What Happens When You Win A Lemon Law Case?
- Marvin Harvey
Refund of the purchase price – This is often the most desired outcome of a lemon law claim. You can use the refund to purchase any make or model of car you want. In exchange for the refund, the manufacturer or dealership will take possession of your lemon vehicle.
What is the Texas lemon law for new cars?
How does the Lemon Law work? – The Texas Lemon Law is a state law administered by the Texas Department of Motor Vehicles that helps consumers who buy or lease new motor vehicles and have repeated problems getting their vehicles properly repaired under the manufacturer’s original warranty.
How long does lemon law Philippines affect the vehicle?
The Lemon Law – This law took into effect in 2014 and serves to protect your consumer rights. It covers a wide range of passenger vehicles in the form of hatchbacks, sedans, crossovers, and even large SUVs. However, it is important to note that this law does not yet cover motorcycles, buses, delivery trucks, and heavy equipment.
To quickly gloss over how the law can protect your consumer rights, it protects owners of brand-new vehicles that were purchased in the Philippines within 12 months after the date of delivery. It also covers the first 20,000 kilometers of operation after the date of delivery of the vehicle to the customer or the 12 months whichever comes first.
This gives the owner the right to report any non-conformity with the vehicle’s manufacturer or with the distributor’s standards of specifications. If the owner of the vehicle finds that their car is defective, then they may invoke their Lemon Law rights.
What three options does the Texas lemon law allow for with a vehicle?
Texas Lemon Law Rights Consumer Guide The and the federal Lemon Law (the Magnuson-Moss Warranty Act) provide for compensation to Texas consumers of defective automobiles and trucks and other vehicles and products including motorcycles, RV’s, boats, computers and other consumer appliances and products.
- To qualify under the Texas lemon law on cars you must generally have a vehicle that suffered multiple repair attempts under the manufacturer’s factory warranty.
- Texas car lemon law compensation can include a refund, replacement or cash.
- And even if your vehicle is too old or has too many miles to qualify under either of these lemon laws, the and/or other related car buying laws may provide an avenue to recover cash damages that can help you trade out or pay for repairs.
You can learn more about the Texas lemon law definition and the Texas lemon law process from a and get a free Texas lemon law case review, or by reading the handy guide below on your Texas Lemon Law rights compiled by the Texas Attorney General and presented here by CarLemon.com, THE Texas automobile Lemon Law one stop infosource.
- Texas Lemon Law Rights Introduction The Texas Lemon Law is a state law that helps consumers who buy or lease new motor vehicles and have repeated problems getting their vehicles properly repaired.
- The Texas Lemon Law statute can help a consumer get the vehicle repurchased, replaced or repaired.
- It can be less complicated and less expensive than going to court.
The Texas Car Lemon law was enacted by the Texas Legislature in 1983. A court challenge stalled enforcement of the law, but in 1985, a federal appeals court upheld its validity. In Texas, the Lemon Law is administered by the Texas Department of Transportation’s Motor Vehicle Division and its Motor Vehicle Board.
Through mediation and formal hearings allowed under the law, the Motor Vehicle Division has helped resolve many complaints. From 1988 to 1997, the division processed 12,282 complaints. In 1997, the division received 1,291 written complaints and held 182 hearings on complaints that were not resolved informally.
In about half the cases heard in 1997, consumers received either replacement, repurchase or repair of their vehicles, or some other appropriate relief. In 1991, the Legislature changed the Lemon Law to benefit more consumers. The time period for filing a complaint and the definition of a “lemon” were expanded, and consumers may now be reimbursed for certain incidental expenses.
- be titled and registered in Texas;
- be built on a single chassis;
- contain one or more life support systems, and
- be towable by another motor vehicle.
The relief available to used motor vehicle buyers is limited to repairs only, if the vehicle is still under the original factory warranty. What does it cover?The Lemon Law applies to new vehicles, including cars, trucks, vans, motorcycles, all-terrain vehicles motor homes and towable recreational vehicles (TRVs) that develop problems covered by a written factory warranty,
- problems caused by the owner’s abuse, neglect or unauthorized changes to the vehicle,
- parts or components not authorized or installed by the manufacturer, or
- problems that do not substantially affect the use or market value of the vehicle. Minor rattles or stereo problems are usually not considered serious under the Lemon Law.
When the term “manufacturer” is used, it should be understood to include distributor and converter, as well. How do I Know if My Vehicle is a Lemon? A motor vehicle may be declared a lemon if it meets all of the following conditions:
- The vehicle has a serious defect or abnormal condition.
- The defect or condition is covered by a manufacturer’s written warranty.
- The owner reports the defect or condition to the dealer or manufacturer within the warranty term.
- The owner gives the dealer or manufacturer a reasonable number of attempts to repair the defect or condition.
- The owner gives the manufacturer (preferably by certified mail) written notice of the defect and at least one opportunity for repair.
- The defect or condition persists and substantially impairs the vehicle’s use or market value, or creates a serious safety hazard.
- The owner files a timely Lemon Law complaint and pays the filing fee.
How Many Chances Does the Dealer get to fix the Vehicle? Determining how many chances a dealer has to fix a defect is easy. Simply see if you pass either the four-times test, the serious-safety-hazard test or the 30-days test, The law presumes you have given the manufacturer or authorized dealer a reasonable number of attempts to fix the defect if you pass one of these tests.
- two times for the same problem or defect within the first 12 months or 12,000 miles, whichever comes first, and
- twice more during the 12 months or 12,000 miles after the second repair attempt, and
- the problem is still not repaired
you pass the four-times test. Serious-Safety-Hazard Test If you have taken the vehicle for repair of a serious safety hazard:
- once during the first 12 months or 12,000 miles, whichever comes first, and
- once more during the 12 months or 12,000 miles following the first repair attempt, and
- the problem is still not repaired
you pass the serious-safety-hazard test.30-Days Test If your vehicle has been out of service for repair because of problems covered by the warranty:
- for a total of 30 days or more, not necessarily all at one time, during the first 24 months or 24,000 miles, and
- there were two repair attempts during the first 12 months or 12,000 miles immediately after delivery, and
- a substantial problem still exists
you pass the 30-days test. If a comparable loaner vehicle was provided while the vehicle was being repaired, that time does not count toward the 30 days. How Long do I Have to File a Complaint? A Lemon Law complaint must be filed within six months following the earlier of :
- expiration of the express warranty term;
- 24 months; or
- 24,000 miles following the date of delivery of the vehicle (except TRVs)
In other words, the filing period is determined by which of the above events comes first. To be safe, file your complaint as soon as you realize the dealer is having problems repairing the vehicle. Even if you have gone past the time limit allowed for a repurchase, the Motor Vehicle Board may still be able to help you get repairs under your vehicle warranty.
- Why so Many Requirements? Most people feel that a seller or manufacturer should replace defective products or refund the purchase price without a lot of hassle.
- However, it is not practical for automobile manufacturers to do this.
- Their products are much more expensive than most other consumer goods, and warranty disputes involve more complicated issues.
Often, whether the vehicle is really defective is a legitimate question. Before the Lemon Law, consumers had to file lawsuits to get relief. Most states have passed laws to provide consumers with a relatively quick, inexpensive and easy way to pursue their claim.
- But, any law requires certain procedures.
- Our staff, especially our consumer advisors, will try to make it easy for you to understand the legal requirements and procedures.
- Informal Procedures What’s My First Step? If your dealership does not seem to be able to correct the problems with your vehicle, send a letter, preferably by certified mail, to the manufacturer.
The owner’s manual or warranty booklet should have a contact name and the address of the manufacturer’s regional office. Describe the vehicle’s condition and offer the manufacturer an opportunity to fix the problem. Better yet, tell the manufacturer when the vehicle will be back at the dealership for repair.
- It is important to keep a complete record of all your dealings with the manufacturer and dealer, including copies of all repair orders, letters and records of phone calls.
- If you decide to file a Lemon Law complaint, you will need to send copies of all the materials to TxDOT.
- How do I File a Complaint? Your complaint must be in writing.
If you want your vehicle replaced or repurchased, you must send a $35 nonrefundable filing fee with your complaint. However, if you win your case at a hearing, the manufacturer will reimburse you for the fee. If you are only seeking repairs under the warranty, no fee is required.
- Can My Complaint be Resolved Quickly? TxDOT will contact the manufacturer and dealer about your complaint.
- The manufacturer may send one of its experts to the dealership to help identify and fix the problem.
- If your vehicle is satisfactorily repaired, your case is resolved.
- If the vehicle is not repaired, TxDOT may send a technical expert to meet with you and representatives for the dealer and the manufacturer.
At the meeting, TxDOT’s expert will help settle the dispute, if possible. In many cases, the complaint is resolved at this stage, within 30 to 60 days after the complaint was filed. If the complaint is not settled, a hearing will be necessary. Formal Procedures What is a Lemon Law Hearing? A Lemon Law hearing is your opportunity to prove to an Administrative Law Judge ( ALJ ) that your vehicle is a lemon.
You must present your own testimony or that of witnesses. You should also present letters, repair orders or other documents (except affidavits) to prove to the ALJ that your vehicle is a lemon. Presenting a case to the ALJ is somewhat like appearing before a judge of a small-claims court. There are certain legal procedures that a judge must follow.
The ALJ will relax the rules as much as possible, but the process is subject to the Texas Administrative Procedure Act, the Texas Rules of Civil Procedure and the Texas Rules of Evidence. When a hearing is needed, TxDOT’s goal is to hold it and issue a decision within 150 days after receiving the complaint and filing fee.
- Collect your documents. For example, your sales contract, warranty booklet, work orders or repair tickets, and letters to or from the dealer or manufacturer. Bring three copies of all documents to the hearing.
- Arrange the work orders by date. Put the oldest work order first and complete the warranty repair log. Be prepared to support the log entries with your testimony or notes, or with testimony of witnesses.
- Complete the “List of Agreed Facts” form in advance to save time at the hearing.
- Arrange for witnesses to appear at the hearing because notarized statements generally are not allowed. If you have friends who have witnessed the vehicle’s problems, ask them to testify at the hearing. You may also subpoena witnesses. Make sure your witnesses know when and where to appear, and tell them it may take most of the morning or afternoon.
- Make sure the vehicle is ready to be inspected and test-driven at the hearing, including having current registration and state inspection. For example, if the complaint is a severe vibration, make sure the tires are not worn out and that they are properly aligned and balanced. Be sure your vehicle has had the required maintenance and bring records to prove it.
How do I Prove My Case? Although a hearing is less formal than a court trial, you must still prove your case to the Administrative Law Judge, You must prove that:
- you purchased or leased a new motor vehicle, and you still own or lease it at the time of the hearing;
- the vehicle had a defect covered by the warranty, and you reported the defect to the dealer or manufacturer during the warranty period;
- you filed a Lemon Law complaint within the time limit and paid the filing fee;
- you gave the manufacturer or its dealer a reasonable number of attempts to fix the defect or condition, but the defect remained. Ordinarily, the defect must continue to exist at time of hearing;
- you notified the manufacturer of the defect in writing and have given the manufacturer at least one chance to fix it;
- the defect or condition substantially impairs the use or market value of the vehicle, or creates a serious safety hazard. You may be able to prove the vehicle’s use is impaired if any of its major systems are defective, or if a defect such as a water leak prevents it from being used normally in the rain.A vehicle’s value may be decreased by paint flaws or any other condition that would lead a buyer to pay substantially less than the market price for a comparable vehicle that does not have the defect. A serious safety hazard is a life-threatening malfunction that impedes your ability to control or operate the vehicle normally or that creates a substantial risk of fire or explosion.
TxDOT attorneys conduct the hearings, which usually last two to four hours. These attorneys (administrative law judges or ALJs’s) travel across the state to locations convenient to consumers. The judge does not represent either party at the hearing, but reaches a decision based on the evidence presented.
- Proof elements here are described in layman’s terms.
- The actual legal provisions are found in §6.07 of the V.T.C.S.
- Article 4413(36).
- Who is Involved in the Hearing? Usually, owners present their own cases, and manufacturers send their customer relations managers.
- However, if a manufacturer has an attorney or if you feel uncomfortable without one, you may want to be represented by counsel.
If you choose to have an attorney, you must send written notice to TxDOT’s Motor Vehicle Division and the manufacturer at least five days before the hearing. Attorney fees are not reimbursable. What Will Happen at the Hearing? First, you will present your side of the story.
- there is no defect at all;
- the defect is minor and does not substantially impair the vehicle’s use or market value;
- the defect was caused by owner neglect or some other factor.
Be sure to take notes as the manufacturer presents the case so you can then ask specific questions about testimony or documents. After all the evidence is received, the hearing recesses for a vehicle inspection and test drive. The ALJ may decide to conduct the inspection and test drive after you present your case, and will explain the procedures.
- the complaint should be dismissed;
- the vehicle has a defect that the manufacturer must repair;
- the vehicle qualifies as a lemon and should be repurchased or replaced.
What Happens if I win? The law provides basic guidelines for what you may get if you prove your case. Because every situation is different, judges review the facts of each particular case when making a decision. If you win your case, the judge will order one of the following: Refund The manufacturer must buy back the vehicle for the full purchase price, including taxes, title and license fee, minus an amount charged for the use of the vehicle.
- The amount deducted is decided according to a formula that takes into account the number of miles on the vehicle at the time of the hearing and other factors.
- Replacement The manufacturer must replace the defective vehicle with one that is comparable to your original vehicle, usually same make, model and accessories, that is acceptable to you, minus the mileage used.
Repair The manufacturer must fix the vehicle’s defects. Also, out-of-pocket expenses for repairs that should have been covered by the warranty will be reimbursed. Reimbursement of Incidental Expenses Incidental expenses are awarded only if the vehicle is ordered to be repurchased or replaced.
- They include the costs of towing, rental cars, lodging and meals if the vehicle broke down while out of town, and telephone calls and postage spent trying to get the vehicle repaired.
- What if I’m not Satisfied? Neither you nor the manufacturer has to accept the ALJ’s decision.
- Copies of the decision and order are sent to the consumer and the manufacturer by certified mail.
Each can file a motion for rehearing within 20 days after the decision is mailed. The motion may be sent either to the director of the Motor Vehicle Division or to the Motor Vehicle Board. Parties are promptly notified whether the motion for rehearing has been granted or denied.
- If a rehearing is denied, a party can appeal to the State District Court in Travis County within 30 days of the order denying the motion for rehearing.
- A replacement or repurchase order remains in effect even though a manufacturer files an appeal.
- A party wishing to appeal a TxDOT order should hire an attorney promptly because of the short time allowed to file an appeal.
What are My Other Options? The Lemon Law expressly provides that it does not limit the rights or remedies otherwise available to an owner under any other law. You may file a lawsuit against a manufacturer or dealer for breach of warranty, deceptive trade practices or some other reason as long as you are still within the applicable statute of limitations.
For information concerning other rights and remedies available, you should contact a private attorney. Once you have had a hearing under the Lemon Law, you may be able to use certain provisions of the Lemon Law in court as part of your lawsuit. You may also use the Lemon Law in court if it has been more than 150 days since TxDOT received your complaint and filing fee, and you have not yet received a decision.
For More Information The information on this page is a summary of the Lemon Law and the procedures involved in pursuing a complaint. The law itself is found in Vernon’s Revised Texas Civil Statutes, Article 4413(36), Section 6.07. : Texas Lemon Law Rights Consumer Guide
Can a dealership take a car back in Texas?
After the Sale – Under Texas Law, you do not have 3 days to cancel the purchase like you may with some transactions the dealer is required to register and title the vehicle in your name within 30 days, regardless of if you owe money on the vehicle to the dealer or another financier.
As soon as the vehicle is registered in your name, the dealer should provide you with the original title application receipt from the Tax Assessor-Collector’s office. If you owe money on the vehicle, the original title will be sent to your financier. If you pay in full for the car when you purchase it, you will be mailed the original title.
Keep all payment receipts and other documents in a safe place. Do not keep them in the glove compartment. If the car is stolen, or if a dishonest dealer illegally repossesses the car, you will have no records of ownership or payment. Make your payments on time.
If the dealer or your Lender says that you can change the payment dates, or pay late, get it in writing. Get a receipt for each payment. Texas dealerships have the legal right to repossess your car without prior notice, even in the middle of the night. Keep your records safe and up to date for your protection.
Learn more about your rights after the sale with the Texas DMV,
How many repair attempts can a car have before we consider it a lemon?
The Philippine Lemon Law otherwise known as Republic Act No.10642 took into effect back in 2014. It is a law that can protect your consumer rights against some car dealer’s trade malpractices. With new cars being sold by the thousands every year chances are a few “lemon” vehicles will make their way into the hands of the customers, that in mind, we have compiled a few frequently asked questions about the Philippine Lemon law.
What is a lemon car? A “lemon” car is a vehicle that is brand new and has defects straight out of the showroom or dealership floor. These are vehicles that are also bought from official and authorized dealerships in the country. What vehicles are covered by the Lemon Law? The Philippine Lemon law covers a wide range of vehicles in the country, these include passenger cars, hatchbacks, crossovers, SUVs, and pickup trucks.
This law, however, does not cover motorcycles, buses, delivery trucks, dump trucks, and other kinds of heavy equipment such as bulldozers or cranes. What is the scope and coverage of the law? Consumers are protected by the law up to 12 months after purchase or within the vehicle’s first 20,000 km of total distance traveled, whichever comes first.
The period may be short, but on the bright side, most car manufacturers these days offer warranty benefits and free preventive maintenance services (PMS) for up to 3 years or more which may help in resolving potential factory defects. What kinds of defects does the law acknowledge? The Philippine Lemon Law acknowledges any factory defects that are found in or around the brand new unit that do not meet the manufacturer’s specifications or warranty claims that are covered by the law.
It is still up to the dealership or manufacturer to assess these “defective” units and find a way to take action and resolve these issues. When and how can the consumer avail his/her rights under the law? The consumer may request (in writing) the dealer to have the defective unit fixed within the 12-month time period for at least 4 attempts.
- This, however, comes with an agreement that the consumer must return the unit within 30 days from the previous repair attempt, should the issue still persist.
- If unreturned within 30 days, the previous repair may be considered as successful.
- If the dealer didn’t resolve the issue beyond 4 attempts or if the issue persists after several repairs, the consumer may then issue a Notice of Availment of Lemon Law Rights to the dealer.
If both parties agree with the notice, the consumer shall then return the unit for a final repair attempt. If the dealer still fails to resolve the issue, the consumer can bring the case up to the Department of Trade and Industry (DTI) for assistance.
- Are there any issues that go beyond the law’s protection? Yes.
- These issues include; non-compliance to the warranty terms and conditions, unit modifications within the warranty period, and careless use of the unit.
- Damages caused by accidents or acts of nature like flash floods and earthquakes are likewise not honored.
This aspect of the law is important so as to protect the honest dealers’ rights against some consumers who may have wrongful intentions that would damage credibility and reputation. Is there any compensation for the customer during repair of the unit or availment of Lemon Law rights? Yes.
- During the period of unit repair or availment of Lemon Law rights, the dealer shall provide the consumer with either a daily transportation allowance or a service vehicle.
- If ever the DTI deemed the issue in favor of the consumer, he or she can request the dealer to replace the unit with a similar model or a vehicle of higher value.
Should the consumer choose to have a more expensive model, he or she has to pay the additional cost. On the other hand, the consumer may return the defective unit and demand a full refund with collateral damage pay. What if the DTI rules in favor of the dealer? If it’s proven that there’s no defect on the unit, the DTI will order the consumer to pay or reimburse the total amount that’s spent by the dealer in repairing the otherwise non-defective unit.
- Can the consumer or dealer make an appeal? Yes.
- Both parties can seek help from the DTI in appealing the case within 15 days after the decision has been made.
- This, of course, has a few grounds to meet, most especially with regard to the possible factual errors in the decision-making.
- What will happen to the non-defective unit if returned or replaced? The dealer may resell it, provided that the new buyer is given full documentation of the unit’s history.
Not doing so may result to the dealer paying P100,000 in damages to the new buyer. These are 10 of the basic questions that we hope will help you in better understanding the Philippine Lemon Law. Not only does it protect your rights as a car buyer, it also protects the rights of those honest car dealers.
Are California lemon law settlements taxable?
What about the non-monetary settlement and attorney fees? – Regardless of whether you choose the repurchase or replacement scenario, you are entitled to compensation including all the amounts described above. However, courts may be reluctant to award damages for lost wages or lost time in connection with the malfunctioning vehicle.
Also, a lemon law settlement is taxable only for the portion that exceeds your loss. In this case, you need to refer to the fair market value of the lemon vehicle at the time you bought it. Last, but not least, lemon law settlement permits you to recover the attorney’s fees and expenses. This means that attorney fees are not taxable income to you.
Once you win the case, the manufacturer will have to cover the attorney fees and related expenses. Our highly qualified attorneys at Margarian Law are determined to reach a successful settlement for your case so that you don’t pay attorney fees. We are specialized in lemon law cases and will make every effort to reach a positive outcome for you.
What are reasonable attorneys fees in California?
The typical lawyer in California charges between $90 and $483 per hour. Costs vary depending on the type of lawyer, so review our lawyer rates table to find out the average cost to hire an attorney in California.
|Practice Type||Average Hourly Rate|
|Civil Rights/Constitutional Law||$404|
|Commercial/Sale of Goods||$385|
|Wills & Estates||$375|
What are the three main ways that lawyers typically charge for their services?
Machine Transcription: – Welcome everyone. This is Amer Mushtaq from YouCounsel. Today we will talk about how do lawyers charge their fees in Canada. Before we begin, there is the usual disclaimer that this course is not legal advice. If you have any specific questions, you must contact your own lawyer or paralegal or the lost sight of opportunity for and for its.
- Legal fees usually have two components: (1) one is the legal fees itself, which is paid to the lawyer and (2) the second component is disbursements.
- Disbursements are all of the costs associated with your legal case.
- Let’s talk about disbursements,
- One of the things, that we can give, as an example of disbursements, is court fees,
For instance, if you commence a court action in the court you will have to provide certain fees for the commencement of that court action. Similarly, there are other instances within the court action where you may have to provide some fees along with it.
- For instance, if you are bringing a motion, there are fees for a motion.
- If you are setting your matter down for trial, there are fees for trials.
- So court fees are part of disbursements that clients are responsible for.
- Similarly, process server fees —process server is a glorified term for a high-end courier if you call it that.
If you have watched any movies where you see that somebody is at a restaurant or a club and a person taps them on the shoulder. When the person turns around he says John Smith? And the answer is yes. Then they hand over certain papers and say you have been served.
The person who is doing that role of serving documents is called a process server. Process servers do a variety of things for law firms and their clients. They file documents with the courts, serve it on different parties, get records from the court and so on and so forth. They charge their fees which are part of a client’s disbursements.
Similarly, there are fees like agency fees, For example, if you go to mediation and you have to hire a mediator the cost of that will come under agency fees. In medical malpractice cases you may be getting your medical reports from doctors and other sort of clinics and those may fall under agency fees as well.
Any fees that you pay to some third party e.g., when you hire actuaries or damage consultants to provide expert evidence to the court and there may be fees associated. All of those come under the umbrella of “agency fees”. Then there are smaller kinds of fees e.g., for copying, binding, faxing and long distance calls.
The key thing to know here is that disbursements are costs that are associated with your particular case—depending upon what it is. Those costs are the responsibility of the client. Mostly law firms obtain a retainer from the client and they use that money to pay for the disbursements as they go along or they can ask the client to pay directly to the vendor for those disbursements.
Coming to legal fees, the fee structure is generally of three kinds. (1) hourly fee structure; (2) flat or block fees or fixed fee structure; and (3) is contingency fee structure. I will cover each one by one. Hourly fee as the name implies is based upon the number of hours that the lawyer works on your case and then charges it accordingly.
For instance, if a lawyer charges $400 an hour and he works on your file for two hours—then the legal fees are $800 plus tax. Hourly fees are captured usually at one tenth off an hour. When you see a notation of,1 as the time entry for the lawyer, that indicates that the lawyer has worked on that specific tasks task for six minutes or less.
In hourly retainers you will see quite detailed invoice statements from the lawyer indicating the date and the time that the lawyer worked on your specific matter i.e., what dates that the lawyer worked on your file and what specific tasks did he or she perform in that file, then how long did it take him to do that.
Those are recorded as the lawyers do their work. They have a software in most law firms where they keep on recording and then once the invoice is generated all of that information is already there. Hourly fees are not dependent upon results. If the lawyer has worked X amount of hours—whether you win the case or you lose the case—you are bound to or are liable to pay those fees.
Second model is the flat fee / block fee model which is now becoming more popular primarily because clients would like certainty in terms of what cost they will incur for a specific matter. These, as the name implies, are fixed fees and mostly they are coded per specific task. F or instance, in employment law practice if we are drafting a statement of claim or statement of defense on behalf of the client, we will and the client is interested in obtaining block fee quote, then we will advise the client based upon the amount of work that we will have to do, that this specific task will cost $X amount.
Those tasks are then listed in the retainer agreement along with the fees that will be charged. The retainer agreement also covers some of the unanticipated costs that may arise—for instance if the other party brings a motion, which was not part of the usual court process, then the lawyer may advise that if that happens then $X amount will be charged for that particular task.
- The main function of block or flat fees is that they provide certainty both to the client and to the lawyer in terms of the cost of the specific work that is being done.
- Again, like hourly fees, these are not contingent upon results as long as the lawyer has performed the work, the success of that matter is not relevant in this case and the lawyer is entitled to the fees that are agreed upon.
Third model is the contingency model, As the name implies, it is contingent upon the results. Most contingency retainers indicate that lawyer will only get their fee if the client is successful either in a settlement or in a judgment. If the client is not successful, then there are no fees towards the lawyers.
In contingency fee models the lawyer takes significant risk on the file. Obviously his or her analysis of the case is that strong that he or she is willing to put his / her own time and effort with hopes that there will be some fees generated because of results that the lawyer will get achieve. Contingency fee model is usually based upon a percentage of success,
It could range anywhere from 25% to 35%. Once the settlement is achieved or the judgment is awarded that percentage is paid as legal fees. Important thing to keep in mind in contingency fee retainer is that if your matter goes to trial (all the way to trial) and you are unsuccessful / you lose the case, the court will award some legal fees against you to be paid to the other side.
- If that is the case, then you the client is responsible for payment of those fees.
- The lawyer is not responsible for paying fees to the other side.
- The only risk that the lawyer is taking is upon only his fees but not on the other side’s legal fees.
- If you lose, then you have the burden to pay the legal fees of the other side.
Finally, keep in mind that all of the disbursements that are incurred even on a contingency fee file are also client’s responsibility because these are costs associated—these are not monies that are to be paid to the lawyer, but are paid to the vendors and third parties.
- Those are always the client’s responsibility—whether they pay at the outset or whether they pay towards the end, depending upon which law firm and what kind of case you have.
- That is the contingency fee model.
- Those are the three major models that are in place.
- I want to go back to the block fee model one more time.
This has become popular, As I indicated, one of the primary reasons why it is so popular now and increasingly so—and probably as you know, still underutilized is because Law Societies across Canada have generally now created this option of hiring lawyers on a specific task basis.
- It is called unbundled services or limited scope retainer and I have talked about in a separate lecture on self-representation.
- You can find more information on that.
- Essentially the idea is that because the legal fees or the costs of retaining a lawyer have become so exorbitant it is so hard to retain a lawyer on a long term basis.
Depending on the length of the entire file you can actually choose when you want to bring in a lawyer to do a specific task and then just pay them accordingly. Because there is now the option of unbundled services and specific limited scope retainers you can actually negotiate flat or block fees for that specific task and then have the lawyer represent you only for that part of your case.
- Then you can continue to perform the representation of your case on your own or you can have the lawyer represent you for the entire length and still negotiate the flat fee.
- This does give you some certainty.
- Let’s go back to now the last slide that I want to talk about which is the selection of lawyers.
There are two things that obviously the clients want from a lawyer—(1) they want the certainty of the legal fees i.e., they want to know exactly how much money they will incur with respect to a matter and (2) they want some certainty or guarantee in terms of the results that will be achieved.
- I want to talk briefly about both things certainty and legal fees.
- It is something that obviously people want—they want to know how much they’re going to spend—if you are buying a pair of pants you want to know exactly how much you’re paying.
- You do not want to be in a situation where the manufacturer says, “well it depends on how often you use the pants” and “you know how you use them” and what not—and our fee or our costs for the pants will be based upon that.
It is an odd way to pose that—because the legal structure is so different. The certainty is possible in some cases while in some cases not. I mean, you get absolute certainty when you have block fees because you know how much you’re incurring. But, even in Block fees there are unanticipated steps that may happen, not because of you, but because of the other parties—especially in court actions.
- Even though you know with certainty exactly how much you will pay for that action—an unanticipated action, it may still increase the overall cost of your legal action.
- Certainty is achievable.
- It is more and more possible.
- In my practice I am pretty confident about every single step and how much it will cost my client.
I can provide certainty but sometimes it’s not possible to do so. The second component is: results. You be wary of any lawyer who guarantees success of any kind because the simple fact is when you have a court action, it is a judge or a panel of judges who are going to decide and they may decide against you no matter how strong your case is.
- There is no guarantee.
- A lawyer can always indicate to you that based on previous cases and based upon jurisprudence your chances of success is very high i.e., 99% or 99.9% but it can never be one hundred percent guaranteed—because the lawyer himself or herself is not the decision maker, somebody else is.
And also depending upon how your case performs—you may have a bad day at court and your testimony may not be as strong as your case is and that may jeopardize the success of your case. So there is no guarantee of results. Yes, the lawyer can advise what are the chances of success and your chances of success could be very high.
Those are sort of the two cautions. With that in mind, I want to talk about whether you want to hire a lawyer whose legal fees or hourly rates or contingency fees are low vs. a lawyer who charges a lot more. What role should play in your decision to hire lawyers? Obviously, I completely agree with you that the cost of legal services are a strong component for a client to decide which lawyer to hire but I want to give you a word of caution that hiring a lawyer is no different than hiring a plumber or hiring a general contractor.
You would not simply hire a plumber or a contractor because the rates that that person is offering are the cheapest. The same principle should apply in hiring a lawyer. My recommendation is that fees should not be the sole factor for you to decide whether to hire the lawyer or not.
- It should be one of the factors.
- You should obviously get referrals, get some understanding of whether the lawyer has expertise in what you want, whether the lawyer will be suitable for your kind of case and obviously whether the costs are within your reach.
- It should be one of the factors but not the sole factor.
Hopefully this lecture has given you some insight on how lawyers are retained and how they charge their legal fees in Canada. Look forward to any comments and anything else that you want to explore in this area. Further please send us a comment or send us a note and we’ll be happy to include that in our next lecture.