Understanding legal fees:

Legal fees are often talked about but how do you do at understanding legal fees? Legal fees can be hourly or flat rate and will often also have disbursements and other charges added on.

Legal fees that are billed hourly will have an hourly price. You then pay for the portion of the hour that you use. Usually time is broken down into .1 of an hour. For example if you talk to a lawyer for 1-6 minutes then your legal fees will be the hourly rate times .1. The good thing about this system is that you pay only for the time that you use. The bad thing is that the time used can increase quickly. This means that your legal fees will continue to accumulate. Each time that you lawyer works on your file, you are being billed. This includes every time they call someone, listen to a message, email, read an email, research, draft a letter/fax/email, etc. a lawyer can fax another lawyer for you 5 times trying to work out a point and you will pay for each fax sent and read, even if there is no resolution at that point. This leads people to be frustrated because they are spending money with no tangible results. The plus side is that sometimes an entire issue can be resolved in an email or two and so you only pay for that little time used. At Kahane Law we include two hours of issue resolution in our flat rate real estate fees for client peace of mind.

Flat rates are just that. A lawyer will set out the exact service that will be provided and you will pay a predetermined amount for that service. It is important to remember that if you need more services, there will be additional charges for them. In both flat rate and hourly billing you will usually have to pay a retainer. This is a “down payment” that will go towards your legal fees. When it is used up (or comes close to being used up) your lawyer will ask for an additional retainer.

You will also have to pay disbursements, unless they are included in the legal fees (i.e. flat rates). Disbursements are sums paid to third parties by the lawyer but on your behalf. for example if your lawyer has to file something at the courthouse and pay a filing fee, you will have to pay it. There are different than other charges. Other charges also make up legal fees but only sometimes. they are fees for things like photocopies and faxes. They are not paid to third parties but are expenses that become part of conducting your file.

Watch this video to better understand these three components of legal fees as they pertain to the law in Alberta.

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The Kahane Law Legal Minute is brought to you by Jeff Kahane of Kahane Law in Calgary, Canada. http://www.kahanelaw.com/ (403) 225-8810