I’m often asked: how do I determine if the lawyer I’m speaking with is the right one for me and my situation?  My answer is very simple: do your due diligence and, if you’re satisfied and comfortable with the lawyer’s responses, feel free to go ahead with him or her. People need different lawyers for different things.  Some people need lawyers to facilitate a simple residential real estate transaction, while others need lawyers to negotiate commercial leases with landlords.  The latter situation raises lots of additional issues – such as hourly billing instead of fixed fees, negotiation strategy, legal drafting and revisions, etc. – that should be addressed before the lawyer is retained. At the first meeting with the lawyer, you should ask some or all of the following 15 basic questions related to:

1. What services will the lawyer specifically provide (e.g. transaction, representing, drafting, negotiating, etc.);
2. Billing (both legal fees and disbursements) and budget: how will it be done (e.g. hourly, fixed fee, contingency fee, etc.) and how often will the bill be sent;
3. Are there any concessions for paying early, settling early, additional business?
4. Time line;
5. Communication (e.g. by phone, e-mail, etc. and how regularly) and who can be contacted to inquire about the status of the case;
6. Past Experience generally (e.g. how long have they been practicing law and in what jurisdictions);
7. Past Experience in a particular field (they should have past cases they’ve done or some synopsis of transactions they’ve facilitated);
8. Past results (and possibly referrals?);
9. Possible Strategies;
10. Alternatives, possible outcomes, and evaluation of alternatives;
11. Style (e.g. aggressive trial lawyer or alternative dispute resolution lawyer);
12. What is the process or formalities for facilitating or resolving this matter?
13. What potential difficulties/complications/factors could affect the matter, its time line and cost?
14. Will any other parties at the firm (e.g. other lawyer, paralegal, law clerk, etc.) be handling the matter?
15. Terminating the retainer (e.g. failure to pay, failure to act, breakdown in the relationship, loss of confidence, etc.).

Make sure you keep a copy of the retainer agreement you ultimately sign.

written by admin \\ tags: ask a lawyer, ask a lawyer before hiring them

There’s no doubt that lawyers, as a group, charge a lot per hour (just check out our recent report on legal fees in Toronto, where we telephone interviewed 500 solo and small firm Toronto lawyers and asked them about their legal fees).  This makes them inaccessible to the average middle-class Torontonian for legal matters which they should be consulting a lawyer for (e.g. litigation, reviewing contracts, etc.).  So now that we know that lawyers are generally expensive, we move on to addressing the question: why is that so, and from there – what can be done about it?

In attempting to answer the question, “Are Lawyers too Expensive”, one should look at both sides: lawyers’ and their clients’ (both actual and prospective).  In this blog, I’ll be looking at this question from a lawyer’s perspective (which, as an Ontario lawyer, I can do).

As a lawyer, and in their defence, I guess we as a group charge so much has to do with (1) our unique education, knowledge, skill-set, and experiences, (2) the cost of our education, and (3) the cost of operating a law practice.  I’ll deal with each of these briefly in turn.

To begin, lawyers spend years developing a form of legal reasoning that the layperson lacks (and may never acquire).  Lawyers read all the time, and it’s not easy-reading either!  They have to comprehend vast quantities of legalese written throughout the century or longer.  They research cases and legislation, transcripts and documents, and even delve into the legislative debates to figure out the rationale behind a certain piece of legislation.  Apart from having done their due diligence, they have to present their case in a concise and compelling manner.  They have to briefly review the facts, identify the issues, and make arguments based on precedent or appeals to fairness/justice/efficiency and the like.  In doing all of this, lawyers are held to a high standard of professionalism and legal ethics and are a heavily regulated group.  They have to learn the legal process and the substance of the law and be able to explain both in a simple manner to their clients and others (e.g. opposing parties, judges, etc.).  The life of a lawyer is perhaps the most intellectually stimulating and challenging profession that anyone could ever aspire towards.  No two lawyers are alike and, while some lawyers can provide the same basic services as other lawyers (e.g. wills, incorporation, real estate transactions), people often need specialized lawyers to deal with their particular situation.  Hence, the cost of lawyers’ specialized education, knowledge, skill-set, and experiences are reflected in their seemingly high hourly rates or fixed fees.

The cost of a legal education is also worth mentioning.  I met a person who wanted to own part of my law practice.  I was a bit curious about the request.  Having never met the man, I musingly asked him whether he was a lawyer (since only lawyers can ‘own’ law practices).  “No”, he responded.  “Do I have to go to school for that?  And If so, how much would it cost?” he asked me.  “Sure you do”, I responded: “You need an undergraduate degree with killer marks, great references, and a high LSAT score.  It cost me roughly $25,000 for my undergraduate degree (with books and all) at U of T, then another $75,000 for my combined 4 year LL.B. and M.B.A. degrees at Osgoode Hall Law School and the Schulich School of Business (with books, residence and all).  So by the time I was finished school, I had spent over $100,000 on my legal education.  When students become lawyers, they are typically in significant debt and will look to the highest paying jobs to get them out the quickest (these ‘high paying’ jobs are typically at big bay street law firms which charge the highest fees to their clients).

Finally comes the issue of the costs of setting up and maintaining a law practice.  I can only speak for myself here.  Looking back, I must have spent between $15,000 to $25,0000 to establish Carabash Law.  The biggest expenses were technology purchases (e.g. laptop, website, PC Law, cell phone, printer/scanner/copier, keyboard/mouse, etc.), licensing and insurance fees (almost $3,000), stationary, traveling, bookkeepers, and new suits. After these initial expenses, the only recurring expenses will typically be office supplies, employees, and rent.  I didn’t pay rent or salaries (perhaps the biggest ongoing expenses) because I was a sole practitioner working from home.  Adding these things to the equation, however, means that lawyers need to generate substantial revenue (particularly because legal staff have specialized knowledge and are more expensive than normal business admin staff).  When a professional service business must rely on the time spent by its rainmakers to bring in the revenue, the higher the overhead and variable costs, the greater the rate must invariably be.  So if lawyers could make the same or more money without depending on their time to do it, I’m sure that their hourly rate would subside.

So there you have it: it takes a lot of time and money to become a lawyer and, while we do our best to give back to the community that supported us and allowed us to be in our special positions as empowers and protectors of legal rights,  our fees often appear front and centre in the common person’s mind.  In any event, the next time someone complains that lawyers charge way too much for their services, please remember to keep in mind that their services are unique, their education was expensive, and that they have capital and operating expenses to pay for.  I’m not saying that this justifies lawyers charging astronomical amounts, but these factors should be kept in mind before the insults and derogatory statements begin…

written by admin \\ tags: are lawyers too expensive, middle class, ontario lawyer, toronto lawyers, unique education

I have been invited to appear as a guest on Goldhawk Live next Wednesday, June 3rd, 2009.  Goldhawk Live is a call-in show from 7:00-8:00 pm.  Dale Goldhawk is the host and directs the caller’s questions to the guests and also lead the discussion in the studio.  The topic question for next Wednesday: ARE LAWYERS TOO EXPENSIVE AND DO WE REALLY NEED ONE? In anticipation of that show, I’ll be blogging about those and other related issues.  In case you miss the hour-long episode, I’ll be sure to post the video on the website with the rest of the media we’ve received.

written by admin \\ tags: Dynamic Lawyers, goldhawk live

Dynamic Lawyers is doing a series of profile reports on lawyers in Toronto.  The first one features Toronto employment and family law litigator and tech guru, Garry Wise.  In this profile report, you can read first hand how technology has changed the face of legal service in three interesting ways.  You can read the full profile report here.

written by admin \\ tags: Dynamic Lawyers, Garry Wise, Profile Report on Garry Wise

In the Spring 2009 edition of the Canadian Forum on Civil Justice’s News and Views, Jordan Furlong points out the various reasons why the end is near for the traditional legal business model.  His article, which can be found here, makes some very compelling arguments as to why billing by the hour, paying lawyers by the hour, and lawyers relying on their knowledge to maintain power over clients will give way to massive changes (that are already underway).   Those changes include increased competition from overseas, collaborative communities that disseminate legal knowledge, and increased pressure from corporate clients on lawyers to control their fees.  Jordan also talks about Richard Susskind’s new book, The End of Lawyers? Rethinking the Nature of Legal Services, which I’ve blogged about extensively here, here, here, and here.  Overall, his message is clear: lawyers should embrace the changes that are coming our way, not fear or resent them.  I agree entirely.

written by admin \\ tags: canadian forum on civil justice, end of lawyers, Jordan Furlong, news and views, Richard Susskind, traditional legal business model

The Canadian Forum on Civil Justice has issued its Spring edition of News and Views on legal services, which features an article about Dynamic Lawyers.  The Canadian Forum on Civil Justice is “a non-profit, independent organization dedicated to bringing together the public, the courts, the legal profession and government in order to promote a civil justice system that is accessible, effective, fair and efficient” (source: website).  News and Views is a publication that informs readers about civil justice reform issues and initiatives across Canada.  Just click on this link to see the full publication or click here to see the article featuring Dynamic Lawyers (which appears on page 20).

written by admin \\ tags: canadian forum on civil justice, Dynamic Lawyers, dynamiclawyers.com, independent organization, Michael Carabash, news and views

Please keep in mind that this is not legal advice.  The information provided herein is for educational purposes only. If you would like to get in touch with a lawyer to determine whether you have a case worth pursuing, then you are encouraged to seek a professional (e.g. make a post on Dynamic Lawyers).

So the media today is focusing on an unfortunate guy in Calgary named Adrian Lee who had the disgusting experience (if you believe what he’s saying) of chewing on a beetle while trying to enjoy a Tim Horton’s chili two weeks ago.  He heard and felt a crunch in his mouth and spit up what he believes are the remains of a 2 inch long beetle!  Here’s the CBC video link.  While Adrian Lee wasn’t looking for compensation (but merely an apology and acknowledgment from Tim Horton’s), it’s worth looking into the legal implications of situations like these which are (unfortunately) not uncommon.

I’ve previously discussed the legal implications of what you can do when you find a fly in your soup, but it’s worth repeating here.  In these situations, you may be able to sue based on a store/restaurant/manufacturer’s negligence or a breach of their contract with you (i.e. you didn’t get what you bargained for). There are a number of questions that you must typically answer before a lawyer can tell you whether you have a worthwhile case to sue for either of these grounds. For example: did you suffer monetary damages by missing work? Did you go to the hospital and have to pay for medication? Did this experience make you lose any money at all (other than the cost of the drink you likely threw away)? Did this experience cause you to have a psychiatric injury (e.g. nervous shock, emotional distress, a major depressive disorder with associated phobia and anxiety)? Basically, if you sue, a judge will want to know what your damages are in order to award you with something if liability has been found. If you haven’t really suffered any tangible damages, then it’s not worth suing because you won’t get anything.

The importance of establishing damages in these types of cases was reiterated recently by the Supreme Court of Canada in the case of Mustapha v. Culligan of Canada Ltd. Basically, in that case, a person sued a company for psychiatric injury after witnessing a fly in a water bottle. The Supreme Court held that the there was no negligence or breach of contract because the person could not establish that his damage was caused in law by the defendant’s negligence (i.e. the damages were “too remote” to allow recovery).

Each case is different, but at the end of the day, success will depend on what the damages are and whether it was foreseeable that a person of ordinary fortitude would suffer serious injury from, for example, drinking something and finding an insect in it.

written by admin \\ tags: adrian lee, calgary man chews on beetle in tim hortons chili, emotional distress, fly in the water bottle, major depressive disorder, monetary damages, nervous shock, tim horton, unfortunate guy

Part of your law firm search engine optimization strategy will undoubtedly involve identifying and targeting a viral market.  What is a viral market, you ask?  Simple: an initial market that will take your product, service, or idea into the mainstream (where all the money is going to be made).  A viral market, much like a virus, spreads the word for you.  They are the market that the hesitant mainstreamers will look to before embarking on a new idea.  Here are a few examples of how viral markets helped make Internet websites and companies become what they are today:

Facebook: Facebook is a social media website where people can post information, pictures, videos, and updates about themselves on their own personal page and interact with others that join their network.  Membership was initially limited to Harvard students but was expanded to other colleges in the Ivy League. It later expanded further to include any university student, then high school students, and, finally, to anyone aged 13 and over.

Yahoo!: Search engine giant Yahoo! started as a student hobby in a campus trailer as a way for the founders to keep track of their personal interests on the Internet. Before long, hundreds of people were accessing their guide from well beyond their Stanford trailer. Word spread from friends to what quickly became a significant, loyal audience throughout the closely-knit Internet community.

Criagslist: Craigslist is a very popular free (for the most part) classifieds website.  Most of the early postings were submitted by founder Craig Newmark and were notices of social events of interest to software and Internet developers living and working in San Francisco.  This quickly developed to include free classified posting on everything imaginable.

eBay: this website started out as a place where collectibles and antiques could be bought and sold by traders.  This ultimately turned into a marketplace where all sorts of products could be bought.

So what can you learn from this?  Simple: to spread the word that you are the best at “X” in your industry, you need to focus on a target market that is going to take you to the next step – namely, to help you penetrate the mainstream market.

Say, for example, you’re a Toronto personal injury lawyer.  Your target market may include, for example, those persons who have been injured in a car accident.  To reach out to them, you’ll need to target those “go-to” people who could recommend your services to those injury victims – for example, doctors or tow truck drivers or police officers or people in the insurance industry.  If, for example, doctors are that group that your target market will listen to for advice and spread the word about your services, then you need to target and incentivize them to do so.  This is where your strategy begins to take shape.

With respect to your online marketing presence, if you’re targeting doctors, then you’ll need to do things like offer good quality content about things that doctors want to read about, be linked to websites that doctors visit, promote yourself and your brand as one that caters to doctors, and do off-line promotional activities (e.g. conferences, seminars, lunch meetings, etc.) with doctors to help them spread the word about your law firm’s legal services.

written by admin \\ tags: craigslist, criagslist, ebay, facebook, initial market, internet community, law firm marketing, law firm search, loyal audience, search engine optimization, search engine optimization strategy

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.  If you need legal advice with respect to creating a limited liability company or amending a corporation’s articles of incorporation, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto and Ottawa business lawyers registered on the website who can answer your questions or help you with your  Ontario or Federal corporations.

As a follow up to my recent post about income-splitting shares, I neglected to mention one of the biggest benefits of using income splitting preference shares: income splitting to reduce reduce household taxes.

Take the following example.  You have a corporation.  It earns $300,000 in taxable income.  Because of the small business credit (which I will be discussing in a future blog post), the corporation only pays 16.5% tax on that amount (this rate is going down to 15.5% starting July 1, 2010).  What do you do with the after-tax dollars?  Well, you could either keep it in the company and let it accumulate or you could dividend it out.  The latter is where the income-splitting shares come into play.  You can simply give these shares to members of your family who have little or no income.  Then, when the corporation’s directors (e.g. you) declares a dividend to the shareholders of this class of shares, they will receive and have to pay tax on those dividends.  They will get the benefit of the dividend tax credit.  But the beautiful thing is that less taxes end up being paid than if someone (e.g. you) had a higher income and received the same dividends (because of how our marginal taxes work).  These shares are not susceptible to the attribution rules found in the Canada Income Tax Act.

Remember, if you need help structuring your corporation to create income-splitting preference shares, you should make a post on Dynamic Lawyers.

written by admin \\ tags: articles of incorporation, business, canada, Canada Income Tax, canadian income tax, canadian income taxation, corporation, declarations, dividend, dividend tax credit, income tax act, incorporation, lawyers, shareholder, shareholders

Please note that the information provided herein is not legal advice and is provided for informational and educational purposes only.  If you need legal advice with respect to dissolving a partnership, you should seek professional assistance (e.g. make a post on Dynamic Lawyers).  We have Toronto and Ottawa business lawyers registered on the website who can answer your questions or help you with your partnership dissolution.

The Ontario Partnerships Act contains various provisions dealing with circumstances in which a partnership can end.

First, a partnership can end by notice or by a contractual term in the partnership agreement: ss. 26 and 32.

Second, a partnership can terminate by death, insolvency, charge on a partner’s share or illegality of business: ss. 33 and 34.

Third, a partnership can be terminated by court order: s. 35.  This method of dissolving a partnership requires that an application be brought for one of the following reasons:

1. one of the partners is found to be mentally incompetent;
2. one of the partners becomes permanently incapable of performing his or her part of the partnership;
3. one the partners has been guilty of conduct that prejudicially affects the carrying on of the business;
4. one of the partners willfully or persistently permits a breach of the partnership agreement or otherwise so conducts him or herself in a manner relating to partnership business that it is not reasonably practicable for the other partners to carry on the business partnership with him or her;
5. when the business of the partnership can only be carried on at loss; or
6. when in any circumstances have arisen that in the opinion of the court render it “just and equitable that the partnership be dissolved”.

In conclusion: a partnership can only be terminated according to the terms and conditions of the partnership agreement and under one of the provisions of the Partnerships Act.

written by admin \\ tags: dissolving a partnership, ottawa business lawyers, partnership, partnership agreement, partnership business, partnership dissolution, partnerships act, toronto, toronto business lawyers