This post is likely to be unpopular with my colleagues, but it needs to be said.
Lien work is gravy work for lawyers. It takes us very little time from start to finish, it can be easily delegated to staff, and it can be very lucrative because most boards don’t know or care what is charged since the owner foots the bill. As a result, many law firms spend thousands of dollars a year on advertising their lien work. Take a look at the advertisements in the condo industry magazines for the past year. I bet you find at least 2 firms advertising their special lien software or collection “guarantees”.
In recent weeks you’ve probably read an article or two about the appropriateness of non-lawyers registering and discharging liens. The discussion stems from a single Small Claims Court case where an owner sued a property management company after it registered and discharged a lien against her unit. The owner (a paralegal) felt that it was inappropriate for the management company to use an in-house paralegal to register and discharge the lien. She brought an action in the Small Claims Court seeking the return of the legal fees she paid ($819.25) for the lien and punitive damages.
The court dismissed her claim, but awarded her $500 to compensate her for her time in bringing an issue of public importance (i.e. paralegals registering liens and unauthorized practice) to the attention of the Law Society and the court.
Is lien work lawyers’ work?
The part of the case that many lawyers seem excited about is a report issued by the Law Society about the paralegal working for the management company. The report concluded that registering and discharging liens was outside the scope of the paralegal’s licence. Many have interpreted this to mean that only lawyers can register liens.
I have two main concerns with this decision.
First, most condo law firms have dedicated law clerks who are responsible for registering and discharging liens with no involvement by the lawyers. Would this be unauthorized practice too? Next time your condo’s lawyer registers a lien for you look the registered copy to see who actually registered it. I bet it wasn’t the lawyer.
Second, the decision is terrible for owners as it simply means they will pay more for (arguably) the same level of service. Not surprisingly, lawyers come with higher price tags than paralegals. The management company charged the owner $819.25. A quick review of case law suggests that many lawyers (especially in the GTA) charge at least double that: $1,500 to $2,500 to register and discharge a lien.
Tips for Condo Boards
Don’t fall for the gimmicks used by many to sell their services to you. Watch out for promises or guarantees of success.
When considering a lawyer for your lien work, ask the following:
- their fees (i.e. do they charge hourly or is a flat rate provided)
- the typical disbursements (i.e. hidden software charges in addition to registration charges)
- their philosophy on extra charges and chargebacks (i.e. can the condo collect amounts other than monthly fees, like late fees, NSF charges)
- their standard process (i.e. are there any special forms to fill out, who signs the lien documents)
- the turnaround time (i.e. same day registration or a week later).
Price isn’t the only consideration, but it is likely an important one given the work does not require any special expertise (beyond a general knowledge of condo law). Like any project, shop around for competitive prices and high-quality services.