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Experienced lawyers can provide you with greater certainty before signing a commercial agreement. For this reason, many business owners obtain legal advice before entering into a commercial contract. However, although legal advice might be invaluable in terms of the future success of your business, it nevertheless comes at a cost. This article provides an outline of general legal fees you should consider when hiring a lawyer for contract review.

Hourly Fees

Traditional law firms typically charge an hourly fee for their services. However, some issues that might spring up when lawyers charge an hourly rate include:

  • high costs, especially if the work you brief them with is complex or requires a large volume of time; and
  • uncertainty, since you may not have a cost estimate until receiving the final bill and some work, such as protracted contract negotiation, is hard to quantify.

Whilst most law firms have moved away from the hourly rate model, larger firms tend to continue to use the model. As a general guide, the hourly rates for lawyers range from:

  • $200 – $250 per hour for a junior lawyer;
  • $250 – $500 per hour for a senior lawyer; and
  • $500 – $1,000 per hour for a practice leader or a partner.

Of course, any cost estimates given to you are general estimates of what a firm might charge you. Moreover, depending on which firm you retain to review your legal documents (and other factors), they are subject to change.

Itemised Bill

If you are charged an hourly fee, you may have the right to request an itemised bill. An itemised bill provides you with a breakdown of costs for legal services. When reviewing an itemised bill, you should remember that a lawyer can charge you for time spent:

  • drafting documents for your matter;
  • preparing any documents or materials necessary or incidental to drafting your legal documents;
  • negotiating or liaising with counterparties; and
  • making or receiving phone calls or emails about your case.

However, a lawyer cannot charge you for the time taken to prepare a costs agreement or costs estimate or an itemised bill. If you do not agree with the items listed in the bill, you should speak to your lawyer directly.

In the instance where you cannot negotiate your bill to a lower price, you may be able to file a complaint with the Legal Services Commissioner or Law Society of NSW.

Flat Fees

As opposed to an hourly rate, a firm that charges you a flat fee for their services will not charge you on a time-cost basis. Rather, you will be charged a fixed fee for their services. A fixed-fee service can provide you with greater certainty, since you know the bulk of the legal costs before you retain a lawyer for their services.

It also means that you can ‘shop’ around for different legal services by comparing the prices for their services.

The cost depends on the type of legal work you need. By way of example, some common fixed-fee matters are set out in the table below.

Legal Matter

Fixed Fee

Incorporating Your Company

$600 + GST

Drafting a Letter of Demand

$1500 + GST 

Reviewing Your Commercial Lease

$2500 + GST

If you have a more complicated legal matter or a matter that is likely to be ongoing, it is less likely that a lawyer will charge you a fixed fee. In any event, it would be wise to call ahead and see if a lawyer can provide you with a fixed fee quote for the contract review you have in mind.

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Cost Agreements

In NSW, if your legal work does not cost more than $750 before disbursements and GST, your lawyer is not obliged to disclose costs. Nevertheless, as a client, you have the right to request and negotiate a cost agreement with the lawyers you have engaged with, irrespective of the amount they charge. 

You should note that a cost agreement must be in writing. It typically provides:

  • the fixed-fee amount that they will charge; or
  • an estimate of costs if the firm charges you an hourly rate.

Additionally, your cost agreement cannot impair your right to review legal costs in any way. In other words, a cost agreement cannot prevent you from filing a complaint to the Legal Services Commissioner if there is a dispute about costs.

Costs Dispute

If costs are not fair and reasonable, you may be able to dispute the costs with the Legal Services Commissioner. From the date you must pay your legal fees, you have sixty days to file a complaint. Alternatively, if you requested an itemised bill from your lawyer, you have thirty days to file a complaint after the lawyer provides you with the bill.

When the Legal Services Commissioner reviews fees, you should note that they focus on the fairness of the disclosure process and the negotiation of the costs agreement rather than the actual amount of the fees. In this sense, a lawyer’s professional fees will not necessarily be unfair because it is a high rate.

Key Takeaways 

Depending on the type of firm you engage to review your contract, you can be charged an hourly fee or a fixed fee. If you obtain legal services in NSW and your legal work costs more than $750 before disbursements and GST, you have the right to require and negotiate a cost agreement. A cost agreement must be in writing and outline the fixed fees you will be charged or an estimate of costs based on an hourly rate. If you disagree with the cost agreement, you should speak to your lawyer directly. 

If you need help with the costs of reviewing contracts, our experienced contract lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 1300 544 755 or visit our membership page.

Frequently Asked Questions

Do firms charge an initial consultation fee?

While some law firms charge clients for an initial consultation, LegalVision offers free consultations and fixed-fee quotes.

What does ‘costs follow the event’ mean? 

If you are the unsuccessful party in legal proceedings, the court may order that you pay the other party’s costs.

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