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Fee Payment by Third Party

Because you are not required to accept a third party payment on your client's behalf, you may suggest that the funds be provided directly to your client so that you may avoid dealing with the third party completely.

If you choose to accept payment from a third party on your client's behalf, prior to doing it is best practice to ensure that:

  • Your client and the third party understand that the third party is not also your client 
  • Your client and the third party understand that your client's matter is confidential and that no information will be released to the third party unless your client consents to the disclosure 
  • Your client and the third party understand that your obligations are to your client if a dispute arises between your client and the third party 
  • You obtain your client's advance instructions regarding the refund of any unused portion of any retainer fee paid by the third party, if that was the nature of the payment 
  • You document the retainer fee payment and refund arrangement in a retainer agreement with or an engagement letter sent to your client, if that was the nature of the payment 
  • You obtain your client's consent to document the arrangement in a letter to the third party

If you unexpectedly receive a third party retainer payment (e.g. because your client is in police custody or is otherwise unavailable to personally provide payment) or payment for an outstanding invoice, you should make efforts to discuss these issues with the client before accepting the payment and should confirm the client's instructions in writing. You may also consider including in your retainer agreement a standard term that addresses the payment of a retainer fee or invoice by a third party, should that need arise.

You must maintain confidentiality regarding the client's matter, unless the client has consented to your disclosure of confidential information to the third party [section 3.3 of the lawyers' Rules of Professional Conduct (lawyers’ Rules) and subrule 3.03 of the Paralegal Rules of Conduct (Paralegal Rules)]. Providing payment does not entitle the payor to information regarding the client's matter, including future interim bills or a final statement of account. However, it is prudent for you to provide the third party payor with a receipt for the payment you received.

If the payment arrangement was ongoing and the third party stops paying or no longer agrees to provide payment, you may only withdraw from representing the client for non-payment of fees in accordance with rule 3.7-3 of the lawyers' Rules or subrule 3.08(6) of the Paralegal Rules.

In the event that you did not obtain advance instructions from your client about the refund of any unused portion of a retainer fee paid by a third party and a dispute arises where you cannot determine who should receive the refund, you must apply to a tribunal of competent jurisdiction for direction [rule 3.5-7 of the lawyers' Rules or subrule 3.07(6) of the Paralegal Rules].

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