Emotions can run high when you’re dealing with a lawsuit — and the high cost of legal fees don’t help. Legal representation doesn’t come cheap and it’s often necessary to look into financing to cover the high costs.
To avoid spending all your savings or going broke, you might want to consider looking into financing options to help pay your legal fees. Read on to learn about your options.
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If you have savings, the most cost effective way to pay for legal fees is to use them. Aside from paying out of pocket, you might want to consider one of the following options:
If you’ve run into some trouble with paying off debt in the past, you could have trouble qualifying for credit from a lender. Generally, you’ll need to meet the following requirements to be eligible for a competitive personal loan:
- Have good or excellent credit
- Have a steady source of income
- Be a Canadian citizen or a permanent resident with a valid Canadian address
- Have a debt-to-income ratio below 43%
- Have a working bank account
- Be 18 years of age, or the age of majority in your province or territory
How to qualify for a personal loan
The total cost of legal fees varies wildly, depending on your specific situation and deeds. These are some common fees you might run into in addition to the lawyer’s hourly rate.
Either a fixed or hourly fee for your first meeting with your lawyer, typically paid upfront. Lawyers generally require a consultation before you decide to use their services. You typically don’t need to pay this if you have a flat-fee case.
Typical cost: Usually based on your lawyer’s hourly rate.
There are two main types of retainer fees. Either it’s a set fee you pay into an account that your lawyer withdraws from as costs build up. It could also act as a down payment on your lawyer’s services and establishes that they’re working on your case.
Typical cost: Varies widely depending on the lawyer and your case.
You can pay your lawyer per hour of work on your case. Rates can vary depending on the city, province or territory that you live in, your lawyer’s seniority and type of legal work. You’ll typically pay more if you hire a senior partner at a law firm in Toronto or Vancouver, for example.
Typical cost: $200 to $500 per hour, as much as $1,000 per hour in specialized legal cases
A fee that covers the total cost of your case, common with cut-and-dry cases like an uncontested divorce or drawing up a will.
Typical cost: Varies by case
You agree to pay your lawyer a portion of the amount you’re awarded in your case — if you win. Some lawyers offer this fee on a sliding scale depending on how long it takes to settle the case.
Typical cost: 25% to 40% of your settlement amount
- Compare lawyers. Shopping around not only lets you find a lawyer that’s right for your case, but will also help you get a feel for how much most lawyers charge for your particular type of case — giving you the confidence and leverage you need when you negotiate your fees.
- Set a budget. This seems simple, but knowing exactly how much you can afford to pay in legal fees — including extra financing — can help you weed out lawyers that charge more than you’re able to pay.
- Keep calls quick and to the point. Paying by the hour? Time is money. Don’t waste it with small talk and try to prepare questions ahead of time.
- Be organized. Clearly label and organize your documents and paperwork. Write summaries of key facts that your lawyer can clearly refer to so they don’t have to spend extra time on busywork.
- Ask for six-minute billing increments. Many lawyers give you a choice between six- and 15-minute billing increments. Choosing the smaller one gives your lawyer less of a chance to round bills up and could potentially save you hundreds, or even thousands of dollars.
Legal fees can deplete your savings and hurt your finances if you’re not prepared. Luckily, there’s usually a way to find financing if you’re caught by surprise or simply can’t cover the costs right away. If you can’t find a lawyer to work pro bono and don’t expect a settlement, a personal loan can be a reasonable solution for most legal cases.
To get the best deal on your legal financing, compare your options in our table above and find a favourable deal that will help you pay off your legal fees as quickly and cheaply as possible.