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Saturday, August 19, 2017

I'm shocked at what my lawyer charged me for estate work - what can I do?

Unfortunately, legal services are expensive. This reader wrote to me about his situation in which he was taken surprise by his lawyer's bill. Is the bill reasonable? It depends. Can he do something about it? Probably. Below is his question followed by my comments.

"I have an estate matter worth $350,000 and the matter is a little complex. Now my lawyer wants $80,000. There was no retainer, nothing, and I'm very shocked for an estate matter to cost me $80k. Is  this reasonable? Should I challenge this legal fee? My lawyer isn't talking to me anymore."

Let's start with the question of whether $80,000 is reasonable. The answer, of course, depends on what work the lawyer did for you. You haven't said you're the executor but it sounds as if you are so I'll proceed on that assumption.

Did the lawyer ONLY apply for probate or administration? If so, did you supply all of the information yourself or did the lawyer contact banks, insurance companies, etc to obtain information and values? Did the lawyer call family members to get information such as addresses and dates of birth or did you provide that? Did you provide the original will or did the lawyer have to obtain it? Did the lawyer have to hunt down witnesses to the will? All of this makes a big difference if the lawyer is charging by the hour.

If the only thing the lawyer did for you was apply for probate, then $80,000 in fees seems high. It's about 23% of the estate.

After the lawyer obtained the grant of probate or administration from the court, did you just take the document and go work on the estate by yourself, or did the lawyer do some of the work for you? Work done on the estate such as dealing with beneficiaries, negotiating with creditors, paying estate bills, handling estate funds in trust, etc are all over and above whatever you paid for probate. Again, those tasks would be on an hourly rate.

You mentioned that the estate is a little complex. This could mean anything from  a business to wind up to a court challenge of some kind. If the lawyer dealt with any land transactions (transfer to beneficiaries or sale to third parties) or sale of a business, that's over and above probate fees too because that's different work entirely.

Usually on an estate, the big cost is litigation. If there was any kind of court application, that would be a big expense. The lawyer would have to prepare documents, perhaps do legal research, exchange information with other parties, negotiate on your behalf, attend court, and so on.

So, since I don't really know how much of this work the lawyer did for you, I can't say whether the fee portion of the bill is reasonable.

Let's take a look at the structure of the bill itself. The bill should break down the items into three categories, those being fees charged by the law firm, disbursements, and GST/HST.

I am assuming that the $80,000 includes disbursements. Those are out-of-pocket expenses that the lawyer pays on your behalf. The biggest one is probably the probate fee that the lawyer would have paid at the court and billed back to you. Another large one would be the fees that the lawyer paid at the land titles office to transfer any real estate for you. If the lawyer had to do searches, those cost money too, as do things like service of documents on people. If your lawyer charges (as many do) for every disbursement including photocopies, printing, postage, couriers, etc on top of the court and land registry fees, that could easily make up $10,000 of the $80,000 bill. Particularly once you add in GST or HST.

Before you decide about challenging the fee, make sure you know how much was actually fees and how much is something else.

It seems unbelievable to me that you would have had no discussion of any kind with the lawyer about what he/she charges or what he/she was supposed to do for you. Even if your lawyer charges $300 an hour, that's more than 200 hours (assuming $10k in disbursements/tax). Were you not aware of what the lawyer was doing? I assume you must have gone into the office at least occasionally to sign things and see what was happening.

When you say there was "no retainer", I am not sure whether you mean there was no money requested up front, or whether you mean the lawyer did not give you a retainer letter. I suspect it's the latter. If so, that's the lawyer's omission. It doesn't mean that the lawyer can't charge you, but as you can see, it leads to disagreements over the bill.

Normally I would suggest that when there is a dispute over the bill, you start by discussing it with the lawyer. However, it seems that ship has sailed, since you said you and your lawyer are no longer speaking.

If you are considering challenging the bill, I suggest that you decide what it is about the bill that is wrong. Just saying "it's too high" is not enough. Why is it too high? Was work done that you didn't ask the lawyer to do? Is the hourly rate higher than the lawyer told you it would be? Was the number of hours put in excessive? Was something billed twice? Remember that if you challenge the bill, you have to make your case as to why it's too high, and the lawyer gets to argue the other side of the story. So make sure you can make a good case.

If it's an error that can be corrected, write to the lawyer and ask that it be corrected. What have you got to lose? If that doesn't work, you can participate in a process called taxation of your bill. This is a process whereby an officer of the court called a Taxing Officer or Taxing Master will call a meeting of you and the lawyer, and you will explain to the Taxing Officer why it's too high. The lawyer will be present. Once the Taxing Officer has examined the bill, looked at any supporting material (such as a retainer letter where there is one), and has heard both sides, he/she will decide whether or not to reduce your bill. There is no guarantee that your bill will be reduced.

As I've said so many times in so many situations - good communication is the key. This is why I bill my estate clients every two weeks, and send a retainer letter. Nobody can then say they didn't know what my bill would be.

Thursday, August 17, 2017

The Law Show: Practical tips and how-tos for executors and beneficiaries

This week's (August 17, 2017) episode of The Law Show is online! This week we are talking about several practical tips and how-tos that executors and beneficiaries need to know. The idea behind it is that executors know they are supposed to do certain things - transfer a house to a beneficiary or open an estate bank account, for example - but they may not know how to go about it. So this week's program is packed with practical information you'll find useful. Click here to go to www.vocm.com and choose the episode you want.

Tuesday, August 15, 2017

Joint property cannot be clawed back to satisfy deceased's debt

I recently came across an article by Toronto lawyer Suzana Popovic-Montag that talks about what happens to joint property owned by a deceased person whose estate does not have enough funds to pay all debts. This is something that many executors must deal with, and it certainly is of interest to spouses everywhere.

The article is about the case in which a husband and wife in Ontario jointly owned their matrimonial home. The husband died and due to the fact that the estate could not pay the man's debts, the estate went into bankruptcy. The creditors attempted to have the house clawed back into the estate to pay the debts. The debts in question were not debts against the house (e.g. a mortgage or a secured line of credit). The went to court and the judge decided that the house could not be clawed back. To read the article with more detail about this, click here. The case itself is called Re Cameron and can be read by clicking here.

The gist of the decision is that the court considered that upon the death of a joint owner, there was no "transfer" of the house to the surviving owner. It was rather that the deceased person's ownership was simply extinguished, leaving one owner already on title.

This should be comforting news to anyone out there who is worried about losing his or her home due to their spouse's insufficient estate.

Monday, August 14, 2017

Does a man in possession of deeds necessarily own the property?

Well, you readers never let me get  bored, that's for sure. Here's an interesting question I received recently. I know that lots of people like to take care of legal transactions on their own to save money on legal fees, but this is taking it to extremes!

"My husband's uncle passed away with no will but gave all deeds and belongings to a stranger . My husband befriended this stranger and received all deeds from him. The letter given to him by my husband's uncle was not passed over to my husband. This man decided not to claim the land. This uncle who has passed has a surviving sister & brother in their late years. My husband feels because the deeds were given to him he has the right to claim all land because of the deeds. I disagree but wish to have an expert opinion on this legal issue."

This is one of the oddest questions I've ever had on this blog. I have never before seen people passing around land deeds as if they were no more than trading cards.

Your husband's uncle was entitled to give away his personal possessions as he did. However, it takes a bit more formal paperwork to transfer real estate. Currently the land belongs to whoever's name is on the title. The fact that someone else physically has the deed in his or her possession does not in any way give that person ownership of the land. Having your hands on the deed means nothing. Ownership of land comes with legal rights which are not extinguished by simply giving someone the deed. In addition, all transactions regarding land must be in writing.

It's possible that the "letter" you refer to might contain the right information, signatures, etc to qualify as a transfer of land, or perhaps an offer to transfer land. If it's just a letter from one guy to another, I doubt it, but I haven't seen it so I have to admit it's a possibility.

Based on what you have said here, I don't think "the stranger" ever owned the property in question. You said he decided not to claim the land, which I believe means he didn't register anything at the land registry to put the title into his name. Even if your husband had the letter you mentioned, I don't see how that would help anyone since the letter didn't mention your husband, and you haven't said anything about any documents transferring the property to your husband.

I do not believe your husband has any rights whatsoever based on the paperwork he has. If he really does think he has some claim to the land, I suggest that he take the paperwork to a lawyer for a review and discussion. If he cannot prove that the land was transferred to hiim, it should legally be divided among the uncle's siblings. I'm guessing that nobody has come forward to act as the administrator of the estate, but someone should do that and take control of this land situation.




2017 Best Legal Blog Contest - nominate your favourite legal blog (and yes, I hope it's mine)

If you like reading this blog, why not nominate it for the 2017 Best Legal Blog Contest? Apparently the contest works so that the more nominations a blog gets, the more likely it will be included in the short list for public voting. Click here to see more and to nominate. Pretty sure this one would be in the "niche" category. I only saw one Canadian blog in the winners' list from last year; all the rest were American. Let's show them how great Canadian law blogs can be!

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