me. I have a new lawyer who took over (a partner) in the same law firm and he is 'shock billing' me. They want me to accept a 'creative offer' from the other side. He has refused to send me a copy of a bill that I should have received 9 weeks ago. He sent me a reminder letter. I never received a copy of the bill. As Executor I have always paid legal bills. I also sent a copy of a previous cheque to my sibling to show how expensive it is to chase (sibling) for information that I require to resolve and settle. Suddenly, no response or bills from my lawyer. I am in the process of having my sibling deposed. I am doing everything to move this matter along and get to Trial. It's only been 11 years. I know 'they' will continue to drag it out. I now have to pay legal bills out of my own personal account. I don't think most people would believe my story. I don't think I would. TBC.

    I read your letter and something appears 'very' wrong, but as Lynne pointed out, as is the case with most letters, more information is required. The problem as I see it, is we would need to know a lot more of your Estate Matter. Whatever you do, watch your 'tone', be careful with accusations, don't be combative. Have your documentation in order. Later?, write to the Law Society, the Attorney General and even the Bar Association of that Provence. Maybe consider W5 or a newspaper. Let us know how things turn out. Most people give in and give up. The odds of success are not in our favour. The system needs an overhaul. IMHO.

    ReplyDelete
    Replies
    1. You make some good points, but I don't see the point of all the negative, angry attempts at shaming the lawyer through the media and the bar association.

      Taxing a bill makes sense to me. It's productive and the client will get some reassurance that the lawyer isn't over-charging. Once you've been through that process, why go after the lawyer like a gang with pitchforks? If the court says the bill is reasonable, then it's reasonable.

      Lawyers are expensive, but if you ask them to do work for you, you have to pay the bill, plain and simple.

      Do you also recommend shaming and harassing others who charge for their services, such as realtors, financial advisors, plumbers, mechanics, dentists, and store owners? You make it sound like every lawyer out there deserves to be beaten to a snot simply for charging his or her usual rate.

      And trust me, with the way clients are these days - rude, combative, defensive - we deserve every penny we get.

      Lynne

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  2. Lynne, after what I have been through you might think differently. I went the Law Society route and that was a complete sham. You are a cut above. Few lawyers do what you do, beyond your job, your profession.

    'Lawyers are Officers of the Court' and should be held to the highest standards. If I had done something wrong then the other side would have, First, intimidated me , and threatened me to get the best outcome. Second, if I did not go along with that demand I would be threatened with Court. I have already been threatened (by the other side) that if I take this matter to Trial I will pay the legal fees.

    Judging from some of the cases I have read, cases you have made us aware of with respect to Executors. the Judge would not likely rule in my favour and would throw the book at me, and rightfully so. I have never been rude, combative, or defensive.
    Let's make it a level playing field. Laws, rules and regulations apply to everyone equally.
    I am not saying that all lawyers misbehave. I am merely addressing my situation which involves more than one lawyer.
    As I have said before. we are thankful to have have you and your Estate Blog. I respect very much what you do.
    If my case goes to Trial I will let you know so you can get a better picture of what has happened. I hide nothing and I hide from no one.

    ReplyDelete

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