Like all practice areas, money matters in a real estate practice. This resource reviews some considerations to keep in mind when setting fees, giving quotes and advertising your fees as well as keeping books and records. Use these links to jump to a topic on this page:
If you have any questions or want to chat about any information in this resource, feel free to contact the Director of Practice Management.
The amount a lawyer charges a client for a real transaction is a difficult question in a competitive market and it is a question for each lawyer to determine individually. The answer may depend on the nature of the transaction and various other factors. However, no matter what you decide to charge, you must also keep in mind several rules and obligations set by the Law Society.
As a starting point, the Code of Professional Conduct mandates that fees and disbursements that are charged and accepted must be fair and reasonable (section 3.6-1). The factors that go into what is considered fair and reasonable are found in commentary [1] under section 3.6-1 of the Code of Professional Conduct. See the practice resource entitled Reasonable Fees for more information as well.
A lawyer’s duty of loyalty and candour, all part of the fiduciary nature of the lawyer-client relationship, means that you are required to be upfront and honest with your client about financial matters (section 3.6-1 and commentary). You should provide your clients as much information as possible regarding fees, disbursements and interest and that information should be reasonably accurate. You should also explain how your fees will be determined and provide all of this information to your client in writing (see the Code of Professional Conduct, section 3.6-1 commentary [3]).
Lawyers should not provide unreasonable estimates in order to attract the client’s business. This approach may fall afoul of rule 8.05(1) which prohibits lawyers from providing information with respect to legal services that is misleading, deceptive or is likely to bring the member or profession into disrepute.
The duties of loyalty and candour to the client also translate into a requirement to disclose and get consent from clients to accept fees, rewards, costs, commissions, interest, rebates, allowances, or other compensation. Further guidance on this topic can be found in the commentary under section 3.6-1 of the Code of Professional Conduct as well as the practice resources entitled Commissions and Discounts, Payment of Disbursements and Expenses and Withdrawing and Transferring Funds from Trust Accounts. It is recommended that lawyers review all of these resources on a regular basis to ensure they are familiar with them.
Lawyers are also prohibited from directly or indirectly sharing, splitting or dividing their fees with a person who is not a lawyer and they cannot give any reward for the referral of clients or matters to a person who is not a lawyer (Code of Professional Conduct, section 3.6-7). Prohibitions that speak to real estate transactions in particular are found in rules 8.12(1) and (2):
In addition, rule 8.09(2) mandates that lawyers are not permitted to give, or authorize any person to give, anything of value to a person (e.g. discount coupons) for recommending a lawyer’s services.
As noted in the practice resource entitled Commissions and Discounts,
“Lawyers must be careful where, for example, a title insurer pays a fee to the lawyer for work done. In that case, the lawyer is acting in a joint retainer for both the client and the title insurer. As such, rules with respect to joint retainers and consents apply (see section 3.4-5 of the Code of Professional Conduct). The payment from the title insurer is considered a fee for legal services and not a commission so the requirements for disclosure and consent found above will apply.”
When it comes time to bill the client, keep in mind the requirements of section 3.6-3 of the Code of Professional Conduct. It provides that you must clearly and separately detail the amounts charged as fees and disbursements and notes that you may charge as disbursements only those amounts that have been paid or are required to be paid to a third party by the lawyer on a client’s behalf.
Links:
Reasonable Fees and Disbursements: section 3.6-1 (Code of Professional Conduct)
Restrictions on Provision of Information: rule 8.05(1) (Law Society Rules)
Payment of Disbursements and Expenses
Withdrawing and Transferring Funds from Trust Accounts
Division of Fees and Referral Fees: section 3.6-7 (Code of Professional Conduct)
Sharing of Fees: rules 8.12(1) and (2) (Law Society Rules)
Prohibited Activities: rule 8.09(2) (Law Society Rules)
Joint Retainers: section 3.4-5 (Code of Professional Conduct)
Statement of Account: section 3.6-3 (Code of Professional Conduct)
Related Topics:
Letters of Engagement and Retainer Agreements
Practice Management Issues in a Real Estate Practice
Real Estate Practice Essentials
How lawyers communicate about the legal services they provide and the fees they charge are regulated by the Law Society Rules and the Code of Professional Conduct. The starting point for marketing and communications around legal services is found in rule 8.03 and section 4.2-1. Together they state that a lawyer may market professional services as long as the marketing is
Rule 8.05(1) also explicitly states that lawyers shall not provide information in relation to legal services that
See also commentary [1] to section 4.2-1 of the Code of Professional Conduct.
Lawyers are permitted to advertise a preferred area of practice but are not permitted to advertise that they are a specialist, expert, leader or an established or experienced practitioner in any field of practice or generally (see rule 8.10 of the Law Society Rules).
When advertising about the fees they charge, lawyers must keep in mind the restrictions in rule 8.11 of the Law Society Rules and section 4.2-2 of the Code of Professional Conduct:
Links:
Declaration of Principle: rule 8.03 (Law Society Rules)
Marketing of Professional Services: section 4.2-1 (Code of Professional Conduct)
Restrictions on Provision of Information: rule 8.05(1) (Law Society Rules)
Preferred Areas of Practice: rule 8.10 (Law Society Rules)
Fee Advertising: rule 8.11 (Law Society Rules)
Advertising of Fees: section 4.2-2 (Code of Professional Conduct)
Related Topics:
Practice Management Issues in a Real Estate Practice
Real Estate Practice Essentials
Law Office Organization and Administration
Lawyers who practise real estate law are required, like all other lawyers, to maintain financial records in accordance with Law Society Rules (see rule 5.02 and rule 15.03 in particular) as well as the Code of Professional Conduct. You are also required to have controls and systems in place to ensure proper record-keeping and accountability. Lawyers should be diligent and timely in reviewing financial records and be aware of the increasing prevalence of fraud.
Lawyers should also be familiar with the specific rules with respect to depositing, withdrawing and transferring trust funds, trust cheques, handing cash, credit card transactions and receiving funds electronically (Rule V generally and in particular, rule 5.03, rule 5.04 and rule 5.05 as well as Rule XV). There are practice resources on many of these topics and it is recommended that all lawyers review the rules and the practice resources on the finances of running a practice from time to time to ensure they are in compliance.
Links:
Maintenance of Records: rule 5.02 (Law Society Rules)
Record Keeping Requirements: rule 15.03 (Law Society Rules)
Uniform Trust Account Rules: Rule V (Law Society Rules)
Deposits and Withdrawals from the Trust Account: rule 5.03 (Law Society Rules)
Deposits in Trust Accounts: rule 5.04 (Law Society Rules)
Withdrawals and Transfers from Trust Accounts: rule 5.05 (Law Society Rules)
Cash Transactions and Record Keeping Requirements: Rule XV (Law Society Rules)
Related Topics:
Practice Management Issues in a Real Estate Practice
Real Estate Practice Essentials
(Posted: January 6, 2021)