Fee structures?

[BCLaw2021]

I'd thought I might create a new topic to generate some discussion. Obviously family law proceedings can be quite expensive to the client. 

Aside from hourly rates, are contingency rates or flat fee retainers prevalent in family law?

Do lawyer stop working on a case completely once the retainer funds are exhausted, while waiting for them to be replenished?

[Aureliuse]

In Ontario, family law lawyers are not permitted to charge a contingent fee or any fee in which the quantum is tied to the ultimate result (i.e. results achieved fees):

Contingency Fees and Contingency Fee Agreements

3.6-2 Subject to rule 3.6-1, except in family law, Criminal Code (Canada) or any other criminal or quasi-criminal matters, a lawyer may enter into a contingency fee agreement in accordance with the Solicitors Act and the regulations made under it.

See also, Jackson v. Stephen Durbin and Associates, 2018 ONCA 424 at paras. 45-46, 48

https://www.canlii.org/en/on/onca/doc/2018/2018onca424/2018onca424.html?autocompleteStr=durbin v&autocompletePos=2

Spoiler

[45]      Family law litigation is fundamentally different from civil litigation. One of the unique aspects of family law is that monetary recovery does not occur in the same way in family law litigation as it does in civil litigation. Instead the family finances – which are depleted daily by litigation costs – are divided. No outside funds are injected into the recovery. In these circumstances, it is inappropriate for a lawyer’s fee to be contingent on the monetary result.

[46]      It is also inappropriate for a lawyer’s fees to be contingent on success. In family law litigation, the emphasis is “on resolution, mediation and ways to save time and expense in proportion to the complexity of the issues”: Frick v. Frick, 2016 ONCA 799, 132 O.R. (3d) 321, at para. 11. A fee based on success risks detracting from, and indeed undermining, this emphasis. 

[48]      The legislature excluded family law matters from contingency fee agreements on public policy grounds under s. 28.1(3)(b) of the Act. There is no reason to limit that exclusion to only agreements tied to monetary results.

How some family lawyers mitigate cost of litigation through legal coaching aka "limited scope retainer." The most common LCR is where clients represent themselves in court, the lawyer does not go on the record, but handles all the background drafting, legal arguments, and legal coaching. Sometimes, lawyers only handle a portion of the litigation - e.g. a specific motion/offers to settle/conference.

On 9/19/2021 at 1:03 AM, BCLaw2021 said:

Do lawyer stop working on a case completely once the retainer funds are exhausted, while waiting for them to be replenished?

This depends on the firm policy, their retainer agreement, and on the client. I work for a mid-sized full service firm in a large city, I continue working even when the clients' funds are gone but I make clear that I would need a "top-up" or "retainer replenishment." Although I try to treat every client the same, there are some clients I am partial toward and don't mind keep working without an adequate retainer. I know clients who always pay their legal bills or try their darnest to, sometimes these people are cash-strapped or can't get a loan/line of credit quickly.

From a policy standpoint, let's not abandon people as lawyers when they are at a critical juncture in litigation/life. Family lawyers already have a certain reputation with a segment of the population.

In many access to justice files or with great clients who have been tremendously cooperative and understanding throughout, I do write off thousands in legal fees in the end. This is also a marketing and client retention strategy. Also, I don't want their children to suffer financially - they have suffered enough in the litigation/parental conflict.

If I recall correctly, the largest amount of fees I have written off was between $80,000.00 to $100,000.00. Most of that was spent on countless pointless disclosure motions, numerous conferences, then one contempt motion, then a week-long trial.  The husband made the wife's (my client) life absolute living hell by throwing everything in her path to frustrate her. At trial, we went for the throat and was largely successful with a good cost award (which the husband never paid).

Some law firms take pro bono files where the rates are heavily discounted. But these retainers are not given out routinely.

High-end downtown firms often don't have this problem because of most of the clientele they serve are fairly privileged in life (the wealthy, the middle- to upper-class, or people with wealthy parents). 

What often happens to legal arrears is that law firms are paid through a cut of the equity of the matrimonial home/property settlement when it is sold per a retainer agreement. Sometimes, lawyers are paid from a large cost order.

Edited September 21, 2021 by Aureliuse
Link to caselaw

[BCLaw2021]

Thanks for your insight.

I appreciate that there is a rule against contingency fees in Ontario but not so much its purpose. In my view contingency fees are a much more practical way to collect fees (ie. as a percentage of spousal support) compared to putting a lien on someone's home. However, I do see the risk of such an arrangement being abused. 

I also appreciate the way that you and others practice when it comes to fee collection. However, there is an academic argument to be made that this creates a system of your rich clients paying for the services of your poor ones - socialized family law so to speak. As there are many family law lawyers out in the field, I would imagine that fee collection is not as severe of a problem than I originally suspected it would be. 

[Aureliuse]

On 9/21/2021 at 11:24 PM, BCLaw2021 said:

However, there is an academic argument to be made that this creates a system of your rich clients paying for the services of your poor ones - socialized family law so to speak. As there are many family law lawyers out in the field, I would imagine that fee collection is not as severe of a problem than I originally suspected it would be. 

Many of us in the field are mindful of our fees not only because of "cost submissions" at the end of a court procedure or marketing/client service (not have clients freak out about our bills), but it is also from a public policy standpoint. Do we want families (our clients), even wealthier ones, to spend tens of thousands of dollars on lawyers each, without meaningful or productive progress? Without a tangible result? Without resolution? That much money could've helped separated spouses rebuild their lives, soften the blow on the children (e.g. therapy), find alternative accommodations, grow a RESP or RRSP or LIRA, and (insert thousands of other possibilities here)...

The Ontario Family Law Rules specifically demand that "cases must be dealt with justly" and one of the objectives is "by saving time and expense." See FLR Rule 2(2) and 2(3). This is in addition to thousands of family law cases where judges implore (even beg) parties to settle for the sake of their children.

I wouldn't say that we are socializing our legal services by, in effect, having those with the means to pay for the services of those without the means. I think of it as "loss spreading" or "cost spreading." There will always be files where legal fees are in arrears or there is no way we can ever collect (or the effort put into collection is not worth our time and money). It's not about "rich" vs "poor" clients and their respective ability to pay bills. I have had rich clients who refused to pay our bills and poor clients who would pay without any question (often paying in advance to make sure his/her account continues to be in good standing). It's a "client" problem. Some people wants to take every unfair advantage they can get - including testing to see how far they can go without paying legal fees.

There are also cases where the "interest of justice" demands that we take those files on a reduce fee basis (even pro bono) - for example, children with cancer and a mother working 3 jobs to make the ends meet, meanwhile the super wealthy father refuses to pay for anything and spends $10,000.00 each night in Florida night clubs. It is also to fight litigation abuse or legal bullying, an opposing party who brings countless meaningless motions to drain client finances.

In my view, fee collection obstacles (including timely collection) will always be a part of every family law practice, it might be less of a problem for Bay St firms, but it is only a matter of degree.