Fees and disbursements

Question 1

What are the two essential terms of engagement to discuss with prospective clients?

Answer 1

• scope of services to be provuded
• costs of the services

Question 2

What does retainer mean?

Answer 2

• the act of retaining the paralegal to provide legal services/engagement
• the contract that outlines the essential terms of the professional engagement with the client
• an initial fee/ deposit paid to the paralegal of the professional engagement to secure the paralegal’s services in the near future, and against which future fees and disbursements will be charged (monetary retainer)

Question 3

What are fees?

Answer 3

the amount charged to a client for legal services

Question 4

What are the kinds of fees/methods of billing fees?

Answer 4

• hourly rate
• block/fixed/flat fee
• fees by stages
• contingency fees

Question 5

What is fees by stages?

Answer 5

Charging for a matter that is broken down into stages, with an estimate given as to the fee for each stage or step in the matter.

Question 6

What is a disbursement?

Answer 6

Any expense that the paralegal pays on behalf of the client for which the paralegal is entitled to be reimbursed for by the client

Question 7

How are joint clients billed for fees?

Answer 7

Equally, unless they agree to another arangement, which must be agreed to in writing and clearly broken down on the statement of account

Question 8

What is considered a ‘timely fashion’ as required for disclosure of fees?

Answer 8

before or within a reasonable time after beginning representation

Question 9

What rule prohibits hidden fees?

Answer 9

5.01(3) and Guideline 13 s9

Question 10

Legal services provided by a paralegal through a civil society organization must be provided….

Answer 10

At no cost to client by way of service, membership or other fee model

Question 11

Which bylaw permits paralegals to charge clients for disbursements for services rendered through a CSO?

Answer 11

Bylaw 7

Question 12

What is the process of charging clients for disbursements through CSO representation?

Answer 12

prior to entering into paralegal-client relationship, the paralegal must communicate the disbursement costs to the client and ensure that the client understands the client’s obligations w respect to the payment of disbursements

Question 13

A paralegal should confirm their billing method….

Answer 13

in writing via:
1/ a written retainer agt signed by client
2/ an engagement letter from the paralegal
3/ a confirming memo to the client

Question 14

Money held in the paralegal’s trust account belongs to

Answer 14

The client only.

Question 15

When does bylaw 9 permit appropriation of client funds held in the trust account?

Answer 15

May be withdrawn as
- money properly required for payment to a client or to a person on behalf of client
- money required to reimburse the paralegal for money paid on behalf of the client/expenses incurred in case process
- money required for payment of services performed
- money that is directly transferred to another trust account and held on behalf of a client
- money that, under bylaw 9, should not have been paid into trust but was mistakenly paid into trust

Question 16

When can paralegals pay themselves out of trust?

Answer 16

• work is completed
• paralegal has delivered a bill/statement of account to client
  AND
• there are sufficient funds available in trust for that client for the payment of paralegal fees

Question 17

Misappropriation of trust moneys is…

Answer 17

a form of professional misconduct

Question 18

WHen can a paralegal divide fees/split fees with another legl rep?

Answer 18

1/ the client is informed about and consents to the division of fees, and
2/ the fees are split in proportion to the work done

Question 19

What are the requirements for accepting a referral fee?

Answer 19

• fee is fair and reasonable, and does not increase the total amount of the fee payable by the client
• referral agt has been entered into bw the referring licensee, the licensee who receives the referral, and the referred client
• the licensee receiving the referral has the required ability and expertise
• the referral was not because of a conflict of interest or suspension
• the fee does not exceed 15% of the first $50,000 of legal fees paid and 5% of any additional legal fees paid, to a total max referral fee of $25,000
• the licensee accepting the referal is not providing services through a CSO
  Requirement as of April 28, 2017

Question 20

Can paralegals pay referral fees to non-licensees?

Answer 20

No, but they can partake in business arrangements or agreements where a non-licensee like a professional business/landlord/employer is paid directly or indirectly a portion of fees for their services

Question 21

When did the ammendments to contingency fees come into effect?

Answer 21

July 1, 2021

Question 22

What are the requirements for Contingency Fee Agreements (CFAs) as established by July 1, 2021 and Jan 1 2022 ammendments?

Answer 22

1/ CFAs entered into bw July 1 2021 and Dec 31 2021 are governed by the Solicitors Act and OnReg 563/20 in effect on July 1, 2021, and by the transparency and disclosure requirements set out in Paralegal Rules 5.01(8) to (9.1)

2/ CFAs entered into before July 1 2021 are governed by the previous Solicitors Act and the now revoked OnReg 195/04. The transparency and disclosure requirements set out in Rules 5.01(8)(9.1) do not apply to these

Question 23

What is a contingency fee?

Answer 23

a fee in which any part of of the fee for legal services is DEPENDENT on the SUCCESSFUL OUTCOME or completion of the client’s matter

Question 24

When may paralegals charge a contingency fee?

Answer 24

In any matter that is within the scope of paralegal practice EXCEPT Criminal Code matters or any quasi-criminal matters

Question 25

How might contingency fees be structured?

Answer 25

• Fixed percentage
• staged/graduated percentage
• partial
• bonus/premium

Question 26

What is a fixed percentage contingency fee?

Answer 26

the percentage the paralegal receives remains the same throughout the matter

Question 27

What is a staged/graduated contingency fee?

Answer 27

percentage received changes depending on the staeg the matter is resolved

Question 28

What is a partial contingency fee?

Answer 28

The client pays for some legal services when the matter commences or as it proceeds, in addition to a contingency fee if the matter settles or the client is successful at trial

Question 29

What is a bonus/premium contingency fee?

Answer 29

The client pays a bonus/premium or other amount to the paralegal’s legal fees if a positive result is achieved in the matter

Question 30

What are the restrictions on the amount that can be charged for a contingency fee?

Answer 30

No max percentage, but paralegals are prohibited from charging a contingency fee that exceeds the amt the client receives under award/settlement, including any costs, but excluding disbursements and taxes.

Question 31

What factors must be considered when determining the appropriate percentage of the contingency fee?

Answer 31

• the likelihood of success
• the nature and complexity of the claim
• the expense and risk of pursuing the claim
• the amount of the expected recovery
• who may receive an award of costs.

Question 32

What is a Contingency Fee Agreement (CFA)?

Answer 32

A retainer agt under which payment is dependent on the successful disposition/completion of the matter.

Question 33

What subsection of the Solicitors Act requires that the CFA be in writing?

Answer 33

28.1(4)

Question 34

Where can you find the standard form CFA?

Answer 34

As prescribed by O.Reg.563/20, the November 18 2021 CFA on the LSO website.

Question 35

What are the exceptions where the standard form CFA does not have to be used?

Answer 35

• where the court has approved the CFA
• the client/person responsible for payment of legal fees employs 25+ people, employs a lawyer full time, or has assets/gross annual revenues

Question 36

Prior to entering into a CFA, a paralegal must ensure the client:

Answer 36

1/ is provided w a copy of the LSO “Contingency fees: what you need to know” consumer guide

2/ has had a reasonable opportunity to review and consider the information in the consumer guide, and to make any inquiries of the paralegal

Question 37

What fee related disclosures must be made upon the completion of a CFA?

Answer 37

• breakdown of award/settlement including net amt the client will receive, itemized list of disbursements, legal fees and taxes charged to the client;
• an explanation of the reasonableness of the contingency fee w reference to:
• time expended
  *legal complexity of the matter
• the results achieved
• risks assumed
• a statement that the client has the right to apply to the Superior Court of Justice for an assessment of the paralegal’s bill in accordance w the Solicitors Act and that specifies the latest date for doing so

Question 38

Paralegals who market legal services on the basis that clients may be charged a contingency fee must…

Answer 38

Publish their general maximum contingency fee percentage.