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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.

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