The costs of law are on the rise, and some are so high that some lawyers are now calling for a tax on lawyers’ fees to fund legal services.
The Canadian Bar Association’s new tax on fees, which would kick in at the end of 2019, would help the industry meet the rising costs of the legal profession.
According to the group’s calculations, the new tax would cost $7.5 billion in 2019.
But what’s more, the Canadian Bar says the average lawyer would save $1,824 over the next three years.
The cost of the tax is expected to rise with inflation and to account for rising living costs in Canada, says spokesperson Christine LeBlanc.
In the U.S., the average bill for a lawyer has increased about 10 per cent since 2006, and it’s expected to continue to rise, says David LeDoux, director of the law firm of Covington & Burling LLP.
In Canada, the average fee has increased from $2,200 in 2005 to $5,400 today, according to the Association of Canadian Barristers.
But that doesn’t mean all lawyers are benefiting from the new levy, says LeDouges.
“If you look at the cost of a lawyer’s fees, they’re a very small portion of the overall bill,” says Le Doux.
LeDougles points to recent cases where legal fees have soared. “
In some respects, they are also a way of making sure that you’re paying attention to the people who are working in your profession.”
LeDougles points to recent cases where legal fees have soared.
A federal judge in Nova Scotia has charged $50,000 for a six-hour session, a $2.4-million bill to be paid by an individual, and a lawyer in New Brunswick has received a $300,000 bill for the same service.
The lawyer who helped the family of a teenager accused of stealing a car was paid a $5-million legal bill, and the lawyer who represented the family in a wrongful death case was charged $150,000.
“It’s not just lawyers.
People in other professions are getting the same type of treatment,” LeDough says.
But the government says the new bill is an important step in the right direction.
“As a country, we have an opportunity to take steps to keep the costs of our legal system in check,” says Liberal MP Bill Morneau.
“And the government’s tax on lawyer fees is a good start.”
Morneau says the government is also looking at the “potential of introducing a ‘bail-in’ for people who work on an income-based basis to make sure that they can’t just move up the income ladder,” and to address the “significant gaps in access” to legal aid in some jurisdictions.
He says the tax would only apply to lawyers who hold a licence or are certified by a lawyer licensing program.
LeDucys view on the tax The Canadian Lawyer’s Association says it’s not an unreasonable idea.
“I think that we need to look at these kinds of things very carefully and take a really hard look at it,” says Mary Bower, president of the association.
“There’s a lot of money to be made in this industry, and we need all the help we can get.”
She says the Canadian bar has been talking with other organizations about creating a similar tax, but the cost would be prohibitive.
“For people who earn less than $50k a year, we know that this is an issue that needs to be addressed,” says Bower.
The association’s LeDoyes says it is important to recognize that not everyone can afford to pay for legal services and that it’s critical to have a tax in place to help offset the costs.
Le Doues says if lawyers can’t afford to make ends meet, they need to consider a higher level of education to make up for the increased costs.
He said it would be better to tax a lower income group and the government could fund this with a higher tax rate.
“That would be an easy way to go,” he says.
LeBlanche says there is evidence that higher education levels increase a lawyer the cost-effectiveness of the profession.
“We’ve seen in a number of studies that higher-educated, more experienced lawyers are more cost-effective in a court case,” she says.
“So it’s definitely worth considering a higher legal education tax to help finance it.”
The Liberal government says it will look at a new tax in 2019 to make it more fair.
The government says there are a number options, including a cap on the amount of income a lawyer can earn, an increase in the amount a lawyer must pay into the legal system and an increase on fees.
Morneau also says he will explore ways to make the system more efficient.