Fixed Fees Flashcards
(10 cards)
What defines a fixed fee arrangement?
A. A set price agreed in advance regardless of time spent
B. An hourly rate capped at a maximum
C. A percentage of the damages recovered
D. A public-funded legal aid contract
A. A set price agreed in advance regardless of time spent
Explanation: Fixed fees are agreed up front for a specific task, insulating clients from variable billable hours
Which task is most commonly charged by fixed fee?
A. Conducting large-scale litigation
B. Residential conveyancing
C. Complex corporate mergers
D. Unregulated debt advice
B. Residential conveyancing
Explanation: Routine, discrete tasks like conveyancing are ideal for fixed fees .
A key risk of fixed fees is “scope creep.” This means:
A. The fee automatically increases over time
B. The solicitor must seek client consent to start work
C. The client refuses to pay disbursements
D. Work expands beyond the original specification
D. Work expands beyond the original specification
Explanation: If the defined task grows, the fixed fee may no longer cover the additional work
Which element should a fixed-fee agreement always include?
A. The firm’s historical billing rates
B. A list of competitor fees
C. The client’s tax status
D. A detailed variation clause for extra work
D. A detailed variation clause for extra work
Explanation: A variation clause lets the parties agree on extra fees if the scope changes
A solicitor agrees a £2,000 fixed fee to draft a simple will but the client later adds trusts. The solicitor should:
A. Invoke the variation clause and agree an additional fee
B. Absorb the extra work at no extra charge
C. Refuse to do the trusts work entirely
D. Convert to an hourly-fee basis without consultation
A. Invoke the variation clause and agree an additional fee
Explanation: Variation clauses protect the solicitor against underestimation when scope changes
A fixed-fee client care letter fails to mention disbursements. This omission is:
A. A breach of SRA transparency in fees
B. Permissible if the fee is low
C. Only relevant for CFAs
D. Acceptable if explained orally
A. A breach of SRA transparency in fees
Explanation: Fixed-fee agreements must clearly state that disbursements and VAT are extra
A firm estimates a fixed fee too low and makes a loss. This illustrates the importance of:
A. Accurate workload estimation
B. Charging disbursements within the fixed fee
C. Applying CFA success fees
D. Outsourcing high-cost tasks
A. Accurate workload estimation
Explanation: Underestimating time/resources can erode profitability on fixed-fee matters
A client challenge: “Why is my simple divorce fixed fee higher than industry average?” The solicitor should explain:
A. The specific tasks covered, disbursements excluded and the firm’s efficiency incentives
B. That competitor rates are irrelevant
C. That all fixed fees must be identical
D. That pricing is confidential
A. The specific tasks covered, disbursements excluded and the firm’s efficiency incentives
Explanation: Transparency requires clear breakdown of scope, exclusions and rationale for the fee
In which case would fixed fees be least appropriate?
A. Drafting a straightforward will
B. Conducting a multi-jurisdictional M&A transaction
C. Handling a simple tenant eviction
D. Preparing a standard NDA
B. Conducting a multi-jurisdictional M&A transaction
Explanation: Highly complex or unpredictable matters are poor candidates for fixed fees
A firm wants to introduce fixed fees. Best practice is to:
A. Pilot a few routine services, monitor profitability, then expand
B. Switch all matters to fixed fee immediately
C. Limit fixed fees to high-value corporate work
D. Only offer fixed fees to repeat clients
A. Pilot a few routine services, monitor profitability, then expand
Explanation: Testing on simple matters allows the firm to refine estimates before broader rollout
