Small business lawyer fees usually come in one of two forms: an hourly rate or an agreed fixed price. Most lawyers bill by the hour. You can ask for a fixed price instead. If the work will cost more than $750, your lawyer must also give you a written estimate before the bill grows.
The two main ways lawyers charge
Hourly billing is the common one. You pay a set rate for each hour of work. Time is often counted in six-minute units. A six-minute phone call is charged as six minutes. An eight-minute call is charged as twelve. Some firms use 15-minute units, so ask which one applies. The rate can differ by who does the work. A senior partner costs more per hour than a junior lawyer.
Fixed pricing means you agree one amount for the whole job, or one amount for each stage. Lawyers can offer it for set pieces of work, such as preparing a will or a property transfer. Some charge per item of work instead, which is common in court cases. Other lawyers use conditional fees, where you pay only if the case succeeds. Those are mostly used in injury claims, and they have to be in writing and signed by both sides.
What your lawyer must tell you first
In Victoria, the Legal Profession Uniform Law covers lawyers. It sets out cost disclosure. The amounts below exclude GST and other outlays.
- Likely to cost $750 or less: no formal disclosure is required, though a lawyer may still give it.
- Between $750 and $3,000: the lawyer may use a standard form of disclosure.
- Over $3,000: the lawyer must still give an estimate of the total and say how the costs will be charged.
The disclosure must come in writing, before the lawyer starts or as soon as practical after. It must include an estimate of the total legal costs, plus the basis for charging. The regulator also says commercial and government clients do not always get this disclosure. If your business is a company, ask your lawyer whether you count as a commercial client, and ask for the estimate in writing anyway.
The rights that come with the estimate
The law lists rights your lawyer has to explain to you. You can negotiate a costs agreement. You can negotiate how you are billed, for example by asking for a fixed fee. You can ask for a bill and, if it is a lump sum, an itemised bill within 30 days. You must be told about any big change to the estimate. You can also ask the Legal Services Commissioner for help if you dispute a bill.
If a lawyer fails to meet the disclosure rules, the costs agreement can be void. No costs are then payable until the bill has been assessed or the regulator has resolved the dispute. That is a strong reason to get the estimate on paper. A phone call is not enough.
Lawyers must also keep costs fair and reasonable. The regulator looks at skill, complexity, urgency and the quality of the work.
Fixed price or hourly: which suits which job
A fixed price works best when the job is clear and the steps are known. You know the cost up front. The lawyer takes the risk if the work runs longer than planned.
Hourly works better when no one can say how long the job will take. A dispute with a supplier is a good example. The other side may reply or may not. A fixed price for that would either be padded or would leave out many steps.
A middle path is staged pricing. You agree a price for each stage and decide at each point whether to go on. It keeps the cost in view without locking you into a guess.
Whichever you choose, check what a fixed price leaves out. Outlays such as court filing fees, barrister fees, search fees and courier costs are usually charged on top. A fixed fee that excludes them can look cheaper than it is.
How to compare quotes side by side
Ask each firm the same six questions at the first meeting. The Victorian regulator publishes them.
- Will I be charged for the first consultation?
- How much will you charge in total?
- How are your fees calculated: hourly, fixed, or conditional?
- Are there any extra costs?
- Could my costs change, and how will you tell me?
- When will I be billed, and are payment options offered?
Put the answers in one table. Write down the total, the billing method, what is left out and the billing unit for hourly work. Then compare. A low hourly rate is not always a low bill. A firm at a higher rate that works faster can cost less than a cheaper firm that takes twice as long. Ask each firm for a written estimate of the total, as the law requires above $750, and check how the quotes line up.
Last, ask when you will get an update if the work grows. A good firm tells you before the cost passes the estimate, not after. If you are unsure, shop around. Choosing the right lawyer is worth an extra phone call.
The limit of this guide: it draws on Victorian regulator pages about the Uniform Law. Rules differ in states outside that scheme, and your own costs agreement governs your matter. This is general information, not legal advice.