How do lawyers charge?

Author: Emma Shipp
How do lawyers charge?

Nobody wants nasty surprises when bills arrive. But it isn’t just as simple as trying to spend as little as possible. Sometimes spending more on legal fees will actually save you money but you need to be able to balance spending so it is not only within budgets but proportionate to the value you’re getting back. 

Charges based on the time spent are unpredictable and, perversely, incentivise lawyers to be slow. Fixed fees are predictable and can work well if the work is properly specified but may incentivise corner-cutting. 

Whatever pricing model you go for, things need to be transparent. If you’re going for a variable charging approach then estimates need to be provided to allow budgeting either for the whole job or at least the different stages. These should be broken down by each individual lawyer to be involved. 

If the job is likely to run for more than a couple of months, monthly interim billing can be a good idea. You will be able to see how much work has actually been done in the relevant period, how much progress has been made and, importantly, manage cash flow. 

There are many ways lawyers can charge for their services and understanding your priorities in this respect is part of how Ravenna can help you find the right lawyer. 


Hourly rates can work well if the extent of the work is unknown but some words of warning… It might seem logical that you can compare one firm to another, based on hourly rates. However it isn’t as simple as that. There is no common approach amongst law firms in relation to how rates apply. 

If you’re trying to budget on an hourly rate basis, the total cost to you will depend not only on the rate itself but also the different individuals, different levels of experience or specialisation and the type of work being done. It will also be influenced by differences in time recording culture. US firms, for example, tend to have lower rates but higher time targets because the US practice is to record every moment of time referable to the case wherever or whenever is occurs., The total cost may also depend on the amount of out-of-hours working expected and the level to which the firm has a culture of discounting time to avoid the cost of the work outweighing its value.


If you’re looking at litigation then there could be a range of flexible options for funding your legal advice. A strong claim, for a large amount, may be attractive to a range of funders including lawyers themselves. 

The basic idea is that for bearing risk and cost the funder takes a share of the winnings. It is likely to be a more expensive way of funding it - as the fees are likely to be higher - but it could mean being able to afford otherwise prohibitively costly litigation.

In a conditional fee agreement the lawyer only receives a fee (or a larger fee) when certain circumstances occur - usually if a case is won and if money is recovered. These are known as “no win, no fee” agreements, or, “no win, low fee” agreements if partial fees are charged. 

The risk of an adverse costs order against the person bringing a claim can, in some circumstances, be covered by insurance. If the case is won the insurer gets a share, if it is lost the insurer covers the award of costs to the opponent.

The key question you need to ask yourself, before entering into one of these arrangements, is how much can the business take in terms of the financial risk of legal fees. If you’ve funded it yourself and the case is won, the business will receive a greater proportion of the claimed funds than if someone else has funded the costs. However, self-funding can put a huge strain on the business as the case proceeds.  You will also need to consider how much control you wish to exercise as a funder will naturally want to have some say in when to settle and when to take it all the way..


These services combine cost-spreading with an insurance type benefit but the benefits on offer depend on the type of insurance and the level of premium a business is prepared to pay. If an employment problem does arise the existence of this framework of support can help nip problems in the bud. Furthermore, provided the employer follows the steps recommended, the benefits can include coverage against not only the costs of a fight but also the award of compensation. 


As with any insurance, the premiums can be worth it, if you have a substantial enough claim to warrant the cost of the cover. This rather depends on the nature of your business. 

It works just like any other form of insurance. You pay a monthly or annual fee and in return you are insured against legal expenses. If you do need to claim there is usually an excess for you to pay and you will be steered towards the insurer’s panel of lawyers, who are likely to already have negotiated discounted rates. You may still be able to choose your own lawyer but you may have to pay any excess legal fees yourself above the level a panel firm would have charged. 

The difficulty in deciding whether this is worthwhile for your business is knowing, in advance, the kind of dispute that might arise and how much it will cost in fees. The amount at stake in money terms and commercially (for example your time and reputation) may dwarf the actual legal costs risk.

Before you consider legal expenses insurance it is worth checking other insurance you might have to see if that has legal expenses as an add-on. 

Want to find the right lawyer for your business? Book your free 30-minute consultation with one of our advisors by clicking here. We’ll talk through the options and suggest at least two law firms that we think are a good fit for your business. We aren’t paid any commission and you won’t be under any pressure to work with any law firms we put forward.