PRACTICE WATCH, by Barbara Buchanan, Practice Advisor

Fees, disbursements and interest; Practice Checklists Manual; identity fraud; forest land

Lawyer with clientsBC Code section 3.6 – Fees, ­disbursements and interest

A lawyer must not charge or accept a fee or disbursement, including interest, unless it is fair and reasonable and has been disclosed in a timely fashion: BC Code rule 3.6-1. 

I recommend that lawyers provide a client with a written retainer agreement, before taking the case or very early in the relationship. Rule 3.6-1 (see commentary) requires a lawyer to “provide to the client in writing, before or within a reasonable time after commencing a representation, as much information regarding fees and disbursements, and interest, as is reasonable and practical in the circumstances, including the basis on which fees will be determined.” Also, if a lawyer and client agree that the lawyer will act only if a retainer is paid in advance, the lawyer must confirm the agreement in writing with the client and specify a payment date (rule 3.6-9). 

What is a fair and reasonable fee?

As set out in the commentary to rule 3.6-1, that depends on several factors, such as:

  • the time and effort required and spent;
  • the matter’s difficulty and its importance to the client;
  • the results obtained;
  • whether a special skill or service was required and provided;
  • fees authorized by statute or regulation;
  • special circumstances, such as the postponement of payment, uncertainty of reward, or urgency;
  • the likelihood, if made known to the client, that acceptance of the retainer will result in the lawyer’s inability to accept other employment;
  • any relevant agreement between the lawyer and the client;
  • the lawyer’s experience and ability;
  • any estimate or range of fees given by the lawyer; and
  • the client’s prior consent to the fee.

A lawyer must be ready to explain the ­basis of the fee and disbursement charges to the client, with full disclosure. As a ­lawyer and client have a fiduciary relationship, there must be no hidden fees. Rule 3.6-3 requires that the amounts charged as fees and disbursements must be clearly and separately detailed in the statement of account to the client. If there is a joint retainer, the fees and disbursements must be divided equitably, unless the clients agree otherwise (rule 3.6-4). 

What may be charged as disbursements and “other charges”?

A lawyer 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” (e.g. long distance phone charges, postage, out of office photocopying and printing, courier charges, government filing fees). If the client has agreed in writing to such costs as paralegal, word processing, computer charges, in-house photocopying and fax charges that are not disbursements, the statement of account may include a subcategory entitled “Other Charges” under the fees heading. (See rule 3.6-3 commentary). 

What if something unforeseen ­happens that may substantially affect the amount of a fee or disbursement? 

A lawyer should immediately explain to a client about any fees or disbursements that the client might not reasonably have been expected to anticipate. This and all fee discussions should be confirmed in writing, and the client should be kept up to date as the matter progresses, including about any revision of the initial estimate of fees and disbursements. (See rule 3.6-1 commentary). 

Can a lawyer charge interest on an overdue account?  

A lawyer may only charge interest if it is fair and reasonable and it is disclosed in a timely fashion. The lawyer should set out the rate and how interest will be calculated in the retainer agreement.  

See BC Code section 3.6 in its entirety for other important information regarding fees, including contingent fee agreements and referral fees, and appropriation of client’s funds, as well as the existing provisions in the Legal Profession Act and the Law Society Rules.

Checklists Manual – new updates

Check out recent updates to the Law Society’s free Practice Checklists Manual (go to Practice Support and Resources on the Law Society website). Twenty-eight out of the 41 checklists in the manual have recently been updated:

  • Client Identification and Verification Procedure
  • Criminal – Criminal Procedure, Judicial Interim Release Procedure, Sentencing Procedure, Impaired/Over 80 Trial Examination of Witnesses
  • Family – Family Practice Interview, Family Law Agreement Procedure, Separation Agreement Drafting, Marriage Agreement Drafting, Family Law Proceeding, and Child, Family and Community Service Act Procedure
  • Human Rights Complaint Procedure
  • Immigration – Protection Claim, Appeal Against Deportation
  • Will and Estates – Wills Procedure, Testator Interview, Will Drafting, Probate and Administration Interview, Probate and Administration Procedure
  • Real Estate – Residential Conveyance Procedure, Mortgage Procedure, Mortgage Drafting
  • Litigation – Foreclosure Procedure, General Litigation Procedure, Personal Injury Plaintiff’s Interview or Examination for Discovery, Collections Procedure, Collections – Examination in Aid of Execution, Builders Lien Procedure

Watch for updates to the 13 corporate and commercial checklists, expected to be published shortly. 

If you have suggestions for improving the manual’s content, send them to Barbara Buchanan at The manual has been developed by the Law Society with the assistance of the Continuing Legal Education Society of BC.

Identity fraud – Alberta loan on Alberta land

A recent real estate mortgage identity fraud in Alberta had a BC component, and we bring it to your attention in case it comes your way. Three lawyers were involved, two legitimate Alberta lawyers and one fake BC lawyer. Below is generally what happened:

  • Fraudsters pretending to be the principals of a company posed as the true owners of a piece of Alberta commercial real estate.  The players, a “husband and wife” and their “son,” were represented by an Alberta lawyer.
  • The fraudsters made arrangements for a $3 million commercial loan from a legitimate mortgage company operating in western Canada. The lender was represented by Alberta counsel. 
  • The lender required a $20,000 good faith deposit from the borrower (the fraudsters’ fake company) to conduct due diligence. 
  • The fraudsters provided the $20,000 to the lender and also provided a fake company minute book and personal guarantees. 
  • The son met with the Alberta lawyer, and claimed that his mother and father were in BC.
  • The parents’ identity was to be verified in BC by a person the fraudsters claimed was a BC lawyer; however, it so happened that there was a legitimate BC lawyer with the same name. 
  • The fraudsters asked the Alberta lawyer to wire the loan funds to Mexico ­instead of BC where they lived (a ­sudden change in plans that raised suspicion). 
  • The Alberta lawyers did some cross-checking and discovered that the contact details for the fake BC lawyer did not match with the legitimate BC lawyer. The legitimate BC lawyer was unaware that his name was being used. 
  • The fraudsters lost their $20,000 deposit. The legitimate law firms only lost their time.

What are some lessons to take away from this?

1.  If a lawyer is not able to meet with a new client in person to verify their identity, the lawyer should choose the individual who will do it. Don’t let a potential fraudster choose the guarantor, commissioner or agent.  

2.  If a fraudster thinks that the potential return is high enough, he or she may gamble putting up their own money as a deposit or retainer, in this case a $20,000 deposit. 

3.  Fraudsters are creating increasingly sophisticated documents to make a fraud seem real, in this case a company minute book.

4.  Lawyer should be alert to any sudden change in plans to send funds to a different person or location. 

For more information about scams against lawyers, see Fraud Alerts on the Law Society website or contact Barbara Buchanan at

Warning to lawyers acting for purchasers for private managed forest land – tax issue

BC Assessment has informed the Law Society that two aspects of tax law have caused concern for some purchasers of ­private managed forest land. 

Take note that purchasers of private managed forest land may be responsible for:

  • paying taxes on timber harvested by the vendor; and
  • paying exit fees if the property is removed from managed forest class. 

Detailed information regarding managed forest land and these tax issues is available in the notice at or directly from BC Assessment.

Further information

Contact Practice Advisor Barbara Buchanan at 604.697.5816 or for confidential advice or more information regarding any items in Practice Watch.