89-03 : Appropriate Billing Practices
It has recently come to the attention of the Society that some members of the profession are following incorrect procedures in billing clients, in that trust monies are being transferred to the lawyer's general account before the legal services have actually been performed and/or before a statement of account has been rendered. This improper practice appears to be common in real estate conveyancing, but the comments herein relate to all areas of practice.
The Society reminds members that Rule 129(1 )(c) states a solicitor may withdraw monies from trust for the recovery of fees and disbursements provided always that a bill for such fees and disbursements must be rendered to the client before the money is so drawn. Inherent in the rendering of a bill is that the bill must actually be sent to the client and the legal services outlined in the bill must have actually been performed at the time the bill was rendered.
Thus, it is improper for a lawyer to:
- render a bill 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 bill and transfer monies from trust without delivering a copy to the client at that time; for example, leave the interim bills on file and deliver to the client at the end of the matter only a final statement of account which amalgamates previous billings the client has never received.
With respect to real estate transactions specifically, the Society is of the view that until such time as a lawyer has substantially fulfilled his/her obligations to the client, and is in a position to honour the trust conditions imposed upon him/her, the lawyer is not entitled to receive payment for his/her services out of monies received in trust from other parties. For example, the vendor's lawyer should not transfer trust money to his/her 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 his/her client with the opinion that title to the purchased property has been or will be registered in his/her client's name free of all encumbrances except for those accepted by his/her client.
Nothing herein prevents a lawyer from:
- rendering an interim statement of account to a client, provided such a bill 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
- receiving a general retainer from a client for which the member is not obliged to render services, in exchange for accepting the client.
[amended October 22, 1998]
[Amendment approved by Benchers December 14, 2000]
[Effective February 15, 2001]