2.5 How are Lawyers Remunerated?
Gemma Smyth
How are Lawyers Remunerated?
Lawyers arrange their work in many ways. Much of how lawyers’ work is organised is dictated by the legal status and governance of their workplace (see the previous section on How Legal Workplaces are Organised). Below are common ways lawyers are compensated for their work.
Salary
Some lawyers receive an annual salary for their work. This type of arrangement is more common in nonprofit and clinic settings. The impacts of working on salary are significant. If the lawyer is working directly with clients or on projects, they often still docket time but their salary is not connected to their dockets.
Contract
Contract work offers specific compensation for the delivery of specific services for a limited period of time. Contract work can offer flexibility and work-life benefits but can also be precarious and unpredictable. Anecdotally, more new calls are doing specific tasks on files they might know very little about. This might include writing research memos or facta. This type of employment arrangement appears to be more common in many professions.
Per Diem
A form of contract work, some lawyers charge (or receive) a “per diem” rate of pay. Per diem rate is a flat rate paid to a lawyer for services “per day” as the name suggests. Frequently, these lawyers act as duty counsel or in other scenarios where specific and time limited services are required.
Client Fees
The most common way lawyers are paid is directly by their clients. Some firms use the billable hour structure. Others bill by service (for example, a will might cost a set amount for each client). Typically, clients are charged for a lawyer’s work as well as the work of others on staff (paralegals, for example), along with disbursements. Disbursements are simply the funds paid by a lawyer to work on a file. This might include photocopying, filing fees, medical or other expert reports, and so on.
Legal Aid
Some provinces have legal aid schemes in which a government-funded entity supports lawyers’ work on behalf of clients and/or communities. This varies widely from province to province. Legal aid schemes might support a legal clinic. Some legal aid schemes have a certificate program wherein a client applies for a certain number of hours of funded legal services. The client then approaches a lawyer who accepts legal aid certificates. The lawyer must report their hours to legal aid and then be compensated for their work.
Legal Services Plan
There are also large groups such as unions that join together to provide their membership with legal services at affordable rates (or for free). The Unifor Legal Services Plan, for example, provides legal services for certain areas of law. They are able to do so through union dues and a large membership base. Lawyers are then paid by the union for their work.
Commentary
Lawyers in the same firm can also have different employment arrangements. Increasing numbers of lawyers work in insecure employment arrangements such as short-term contracts and per diems. It is difficult to get specific data regarding how many lawyers are working in this way; however, “[a]ccording to a 2016 Robert Half Legal survey of 350 lawyers at large law firms in Canada and the United States, a majority — 56 per cent — use lawyers on a contract or temporary basis for work on large projects that require more resources than are available at the firm, and 44 per cent use them for cases or matters requiring a specific type of expertise”.
There is a great deal of talk about outsourcing legal work to other countries. Although this does happen, there are significant ethical concerns about transmitting data to jurisdictions without data privacy legislation. Transmitting sensitive information across legal jurisdictions can compromise data security.
The Four-Day Work Week – Interview with Leena Yousefi
Lawyer Leena Yousefi has been interviewed about her approach to firm management, which includes pay transparency, respect for childcare needs, and a four-day work week. This excerpt from her Canadian Lawyer interview describes her approach:
“The four-day workweek has become a trend. From an employer perspective, it scares off a lot of law firms.
I’ve been laughed at. People ask me, “What profession do you think you are in? We work seven days a week.”
I totally get it, but I am here speaking from facts and stats, and since we have implemented it, we’ve tripled our size, doubled our revenues, and almost doubled our profits. Our retention rates have skyrocketed because of the applications we get.
Most people who apply with us are not lazy; they don’t come to us because they’re happy to work one day less. They want a life and are determined to work harder during those four or five days.
They’re also aware, especially lawyers, that we are all bound by the Code of Professional Conduct that says if something is urgent, you must drop everything and work seven days a week, 24 hours. We all do that; we’re no exception.
But what differentiates us from the old model is that we have learned to be more efficient with our time.
Once every two months, a lawyer takes a sick day, and at least once or twice a month, they take a few hours here and there to go and attend a doctor’s appointment. These things add up. You may have to pick up your sick kid or need more vacation. I may be burnt out or need a personal day.
It is not that we’ve given them more time; we’ve just taken all the time that they take off and condensed it to one day a week, where they go and do all of that. They then come back for the rest of the week, and they can focus on their work.
It has generally been positive, but there have been challenges because it’s a new policy that can get messy.”
Reflection Questions
- What are other examples of how firms could organize their work to allow for both excellent client service and greater flexibility for lawyers?
- What other ways are lawyers compensated for their work? How might legal collectives or other grassroots organisations reimagine how lawyers are paid for their work?
