When to Bill – Timing Considerations

Lawyers should bill their clients without delay. Billing on an interim basis (e.g., monthly) is recommended where possible, as a way of managing clients’ expectations. Billing regularly reminds clients of the work that has been done and helps avoid sending a large and unexpected bill at the end of the matter.

Sending interim bills may not be practicable under every fee arrangement. For example, under a flat rate service model, a lawyer may be able to collect their fee at the outset of the matter (lawyers should check the rules in their jurisdiction as some jurisdictions do not allow fees for services to be billed before the work is done). On the other hand, a contingency fee arrangement means that while disbursements may be billed on an interim basis (if that is the agreement between lawyer and client), the final fee will not be determined until the matter concludes. In every case, however, it is critical that the lawyer provides the client with expectations as to when and how the matter will be billed, and then meets those expectations. As Kevin Cheung put it in an article in Canadian Lawyer Magazine:

Whatever method you decide on, communicate what you are doing to your client so that their expectations are set. Then you must slavishly follow the chosen routine. Deviating from that throws off the client's expectations and allows you to form bad habits.¹

For individual clients who will be billed on a regular basis, it can be helpful to find out when the client’s pay cycle is. If the client is paid on a predictable cycle, sending accounts on a schedule that aligns with the client’s pay cycle (e.g., monthly) can help the client pay the account more quickly.²

Billing a client without delay upon achieving a significant success for the client, while the value of the lawyer’s services is fresh in the client’s mind, can also prompt quick payment.³

Learn more:

• Ellen Freedman & Claire Barnes, “Capturing More Time (And Billing It Too!)” CBA Practice Link (April 23, 2009)
• Kevin Cheung, “WIP, taxes and better billing practices”, Canadian Lawyer (October 27, 2020)
• Law Society of British Columbia, Practice Management Course, ​Part 13 – Difficult Client Learning Module including:
  • 10. The Importance of Effective Communication continued – emphasis on prompt, regular billing and what to do if bills are not being paid
  • 11. The Importance of Effective Communication continued – value of small, frequent bills
• Law Society of Ontario, Financial Management Guideline (last updated: January 1, 2022) including:
  • 4.2 Billing Methods and Charges
  • 4.3 Interim Billing, Work in Progress, or Account Status Reports

Statements of Account

A statement of account should tell a story. A lawyer should prepare a statement of account with the expectation their client will review it closely. A client reviewing their account should be left with a clear understanding of what was done, why it mattered and, in most cases, how long it took. If a client requires further explanation of their account, the lawyer should be prepared to explain without hesitation.⁴

Rule 3.6-3 requires lawyers to “clearly and separately detail the amounts charged as fees and disbursements” in a statement of account delivered to a client. As noted in the commentary, lawyers may also separately list “Other Charges” on a statement of account “if a lawyer wishes to separately itemize charges such as paralegal, word processing or computer costs that are not disbursements, provided that the client has agreed, in writing, to such costs.”

Special considerations apply when a lawyer acts under a joint retainer, in which case the lawyer must divide their fees and disbursements equitably between the clients unless the clients have agreed otherwise.⁵

The Law Office Management Committee (“LOMC”) of the Nova Scotia Barristers’ Society provides the following guidance on time-keeping, which will help ensure a lawyer’s timesheet translates into a statement of account that is sufficiently transparent to enable the client to understand the services that were performed:

• Lawyers should be timely when recording the time spent on any professional service.
• Lawyers should be accurate in describing the professional service being performed and for how long.
• Lawyers should not use abbreviations or acronyms for professional services known only to them.
• Lawyers should review time records to ensure that they are free of misspellings and errors in the amounts of time recorded.
• Lawyers should be complete in describing the purpose for the particular service rendered and recorded.
• Lawyers should not record so little information regarding the particular professional service rendered that neither they nor anyone else can define or describe it objectively from the value to the client perspective.⁶

The LOMC also emphasizes the value of accurate time-keeping across many different types of fee arrangements, as follows:

Lawyers understand the necessity of time management and recording from a value perspective. That is not to suggest that the predominant method or even the method most understood and favoured by clients for determining professional fees is the billable hour. We know that for many types of legal services that is simply not the case. Rather, many types of legal services have attracted and will continue to attract standard flat rate fees which have been established by market forces, are routinely accepted by clients and are entirely appropriate. That having been said, we also know that as a gauge to efficiency, profitability, risk management and billing justification, there are few if any law office management standards which are superior to the proper and effective docketing of professional time.

In fact, even if assessing the reasonableness of lump sum legal fee accounts, even in the legal services areas of practice wherein they are common, assessment and taxing officers, as well as the courts, will more often than not resort to an analysis of how much time was taken to perform the services in issue and how much time should have objectively been taken for them. It is on that basis that the LOMC submits that lawyers, who fail to keep time, fail at their peril.

In making that statement, the LOMC fully appreciates and accepts that some lawyers, in particular types of legal practice, use the form of fixed fee model referred to above instead of keeping time; particularly in types of matters wherein the market has established a general fee range or where in those circumstances wherein it is generally possible to predict what a particular matter will entail in terms of time and expertise. Those lawyers should remain free to structure their related fee accounts on that basis; bearing in mind the overall regulatory and ethical framework that goes with any fee (including the above standard) and bearing in mind that contemporaneous time records will be a highly relevant factor in assessing the reasonableness of any contested fee account.⁷

Learn more:

• Edward Poll, “The Perfect Legal Bill”, CBA Practice Link (February 13, 2014)
• Law Society of Ontario, “Time Management” including 7.6.1 Time Docketing or Recording Systems
• Lawyers’ Insurance Association of Nova Scotia, “Law Office Management Standards - #3 – Timekeeping” (May 23, 2014)

What to Bill for and What to Avoid Billing For

The Model Code addresses the question of what to bill for in broad terms, stating: “A lawyer must not charge or accept a fee or disbursement, including interest, unless it is fair and reasonable and has been disclosed in a timely fashion.”⁸ Law societies do not regulate lawyers’ specific approaches to what they do and do not bill for.⁹ However, the commentary to Rule 3.6-1 sets out factors that will help determine whether a fee is fair and reasonable, as follows:

1. the time and effort required and spent;
2. the difficulty of the matter and the importance of the matter to the client;
3. whether special skill or service has been required and provided;
4. the results obtained;
5. fees authorized by statute or regulation;
6. special circumstances, such as the postponement of payment, uncertainty of reward, or urgency;
7. the likelihood, if made known to the client, that acceptance of the retainer will result in the lawyer’s inability to accept other employment;
8. any relevant agreement between the lawyer and the client;
9. the experience and ability of the lawyer;
10. any estimate or range of fees given by the lawyer; and
11. the client’s prior consent to the fee.¹⁰

Furthermore, the commentary to Rule 3.6-1 expressly forbids any hidden fees, or any fees that have not been fully disclosed and consented to by the client (or another party if the lawyer’s fees are being paid by the other party).¹¹

While the existence of a written retainer agreement or letter setting out a particular fee arrangement is not determinative as to whether a lawyer’s fees are fair and reasonable, lawyers are best served by being able to show that a client was fully informed at the outset of a matter as to the potential costs of the matter and how the client would be billed, and agreed to proceed on that basis:

Lawyers must remember that they bear the burden of proof in all cases of challenges to their bills. In other words, the client need not establish that a disputed bill is unreasonable; a lawyer must establish that it is reasonable. If there is no written agreement setting out the parameters of the retainer, particularly in the case of an unsophisticated client, the lawyer involved is setting up a difficult burden for himself or herself to meet.¹²

With respect to disbursements, it is generally recognized that lawyers and law firms should only seek reimbursement for disbursements made on a client’s behalf. The payment of disbursements should not generate profit. As stated in an ethics opinion issued a number of years ago by the American Bar Association:

“… it is impermissible for a lawyer to create an additional source of profit for the law firm beyond that which is contained in the provision of professional services themselves. The lawyer’s stock in trade is the sale of legal services, not photocopy paper, tuna fish sandwiches, computer time or messenger services”.¹³

Lawyers can face ethical and logistical challenges when it comes to determining whether and how to charge certain expenses to clients. For example, lawyers who pay a flat rate fee per month to access legal research services must determine whether and how to pass the costs of research on to clients. As well, administrative costs such as a file opening fee should be made known to the client at the outset, so that these types of additional costs are not a surprise. As Kris Dangerfield, Senior General Counsel for the Law Society of Manitoba, put it:

The best protection that you can have with respect to either a fee complaint or a fee assessment is a well prepared client. If a client knows that you will be charging them for a file opening fee, the cost of every courier, long distance telephone call or fax transmission, they are unlikely to subsequently complain about the reasonableness of your account. If a client knows up front that a matter will require extensive legal research, or that you are going to have to hire a researcher to perform that research, the cost of that research will not come as a surprise. Providing that you have addressed these issues up front, then your client is able to make an informed decision as to whether or not they are prepared to pay for the disbursements and costs that will be charged to them.¹⁴

Learn more:

• Lawyers’ Insurance Association of Nova Scotia, “Law Office Management Standards - #5 – Retention and Billing” (June 13, 2015)
• Law Society of Newfoundland & Labrador, “Reasonable Fees” (posted June 12, 2020)
• Law Society of Ontario, “Fees and Disbursements” (last updated May 28, 2021)
• Kris Dangerfield, “Who is Paying for the Tuna Sandwiches?”, Law Society of Manitoba (2020)
• Noel Semple, “Shady Billing: Closing the Hall of Shame”, Slaw (January 30, 2018)

Modes of Billing

Lawyers have many options as to how they send accounts to clients, including by regular mail, email, or via a secure online portal. The method should be agreed upon at the outset of the matter. Given the sensitive nature of information sometimes contained in legal accounts, lawyers should get clear instructions from their clients about where to send their accounts, especially when accounts will be sent via email.

Modes of Payment

The easier it is for a client to pay their account, the better. As such, lawyers are well served to offer their clients the option of paying by credit or debit, or via electronic transfer. Fees associated with offering such payment options is a cost of doing business and should not be charged to the client.¹⁵ With all methods of electronic payment, lawyers and law firms must have measures in place to preserve the confidentiality of client information. Further, regardless of payment method lawyers must be wary of the potential for fraudulent transactions. The CBA’s Legal Ethics in a Digital Context Toolkit provides tools for appropriately safeguarding and managing digital data.

Learn more:

• Edward Poll, “How to Get Paid: It’s In Your Hands” CBA Practice Link (May 14, 2014)
• Law Society of Ontario, “Fees, Disbursements, and Payments” including:
  • Payment by Third Party
  • Payment by E-Commerce
  • Payment by Debit or Credit Card
  • Remote Deposit Capture

Dealing with Overdue Accounts and Late Payments

Following up promptly on unpaid accounts is important both in terms of getting paid and understanding the reasons why a client may not be inclined or able to pay. According to Edward Poll, “[a]n unpaid bill generally indicates that clients have one of four problems:

• They didn't understand either the specifics or the value of what you did for them.
• They didn't think the bill was fair because you charged for things that weren't requested.
• They didn't feel an urgency to pay, preferring to focus on bills with more personal meaning.
• They no longer have money, though their intentions are good.”¹⁶

Poll emphasizes that none of these problems “implies a professional lapse by the lawyer in preparing the bill.” Nevertheless, while acknowledging the primary purpose of a bill is to ensure the lawyer is paid, Poll urges lawyers to also use their bill as a “another tool for client communication. The perfect bill is one that speaks clearly and directly to clients about how you as a lawyer have improved their lives.”¹⁷

Perfect bills aside, what steps can a lawyer ethically take when bills remain unpaid?

First, it is important for lawyers to have an effective method for keeping track of which clients are behind on their payments so they can follow up. Because an unpaid account can be a sign that the client is unhappy with some aspect of the representation, lawyers should ensure they are in regular communication with their client and have the opportunity to find out what the issue is. This is also a good reason to bill clients regularly, so dissatisfaction has less opportunity to fester.

In a 2009 article titled, “Capturing More Time (and Billing It Too!),” Ellen Freedman and Claire Barnes provide detailed tips on how to follow up with a client about an unpaid account.¹⁸ Generally, this kind of follow up is best done by someone other than the lawyer, and preferably by “the most customer-service-friendly person” available. The goal of the initial call should be to confirm the client received the bill. If not, the bill should be sent again without delay. If the bill is still not paid, the next step is to determine whether a problem or question exists about the bill. If the client has a problem with a specific charge or charges, a good option is to ask the client to temporarily hold back that portion of the bill so it can be addressed, and to pay the balance in the meantime. Once a problem is identified, it should be addressed as quickly as possible. As a matter of customer service, “a client has every right to have their questions answered in a prompt and courteous manner.” Law firms may consider authorizing the person who is making the calls to the client to write off charges up to a certain percentage if they feel the situation warrants it, provided the client then pays promptly. When following up on unpaid accounts, it is important the law firm is not on the defensive, and does not put the client on the defensive, either. At the same time, it is reasonable to request specific answers and specific timeframes for payment from a client. Once a timeframe is established, it is critical to follow up as promised, and to continue to follow up until the account is paid.¹⁹

In situations where bills continue to go unpaid, subject to the rules regarding withdrawing services, a lawyer may suspend further work on the file until fees are paid. However, before doing so the lawyer must ensure this does not prejudice the client, for example in the case of an impending court date. As well, the lawyer should be sure to explain to the client that work on their file is being suspended and why. Documenting such communications is critical.²⁰

If bills are still not being paid, a lawyer should consider whether it is appropriate to withdraw from representation²¹ and, if so, whether it is appropriate to claim a solicitor’s lien with respect to the unpaid fees. However, lawyers should take caution, as clients often have reasons for not paying legal fees. Many a negligence claim against a lawyer has started as a counterclaim to a firm issuing a claim for unpaid fees.

Unpaid fees may be better addressed through a more neutral method such as taxation/assessment or mediation services provided by the Courts or through provincial law societies, if they offer a fee mediation process, as discussed in more detail later in this Toolkit. The Model Code allows a lawyer to disclose confidential information in order to establish or collect the lawyer’s fees, provided the lawyer does not disclose more information than is required.²²

Learn more:

• Law Society of Alberta, Law Practice Essentials, ​Part 12 – Dealing with Challenging Clients including 12.13 Effective Billing Practices
• Elizabeth Raymer, “How to Get Paid”, CBA Practice Link (July 23, 2014)
• Edward Poll, “How to Get Paid: It’s In Your Hands” CBA Practice Link (May 14, 2014)
• Ellen Freedman & Claire Barnes, “Capturing More Time (And Billing It Too!)” CBA Practice Link (April 23, 2009)