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In estate litigation matters, there are a few different ways in which lawyers agree to be paid.
The first way is to hire a lawyer on a Contingency Fee Agreement, which means that the lawyer receives a percentage of your overall recovery from the estate at the end of the case. The advantage of the Contingency Fee Agreement is that you only pay the lawyer at the end of the case once your estate claim has settled.
What should you look for to ensure you are not over-charged for the work performed by your lawyer?
There are many law firms that charge a standard rate of 30-40% on all cases when working on a Contingency Fee Agreement. The Agreement is generally on a pre-printed form giving you the impression that the fee is standard and not negotiable. You should be very cautious about hiring a lawyer who is charging these rates regardless of the amount of work that is performed on the file and regardless of the size of the estate.
The preferable system is to sign a Contingency Fee Agreement where the lawyer’s percentage of recovery increases depending on how far along your case is when it settles. This is called a sliding scale Contingency Fee Agreement. For example, if your estate claim settles within the first 6 months after retaining a lawyer, the fee may be 5-10%, and if it settles after 12 months, the fee could slide up to 10-20%.
Other than the percentage fee to charge, a Contingency Fee Agreement has numerous other clauses, many of which are generally not enforceable if the lawyer tried to pursue the clause in Court. One of the clauses you should be cautious about is how disbursements are dealt with. If your lawyer is not prepared to pay disbursements as incurred on the file and expects you to pay them upfront before settlement, then you should be looking to another law firm because that tells you this lawyer cannot bankroll your estate claim.
In that regard, your lawyer should have a large credit facility available to enable the lawyer to spend enough money on your case to ensure that it is fully developed so that you can maximize your recovery and protect your legal rights.
In recent times, law firms are charging interest on the disbursements they incur before the case is settled. In some instances, the percentage charged by a law firm makes credit card interest charges look reasonable. You should be very careful not to agree to pay a large interest percentage on the disbursement expenses.
The second way to pay a lawyer is on an hourly basis with the charge per hour varying depending on the lawyer’s reputation and experience. A disadvantage of an hourly rate is that you have no control over how much the legal fees will end up being relative to the size of the claim. Indeed, estate matters can become progressively complicated as time moves along and new issues arise, so an hourly rate could result in excessive legal fees. Furthermore, you often are required to pay a money retainer upfront to start the case and are billed regularly as the file proceeds forward. Most people do not have the spare money necessary to fund hourly based litigation.
The third way to pay a lawyer is on an hourly basis but the lawyer does not bill you until you receive money from the estate. There is the advantage of not paying as you go along but you are again faced with a great deal of uncertainty about how much the legal fees are going to be.
Overall, it is generally beneficial to look for a Contingency Fee Agreement for estate matters with a sliding range between 5-30% depending on the size of the claim and the time and steps required to bring the file to conclusion. An hourly rate may be advantageous if the amount of work to be done is easy to pre-determine and there do not appear to be any hidden issues that may arise over the course of litigation. A cautious approach should be taken with hourly rates as the nature of litigation is inherently unpredictable.
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