How does “unbundling” legal services save me money?
I will use a hypothetical example to show you how you can save money by using individual legal services as an alternative to paying hourly for representation:
Kathy has a tax debt of $50,000 and cannot afford to pay her debt. Her collection agent is threatening to freeze her bank accounts and she doesn’t know what to do. She wants to know if the CRA can just take her money and whether there is anything she can do to get the debt reduced.
Kathy decides to use my Unbundled Support Services:
I talked to Kathy to see what has caused the debt to become so high. She decided to pay for me to do a Detailed Case Evaluation which revealed that the debt was due in part to the fact she had previously suffered from depression and was unable to file her returnson time for several years. Now she simply didn't have the money to pay the debts. My opinion letter to her indicated that she could be eligible for Taxpayer Relief to have the interest and penalty portion of her debt reduced as part of the reason for her debt was due to factors beyond her control. I gave her instructions on how to submit a Taxpayer Relief application and how to enter into a payment arrangement with her collection agent to prevent unilateral seizure of her bank accounts. After the evaluation, Kathy was able to negotiate her own payment arrangement and started to write her own Taxpayer Relief Application.
Kathy then called me again as she didn’t feel comfortable writing the Taxpayer Relief application herself and asked to use my Document Drafting and Review Services to retain me again to help her with her submission. She sent me her material and I drafted the application for her. When I returned this draft to her, she sent it to the CRA herself. Five months later, the CRA asked for additional information to do with her application. Kathy wasn’t sure if the CRA were allowed to ask for such personal information and wanted to know if she had to provide the material they requested. She booked a Telephone Support appointment with me and we spoke for half an hour about what information was appropriate to provide to the CRA and what other evidence she could use to support her application. After the call, she dealt with the CRA herself and was able to successfully give them the information they needed.
As far as the CRA were concerned, Kathy was never in contact with a lawyer and she represented herself the entire time.
What did Kathy pay?
Kathy paid $500 plus HST for the initial case evaluation, $750 plus HST for the Document Drafting services and $50 plus HST for the telephone support call. The overall total was $1,300 plus HST.
What would Kathy pay for full representation for these services?
If Kathy had hired me on an hourly retainer, she would not have received the detailed information letter after her case evaluation and I would have simply taken care of everything for her. While this means she would have had a dedicated expert working through her case, it also means she would have to pay for the time I spent doing more administrative tasks rather than just purely legal work. For example, I would have gone through Kathy's financial information and talked to the CRA to negotiate her payment plan and done all the follow up work. Kathy would have been charged for my time spent gathering documents and for regular updates as to the progress of her case.
Even at my reasonable hourly rate of $175 plus HST, Kathy's $1,300 dollars would have only bought her a little over 7 hours of a lawyer’s time. For a typical case such as this, I would expect the initial review to take approximately 3 hours, plus another 7 hours to prepare and negotiate with the CRA regarding her payment plan, approximately another 10 hours to prepare and file the taxpayer relief submission and approximately an hour a month to update and report on the file progress plus a hour to provide the final reporting letter after the application was complete. This would have been over 20 billable hours which would likely have cost over $3,500 if she was paying by the hour.
Could Kathy have used my Fixed Fee Services?
Kathy's case appears to be pretty straightforward and she could have used my Fixed Fee services for her payment arrangement and her relief application. This would have cost $1,750 for the relief application and $875 for the payment plan, a total of $2,625 plus HST. This still provides excellent savings compared to an hourly rate but is not as cost effective as the progress Kathy was able to make representing herself through my support services.
When you need an expert, it makes sense to pay for one. What does not make sense is for you to pay that expert to do something that you could do yourself. Tax law is complicated but with the right support, there is no reason you cannot represent yourself.