9 financing options to pay your legal fees

Legal fees can mount quickly. If you have savings, the most cost-effective way to pay for legal fees is to pay up front and out-of-pocket. But for those of us who can’t afford this kind of expense all at once, here are 9 financing options to pay for your legal fees.

1. Personal loan

Best for: A one-time legal expense

You can generally use a personal loan for any legitimate expense, including legal fees. Getting a personal loan for legal fees is best for when you know ahead of time how much you need to spend — like paying for a consultation or a fine. You can typically borrow between $1,000 and $50,000 at once and pay it back in monthly installments over a fixed period of time, usually between 1 and 10 years.

Am I eligible for a personal loan?

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 reasonable a debt-to-income ratio
• Have a working bank account
• Be 18 years of age, or the age of majority in your province or territory

2. Personal line of credit

Best for: A drawn-out legal proceeding

When you’re not sure how long you’re going to need to pay legal fees, you might want to look into a personal line of credit. Instead of borrowing a set amount of funds just one time, you have access to a certain amount of funds (up to your credit limit) at any time. You only have to pay interest or fees on the amount you actually borrow and can typically renew your credit line as many times as you want. Find out which lenders offer personal line of credit.

3. Contingency fee

Best for: Someone suing for damages

Expecting to win a settlement? You might want to ask your lawyer if they’d be willing to work your case for a contingency fee. Instead of paying your fees upfront and out of pocket, a contingency fee allows you to pay your lawyer with a percentage of the damages you’re paid.

Contingency fees are usually not available for all types of cases.

4. Awards of attorneys’ fees

Best for: Someone suing for damages

Awards of attorneys’ fees work almost exactly like contingency fees. The difference is that instead of your lawyer taking a percentage of your damages, the court orders the defendant to pay your legal fees. This is generally only an option if your lawyer thinks you have a strong legal case.

5. Legal payment plans

Best for: Immigration, defendants in criminal or civil cases

Ask your lawyer if they’d be willing to draw up a legal payment plan to help you cover the cost of your case. Many have standard legal plans — and not all charge interest or extra fees. Some are also willing to accept a partial upfront payment plus smaller installments over time.

This could potentially be an easier, less expensive option than third-party financing like a personal loan if you have bad credit. That’s because you might not need to prove your creditworthiness to qualify, and you’ll have more room to negotiate your terms. The downside is you could end up losing your legal representation if you fall behind on repayments.

6. Crowdfunding

Best for: Cases that the public might stand behind

Trying to keep costs down? Reach out to your social network to raise money for your legal fees. You’ll likely pay the platform a percentage of the funds you earn, so factor in platform costs when you’re setting your goal.

There are many popular crowdfunding platforms including Kickstarter and GoFundMe.

7. Credit card

Best for: Any legal fee you can pay off quickly

Sometimes the easiest way to pay a one-time legal fee like a consultation is to put it on your credit card. Most law firms accept them, and it’s an easy way to meet spending minimums and earn miles or points. Your best bet would be to consider using a balance transfer credit card which would allow you an intro period of usually 6 to 9 months at a very low interest rate so you can make payments towards the balance.

8. Pro bono lawyer

Best for: High-profile cases, low-income clients

Lawyers sometimes reduce their fees or waive them entirely on cases that they think could generate a lot of press or for low-income clients. Some law firms even require lawyers to take on a certain number of pro bono cases each year.

To find a pro bono lawyer near you, check out the Canadian Bar Association’s resources.

9. Friends and family

Best for: Smaller legal fees

You can also reach out to your relatives and close friends for help covering your legal fees. You might not have to pay interest and if you do, it’ll probably be a low rate. Just be aware that you could damage your personal relationships if you’re unable to pay it back.

How much do legal fees cost?

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.

• Consultation fee. Either a fixed or hourly fee for your first meeting with your lawyer, typically paid upfront and is based on your lawyers hourly rate. 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.
• Retainer fee. 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 or it could also act as a down payment on your lawyer’s services and establishes that they’re working on your case. These vary widely depending on the lawyer and your case.
• Hourly rate. 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
• Flat fee. 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.
• Contingency fee. 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. This could be 25% to 40% of your settlement amount.

5 tips for keeping your legal fees to a minimum

1. 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.
2. 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.
3. 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.
4. 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.
5. 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.

Dive deeper: Have time? Compare 45+ personal loans

Bottom line

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 and find a favourable deal that will help you pay off your legal fees as quickly and cheaply as possible.

Related: How settlement loans work

Frequently asked questions

• Do you always have to pay a consultation fee the first time you meet a lawyer?

  No, not always. Lawyers sometimes don’t charge consultation fees on a flat-fee case, while some may not for other reasons.

• What happens if I don't win a settlement and my lawyer agreed to a contingency fee?

  You’ll likely still be on the hook for your lawyer’s hourly fees outside of the contingency agreement, so make sure you’re prepared to cover those costs if things don’t work out as you had hoped.