Client Fee Structures

On this page we will briefly explain the common types of agreements that Solicitors enter into with clients for the payment of their fees and disbursements.

You will find further information on this subject in our Terms & Conditions of Business, our Letter of Engagement and our Legal Costs in Dispute Resolution document.

It may be that a fee agreement changes to another sort of fee agreement during the life of a matter, if the circumstances change.

It is important that any fee agreement suits both parties and is appropriate to the circumstances of the matter being advised on.

In some cases a client may decide that it would prefer to instruct another law firm, if the type of fee agreement that it wants to enter into, is not being offered.

Transactional / ad hoc advice

There are 2 forms of fee agreement commonly used when a Solicitor is providing transactional or ad hoc legal advice to a client, and they are:

1. 1. Time spent on hourly rates – This is the most common option of all those covered in this note.
   2. Fixed fees – Under this option a Solicitor agrees to fix the fees that it will charge a client for doing defined pieces of work.

Dispute Resolution advice

In addition to the options just discussed, the following 2 options are also sometimes offered when advising a client on a dispute resolution matter:

3. 3. Conditional Fee Agreements (CFAs) – A CFA is an agreement which provides for a Solicitor’s fees and expenses, or any part of them, to be payable by a client only in specified circumstances. Generally if the client loses the case, it will not be liable to pay the fees and any expenses that are subject to the CFA. But if the client wins the case, it will be liable to pay all of the fees and expenses, plus a “success fee”.

      A success fee is an additional amount payable over and above the amount that would normally be payable if there was no CFA. It must be expressed as a percentage uplift on the amount that would be payable if there was no CFA, and that percentage cannot exceed 100%. Since 2013 the success fee cannot be recovered from the losing side and so it must be paid by the client (with few exceptions).

   4. Damages Based Agreements (DBAs) – A DBA is a type of contingency fee agreement between a Solicitor and a client, under which the client will make a payment to the Solicitor towards its fees / expenses, if the client obtains “a specified financial benefit” from its opponent (usually damages). The amount of that payment will be a percentage of the damages. If the case is unsuccessful, the Solicitor is generally not entitled to be paid.

Costs awards and insurance

So far in this document we have only discussed Solicitor / client fee agreements. However the payment of legal fees and expenses is often impacted by insurance and by costs awards or agreements relating to 3rd parties.

As for insurance, a client may already have or choose to buy, legal expenses insurance, to cover some or all of its liabilities to pay its own lawyer’s fees and expenses plus any opponent’s fees and expenses it becomes liable for.

As for costs awards relating to 3rd parties, a client may find a court, arbitrator etc awarding it some or all of its legal costs to be paid by its opponent in any dispute, or visa versa, reflecting success or failure in that dispute. Similarly, there may be agreements between parties that one contribute to another’s legal costs as part of any transaction, with such an agreement being contained in the original contract between them.

So there are sometimes these additional layers of complexity. However, none of them alter a client’s core liability to pay its own lawyer’s fees and expenses.