The amount of legal fees is an important factor to consider before commencing legal action in Small Claims Court. This is, of course, very understandable. At the end of the day, retaining a legal representative is a business decision. Small Claims Court cases, criminal charges and landlord-tenant matters alike must get proper legal assessments. However, you also need to see if they are economically and financially practical.
With this in mind, it would be useful to understand the basics of how lawyers and paralegals structure their legal fees. This may help to choose between a lawyer and paralegal and receive the best value for your money.
Types of Legal Fees
At this time, there are three basic ways in which the legal professional calculates and charges his or her fees:
- Hourly Rate
- Contingency Fee
- Flat Fee
Hourly Rates
- Hourly rates (or billable hours) are used mostly by law firms – big and small alike. The concept of billable hours has been in existence and active use for hundreds of years.
- Everybody knows how this works. First, a legal professional asks the client to sign a retainer agreement that outlines an issue to address and sets out that a lawyer gets a certain amount of money for each hour of work.
- The obvious inconvenience of this type of money retainer is a high degree of uncertainty. A client does not know and has no way to know how much he or she will pay at the end of the day. This is especially true for complex civil litigation or serious criminal charges.
Contingency Fee
- A contingency fee is a relatively new way to pay for legal services. It has been around for two or three decades.
- The general idea of the contingency fee is that a legal professional gets a certain percentage of the money he or she managed to obtain for the client.
- This has become especially popular in insurance claims. “You do not pay unless we win!” is a very popular motto of many personal injury law firms.
- This type of fee almost never comes up in other civil litigation matters or criminal cases, however. It is a common misconception that a legal professional is ready to work for free up to the moment when money gets to the client. The significant risk is that in real life, the outcome of a civil or criminal case cannot be predicted with 100 percent confidence.
Flat Fee
The last type of money retainer, the flat fee, has developed in recent years in response to growing public needs. The flat fee retainer is an agreement between a legal professional and the client that the client pays a certain amount of money for a certain amount of work. While some lawyers now work on flat fees, paralegals use this arrangement much more often.
Spectrum Paralegal’s Flat Fees
Let me explain how the flat fee works in our firm. For example, Small Claims Court proceedings have three major stages or procedural steps. They are as follows:
- Preparation, filing and service of the pleadings (a plaintiff’s claim or defence),
- Settlement conference, which is a sort of preliminary hearing with a judge presiding over it. The hearing’s objective is to try to settle the matter and narrow issues for trial.
- The trial, which is a formal hearing where the parties question witnesses under oath and submit documentary evidence. After the trial, a judge issues a binding decision (judgment) at the conclusion of the Small Claims Court trial.
As a paralegal firm working on flat-fee arrangements, we charge a fixed amount of money for each of these stages. In fact, our client pays as he or she goes. That is, if the next stage is not required, no payment is due.
We believe that this is a win-win approach. It creates trust and mutual interest in the best positive result and allows the client to keep his or her options open at the same time. We use this approach not only in the Small Claims Court matters but while working on criminal cases and representing clients before Landlord and Tenant Board or Social Benefits Tribunal. If you have a matter we can help you with and are interested in this type of relationship, please contact us.
