For many business owners, one of the most useful things about fixed-fee legal services is knowing the cost of the work before it begins.
A fixed fee does not mean every legal matter can be reduced to a standard package. It means the scope of the work is defined upfront and a price is agreed for that scope.
This can make it easier to budget for legal work and understand what is included, what is excluded and what may result in additional fees.
This guide explains how fixed-fee business legal services can work in practice and what Australian business owners should look for when considering a legal proposal.
Table of Contents
- How Fixed-Fee Legal Services Work
- Why the Scope of Work Matters
- Business Legal Services That May Be Quoted on a Fixed-Fee Basis
- What Happens if Additional Work Is Required?
- Disbursements and Third-Party Costs
- Fixed Fees and Franchise Legal Work
- What to Look for in a Fixed-Fee Proposal
How Fixed-Fee Legal Services Work
Under a fixed-fee arrangement, the lawyer and client agree on a price for a defined scope of legal work.
For example, a proposal might cover:
- reviewing a particular agreement;
- preparing a new commercial contract;
- reviewing franchise documents;
- preparing a shareholders agreement;
- assisting with a business sale or purchase; or
- preparing and filing a trade mark application.
The proposal should explain what the lawyer will do for the fixed fee and any assumptions or limitations that apply.
This gives the client a clearer understanding of the legal work being undertaken and the cost attached to that work.
Why the Scope of Work Matters
The scope of work is one of the most important parts of a fixed-fee proposal.
A clear scope should explain the particular services included in the fee. Depending on the matter, this might cover:
- reviewing nominated documents;
- preparing a first draft;
- providing written advice;
- a meeting or call to discuss the advice;
- a specified number of amendments; or
- particular steps involved in a transaction.
The proposal should also identify important exclusions.
For example, a fixed fee for preparing a contract may not include:
- extended negotiations with the other party;
- additional drafting outside the agreed scope;
- dispute or litigation work;
- tax or accounting advice;
- financial advice; or
- government fees or other third-party costs.
Clear inclusions and exclusions help reduce misunderstandings about what the client is paying for.
Business Legal Services That May Be Quoted on a Fixed-Fee Basis
Many areas of commercial legal work can be suitable for a fixed-fee proposal where the scope can be identified in advance.
Business Contracts
Businesses regularly need agreements governing their relationships with customers, suppliers, contractors and other parties.
Depending on the business, this might include:
- Terms and Conditions;
- service agreements;
- contractor agreements;
- supply agreements;
- distribution agreements;
- confidentiality agreements; or
- other commercial contracts.
You can read more about our business contract services.
Terms and Conditions
Well-prepared Terms and Conditions can document how a business provides goods or services, including matters such as payment, delivery, liability, termination and other commercial terms.
The appropriate document depends on the business model, customers, industry and the particular risks involved.
See our Terms and Conditions services.
Partnership and Shareholders Agreements
Partnership and shareholders agreements can document matters such as ownership, decision-making, funding, transfers, exits and other arrangements between business owners.
These agreements should be tailored to the ownership structure and the commercial arrangements between the parties.
Read more about our partnership and shareholders agreement services.
Trade Marks
Trade mark work may also be quoted on a fixed-fee basis where the scope is defined.
The work may involve searching, advising on a proposed application, identifying relevant goods and services, preparing the application and dealing with particular stages of the registration process.
Government filing fees and other disbursements should be clearly identified separately where applicable.
See our trade mark and intellectual property services.
Business Sales and Purchases
Legal work relating to buying or selling a business may also be quoted on a fixed-fee basis where the transaction and scope can be properly identified.
This may include reviewing or preparing the business sale agreement, advising on key terms, legal due diligence, settlement work and related transaction documents.
Because transactions can differ considerably, the fixed fee may depend on the complexity of the deal and the documents involved.
Read more about our business sales and purchases services.
What Happens if Additional Work Is Required?
A fixed fee applies to the scope agreed at the start of the matter.
Sometimes the work changes after the matter begins. For example:
- the other party may request substantial amendments;
- additional documents may need to be prepared;
- the transaction may become more complex;
- the client may ask for additional services; or
- an issue may arise that was not reasonably apparent when the proposal was prepared.
Where additional work falls outside the original scope, the lawyer should explain the additional work and the proposed cost before proceeding.
That additional work may itself be quoted as another fixed-fee component where appropriate.
Disbursements and Third-Party Costs
A fixed professional fee does not necessarily include every cost associated with a matter.
Disbursements are costs paid to third parties in connection with the legal work. Depending on the matter, these can include:
- government filing fees;
- company or business searches;
- PPSR searches;
- trade mark application fees;
- registration fees; or
- other external costs.
A proposal should make clear whether disbursements are included in the quoted amount or charged separately.
Fixed Fees and Franchise Legal Work
Franchise legal work is another area where a clearly defined scope can be quoted on a fixed-fee basis.
Franchisee Reviews
A fixed-fee franchise review may cover documents such as the Franchise Agreement and Disclosure Document and provide advice on the key rights, obligations and commercial provisions contained in them.
The precise scope should be set out in the proposal.
If you are considering purchasing a franchise, see our franchisee legal services.
Franchisor Legal Costs Under the Franchising Code
The Competition and Consumer (Industry Codes—Franchising) Regulations 2024 also regulate when a franchisor can require a franchisee to contribute to the franchisor’s legal costs relating to the franchise agreement.
Under section 38, the franchise agreement may require payment of a fixed dollar amount only where the statutory requirements are satisfied.
Among other things, the amount must:
- be specified in the franchise agreement;
- be stated to relate to the franchisor’s legal costs of preparing, negotiating or executing the agreement;
- not exceed the reasonable and genuine cost of those legal services; and
- not include amounts for later legal services relating to other documents after the franchise agreement is entered into.
The Code therefore has its own requirements concerning certain franchisor legal-cost contributions, separate from the legal fees a franchisee chooses to pay its own independent lawyer.
Reasonable Opportunity for Return on Investment
Section 44 of the Code provides that certain ordinary franchise agreements must give the franchisee a reasonable opportunity to make a return during the term of the agreement on investment required by the franchisor.
This does not guarantee a profit or a particular financial outcome.
The section also does not apply to every historical franchise agreement. Transitional provisions apply depending on when an agreement was entered into, transferred, renewed or extended.
What to Look for in a Fixed-Fee Proposal
When comparing legal proposals, price is only one part of the picture.
It is also worth looking at:
- the exact scope of work;
- the documents or services included;
- what is excluded;
- how amendments or additional work are handled;
- whether GST is included or additional;
- whether disbursements are included or additional; and
- when payment is required.
A proposal should give you enough information to understand the work being provided and what may result in additional fees.
Legal Advice vs Accounting and Financial Advice
Commercial legal work often overlaps with financial, accounting and tax considerations, but these are different areas of professional advice.
A lawyer may advise on the legal structure and contractual consequences of a transaction, while an accountant or tax adviser should advise on taxation, financial modelling and accounting consequences.
For significant business decisions, it is often appropriate to obtain advice from the relevant professional advisers before committing to the transaction.
How Rise Legal Approaches Fixed Fees
Rise Legal provides fixed-fee proposals for defined commercial legal work.
Our work includes areas such as:
- business contracts;
- Terms and Conditions;
- franchising;
- trade marks;
- partnership and shareholders agreements;
- business sales and purchases;
- commercial leases;
- contractor agreements;
- PPSR and credit documentation; and
- other commercial legal matters.
The proposal sets out the scope of work, the fixed fee and any relevant exclusions or disbursements before the work begins.
Rise Legal does not undertake disputes or litigation.
Contact Rise Legal to request a fixed-fee proposal for your business legal matter.
Frequently Asked Questions
What does a fixed legal fee mean?
A fixed legal fee is an agreed price for a defined scope of legal work.
The proposal should explain what is included in the fee and any important exclusions, assumptions or additional costs.
Does a fixed fee include unlimited amendments and advice?
Not necessarily. A fixed fee relates to the agreed scope of work.
The proposal should specify any included amendments, meetings, calls or additional support. Work beyond that scope may attract an additional fee.
Are government fees included in a fixed legal fee?
Not always.
Government fees, searches and other third-party expenses are often treated as disbursements and charged separately. The proposal should explain how these costs are handled.
Can a franchisor require a franchisee to pay the franchisor’s legal costs?
Only in the circumstances permitted by the Franchising Code.
Section 38 permits a franchise agreement to require a fixed dollar amount towards the franchisor’s legal costs where the statutory conditions are met, including that the amount is specified in the agreement and does not exceed the reasonable and genuine costs of the permitted legal services.
Does the Franchising Code guarantee a franchisee a return on investment?
No.
Section 44 requires certain franchise agreements to provide a reasonable opportunity for the franchisee to make a return during the term on investment required by the franchisor. It does not guarantee profitability or a particular return.
Can business contracts be signed electronically in Australia?
Many Australian commercial contracts can be signed electronically, but the legal requirements depend on the type of document and the law that applies to it.
For Commonwealth-law signature requirements, the Electronic Transactions Act 1999 sets conditions that may allow a signature requirement to be satisfied electronically, including requirements relating to identification, intention and the reliability of the method used.
Some documents may be subject to additional execution formalities or State or Territory requirements, so the appropriate execution method should be checked for the particular document.
Does Rise Legal assist with disputes or litigation?
No. Rise Legal focuses on commercial advisory and transactional legal work and does not undertake disputes or litigation.
Article by
Helen Kay, Principal Lawyer, Rise Legal
Helen Kay is the Managing Director and Principal Lawyer at Rise Legal, an Australian commercial and business law firm advising business owners, franchisors and franchisees across Australia. Helen practises in commercial law, franchising, business contracts, business sales and purchases, trade marks and related business law matters.
Disclaimer
This article provides general information only and does not constitute legal advice. It does not take into account your specific circumstances. Laws and regulatory requirements may change, so you should obtain legal advice relevant to your situation before acting on the information contained in this article. Liability limited by a scheme approved under professional standards legislation.
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