Does anyone have a general idea of how much I should expect to pay the law firm in dispursements once my LTD claim is settled? Everything should be done prior to mediation, if that helps. I really don’t know what to expect and I’m trying to get a sense of how much will be left for me once all the fees and dispursements are paid out.
Ask them, they should be able to print you off a list of what has been spent already and also have an idea of what more you will need to spend.
Oh just noticed the spelling, it’s disbursements with a b. Although dis’purse’ is a very appropriate typo!
haha good catch! Shows where my mind is right now. And thanks for the tip. I will ask for a list.
Ask them directly because only they would know your particulars - photocopying, phone calls, correspondence, mailings, court filing costs etc.
They can provide you their work to date total, and then estimate the remainder if you are close to the end of it all.
If it’s on contingency it could be a percentage of the overall claim (I’ve heard 25-30% of the settlement)
They usually charge disbursements separately in addition to 25-30%. Keep in mind on top of everything there will be 13% HST charge for the total amount (depending on the province where you live). It will look like this (25-30% + disbursements)*13% HST that goes to the lawyer. This amount will be tax deductible, of course.
Thank you for all the input. Their fee was 1/3 of the claim + disbursements + HST (that tax piece really took me by surprise, although I should have expected it). It worked out to be about 60% of the settlement. It’s been a rough go, and it is hard to compromise on the value, but I feel it was worth it. And my lawyer was worth it. Without him I would have gotten ZERO dollars. I wasn’t healthy enough to deal with the process.
Glad it is over for you. How long did your case take from the beginning till the end? And how many years of LTD amount do they offer as a settlement?
Freda - thanks so much for the info. I’m so sorry to hear this happened to you. I had no idea that a person with a successful claim, like you, who ends up being cut off and hires a great lawyer can end up with only 40% of the settlement (and that settlement is only a very small fraction of what you would have received if you had been able to stay on LTD as you deserved in the first place). It just goes to show how important it is to really understand what you are up against and how LITTLE you may end up with once you are cut off your legitimate LTD claim. Your settlement with the LTD insurance company does not even include all the suffering and potential loss of extended health and dental benefits, pension benefits, etc.
The loser is the legitimately disabled LTD claimaint/employee and the winners in this situation are the employer, lawyers and insurance company (if it is an insured contract and I suspect a large percentage of people reading this forum are covered by non-profit contracts).
(if it is an insured contract and I suspect a large percentage of people reading this forum are covered by non-profit contracts)
@Joanne could you explain that a little more please?
Contingency fee agreements are heavily regulated and there are many misconceptions about them. This is because of a lack of transparency and public information about how these agreement are SUPPOSED to work.
When the rules are followed, contingency fee agreements are a fair way to pay a lawyer for a case. It allows you to get a very experienced lawyer to work for you, when otherwise you could not pay them. When contingency fee agreements are not applied correctly, it can result in overcharging to a client.
Each province has rules governing how contingency fee agreements are applied and the fee that can be charged.
There are a few key points to keep in mind about contingency fee agreements and and how the are supposed to work:
First, any lump sum settlement for an LTD claim should include three separate negotiated amounts – 1) an amount for compensation and damages; 2) an amount for disbursements and 3) an amount for legal costs (or legal fee reimbursement). You should NEVER think about your settlement as just one number. If your lawyer is treating it that way, then you need to require them to break it down into these three amounts.
The contingency fee can only be applied to compensation and damages. The disbursement and interest amount is paid to who paid the disbursements, often the lawyer. The Legal costs amount is TO BE PAID TO THE CLIENT as a reimbursement toward the fee charged on the compensation amount.
It is critical to understand that you are negotiating 3 separate amounts of money and that when done properly --payment for disbursements is not coming from your compensation amount. So for example, if your compensation amount is $50,000 and disbursements are $5000, legal costs paid are $7500, then total settlement is $62,500. The contingency percentage applies to the $50,000 only.
However in the same case if the disbursements are higher it would look like this: $50,000 compensation amount, $25,000 disbursements, and $7500 legal costs. So the total is $82,500. The contingency percentage is still only applied to the $50,000. In the second scenario it can seem like the lawyer is “getting all the money” but that is not true. The lawyer is getting paid the same and you are getting paid the same in both cases. the only difference is the lawyer paid more in disbursements in the second example, so the reimbursement is higher.
Second, contingency fee percentage represent the MAXIMUM amount a lawyer can charge you. Lawyers are not allowed to simply charge the fee created by the percentage unless it results in a fee that is “fair and reasonable” in the circumstances. Each provincial law society has a list of factors to consider if a contingency fee is “fair and reasonable”. So, in cases of large settlement, it is very common for lawyer to have to reduce the fee created by the contingency fee percentage.
Third, every lump sum settlement should include a payment toward your legal costs. In the example above it was $7500 and this should be paid directly to you – the client – to offset the amount you are paying out of the compensation for legal fees.
Lawyers need to negotiate the legal costs and have them paid to you. Do not accept a lawyer telling you that “no legal costs were paid” because it was a lump sum settlement. There is always a way for the lawyer to attribute the proper amount of any lump sum settlement to be for legal costs. There are some times when legal costs are - in fact - not paid, but that is more the exception than the rule in a successful settlement. Lawyers have gotten in trouble for not properly paying legal costs to clients, or by applying the contingency percentage to the legal costs amount.
For example, in Ontario legal costs payments are often anywhere from 10 to 15% of the compensation amount. So in our example above if the compensation amount was $50,000, the legal fee reimbursement amount should be between $5000 to $7500.
So if the lawyer changed a full 33.3% plus HST on $50,000 the legal fee would be $18,815. if you got a legal fee reimbursement of $7,500, then your actual legal fee paid at the end of the day would be $11,315, which is 22% of the compensation money paid. So you would be keeping 88% of the compensation payment, even thought the fee charged was based on 33.3%. This is because you are getting a reimbursement on your legal fee.
Fourth, lawyers are not allowed to use disbursements as a revenue generator. Disbursements must be reasonable in both price and necessary for the case. Lawyer cannot artificially increase disbursements with bogus things like overcharged amounts for photocopies or faxing or long distances etc. It is meant to be a cost recovery, not a profit centre. Lawyers can charge reasonable interest on disbursements if they are risking the money – because if the case is lost the lawyer doesn’t get paid and doesn’t recover the disbursements.
Fifth, every person has the right to challenge a fee charged by a lawyer. Each province has a process for this and it is often referred to by the odd name of “taxing a lawyers account”. You pay a fee and the law society of your province will hire a person to review the fees and he or she can order the lawyer to reduce the fee or they can order the fee to be reasonable. So, rather than focusing on the % fee to be charged by the lawyer when you are hiring them, it is better to focus on whether the fee being charged is fair and reasonable regardless of the percentage.
I hope this sheds some light on this topic. I appreciate that I am a lawyer who makes a living off of charging people under contingency fee agreements, but I hope you will see that I am trying to transparent about this process.
Disability Lawyer with Resolute Legal
The response posted above is based on the limited factual information made available and is not intended as a full and complete response to the question. The only reliable manner to obtain complete and adequate legal advice is to consult with a lawyer, fully explain your situation, and allow the lawyer enough time to research the applicable law and facts required to give an adequate opinion. The basic information provided above is intended as a public service only, a full one-on-one discussion with a lawyer should be done before taking any any action. The information posted on this forum is available to the viewing public and is not intended to create a lawyer client relationship with any person. If you want one-on-one advice, please click here to request a free consultation or call toll free 1-877-282-5188 to speak with a member with our disability claim support team.
David has a good article which explains types of LTD and he talks about “non-profit” LTD. It’s a generic term and I like the term because it explains the motivation of the arrangement - break-even, no profit.
Good to know. Do you have a link?
Hi Elaine - Now I should get a fee to post links and recommendations for David!!! Here’s a link to David’s Ultimate Guide for Long-Term Disability in Canada.
Read section 2 - types of long-term disability benefits
Thank you! We all benefit from this forum
From beginning to end, it took 1 year and 7 months. I retained my lawyer15 months after I was first denied LTD. The lawyer estimated 1 year for the case but silly things kept delaying it, like scheduling issues and waiting on the other lawyer to reply. It was settled and signed 17 months after we started the process but it took nearly 2 months before I got a check because some staff were on holidays in accounting. That is a big part of why I settled for less. I had no more resources to draw from while I waited.
And thank you @Joanne Joanne for the link!
Thank you @David_Brannen for this explanation. I had no idea and wish I had asked some questions earlier. I did the math and I most certainly paid out 33.3% on the total lump sum as one amount. And then I paid 13% HST on that 33.3%, which if I’m understanding correctly, means I also overpaid the taxes.
The disbursements were a little over $1000, and they did send me an itemized list. The insurance company also withheld an absurd amount of money for CRA but I have been told by my accountant I should see about 80% of that back when I file my return this April.
So now my question is, have I lost my chance to challenge the way the lump sum was set?
I don’t have any information on it being broken down to include legal costs. I would have to go back and look at the release that I signed with the insurance company to settle things. I don’t recall having 3 different categories for payment. I believe it just said they would pay me a lump sum of $XXX… and that was it. I was getting so desperate to have it resolved that it didn’t even cross my mind to ask about it. My lawyer had told me in the beginning that they would try and recoup some of my legal costs, and I wondered why that didn’t happen in the end, but now I understand what I should have been asking for.
Should I be talking to someone about this? If my math is right, I overpaid by at least $7000.
Freda, I can’t speak to specific cases to say if legal fees charged were fair or not fair. The rules are different from province to province. There are many considerations that go into calculating the fee. I would urge you not to jump to conclusion you were overcharged.
What I have described above is what I consider to be the best practice based on my interpretation of the rules for contingency fee agreements. In any specific case you would have to have the court or legal fee review officer give an opinion on whether the fee was reasonable.
If not costs are paid, then the % would apply to the entire amount less the disbursements. Whether costs are paid or not paid comes down to the negotiation and insurer. Some insurers will insist on no costs being paid.
Since I paid on the whole lump sum, including disbursements, I know I could have been handling this differently. Hopefully I’m never in a situation where I need to do this again, but at least I will know how to have this conversation about fees with a lawyer in the future, so I thank you for that! I have also learned to be less apprehensive about reaching out for legal help. Waiting to retain a lawyer added a lot of pressure on myself and my family.
I also had a look at your website. It’s an excellent resource and I would have benefited from it greatly if I had found it during my appeal. I’m passing the info on to my union so they can refer members. There are so many who just give up because they are not well, exhausted, alone in their struggle and they don’t understand the system. Having some affordable options for support is a blessing. Thanks for your efforts in supporting the underdog!
Thank you for your response!