89-03 : Appropriate Billing Practices

The Society reminds lawyers and law firms that Law Society Rule 5-44(1)(d) requires that a statement of account for fees and disbursements be rendered to the client before the money is withdrawn from trust to pay for fees and disbursements. Inherent in the rendering of an account is that the account must actually be sent to the client and the legal services outlined in the account must have actually been performed at the time the account was rendered.

Thus, it is improper for a lawyer or law firm to:

• render an account for prospective services not yet performed; for example, immediately upon retainer prepare a statement of account for the full flat rate fee for a real estate conveyancing matter; or
• prepare an interim statement of account and transfer monies from trust without delivering a copy to the client at that time; for example, leave the interim accounts on file and deliver to the client at the end of the matter only a final statement of account which amalgamates previous accounts the client has never received.

With respect to real estate transactions specifically, until such time as a lawyer has substantially fulfilled obligations owed to the client, and is in a position to honour the trust conditions imposed, the lawyer or law firm is not entitled to receive payment for services out of monies received in trust from other parties. For example, the vendor’s lawyer should not transfer trust money to the general account until prior encumbrances, taxes and realtors’ commissions have been paid. In the case of the purchaser’s lawyer, funds should not be transferred until the lawyer is able to provide the client with the opinion that title to the purchased property has been or will be registered in the client’s name free of all encumbrances except for those accepted by the client.

Nothing herein prevents a lawyer or law firm from:

1. rendering an interim statement of account to a client, provided such an account is delivered to the client at the time and also that the fee charged is fair and reasonable and accurately reflects the value of the legal services performed to that date; or
2. receiving a general retainer from a client for which the lawyer or law firm is not obliged to render services, in exchange for accepting the client.