Lawyers & Legal Consultants Professional Fees Arrangements

The lawyers' or legal consultants' professional fees depend on the nature and complexity of the case, the time required to accomplish the work, the financial capacity of the client, the value of the case or the transaction, and other facts.

The nature of the tasks might become volatile or unsteady after the time of determining the legal fees. Some legal cases start getting complicated and take longer than expected because of unexpected facts such as opponent parties' reactions or authorities' orders.

The initial free consultation is a common practice some lawyers and legal consultants offer to their potential clients, while some lawyers still charge initial consultation fees.

It is advisable for clients to meet with lawyers who propose an initial free consultation before getting involved in a complicated understanding or agreement with lawyers, and to provide them with all their legal matter facts. The initial consultation allows lawyers to understand the legal matter factors and evaluate reasonable legal fees. On the other hand, clients will have the chance to recognize the personality and knowledge of the lawyer who will handle their case.

It is worth mentioning that professional fees are subject to negotiation. Clients should try to negotiate the terms and value of the professional fees agreement with lawyers, and it is important to read and understand all terms and conditions of the fees agreement.

In practice, the main types of professional legal fee arrangements are lump sum, charging per hour, and lump sum with a maximum of hours.

Fixed Lump Sum

A lump sum is a fixed agreed amount for a specific scope of work. This model is common and preferable for clients in the Middle East and the United Arab Emirates.

This model might cause issues and complications for lawyers and clients because of the uncertainty and instability of the scope of work, especially when it comes to handling a dispute, a lawsuit, or a negotiation against the opponent party. It is less critical if the task is a corporate task, such as providing a client with legal advice or opinion, drafting a contract, restructuring a group of companies, or similar tasks.

Unless lawyers sufficiently study the various assumptions and estimate the expected working hours and any difficulties that may arise during the work, there will be complications and conflicts in the legal fee arrangement. An example is filing a case against an opposing party to claim compensation, where it is very difficult to estimate the length of the process due to unclear expectations of the opponent's defense or reactions — the opponent party may file counterclaims, initiate a travel ban or provisional attachment, or join a third party to the case, making the process longer and more complicated. It is therefore important to include all assumptions in the legal fees agreement, or to sign a different fee model, or at least add clear limitations on the scope of work or a time limit.

Charging Per Hour

The hourly rate is the price that lawyers charge per hour for tasks. Charging happens by tracking the number of hours lawyers spend working for the client and billing at the end of the project or on an agreed cycle.

Hourly rate agreements, while not preferred in the Middle East and United Arab Emirates, protect both lawyers and clients from conflicts, as long as the hours spent are properly tracked and the lawyer sets clear expectations with the client.

The hourly charge is the preferred model when parties are not fully aware of the factors affecting the legal situation and process — for example, attending settlement and negotiation sessions where the lawyer works alongside the client, since such matters might finish quickly or take much longer.

In Dubai, the average hourly rate for lawyers is AED 2,240, noting that some lawyers and legal consultants are willing to reduce this amount by up to 50% for regular clients or for tasks that do not require the effort of senior lawyers.

Some law firms offer a fixed rate per hour regardless of which lawyer handles the work — known as a Blended Hourly Rate, the average of the combined hourly rate for two or more resources engaged in providing services. Other firms charge a separate hourly rate per lawyer based on experience and job title, so a partner's rate is higher than a senior associate's, which is in turn higher than an associate's or paralegal's rate.

This model is generally not preferred by clients in the Middle East and the UAE, as clients are not accustomed to it and prefer to pre-determine their budget before engaging a lawyer. However, with the growth of larger, organized legal consultation offices and international law firm branches, the hourly model has begun to increase in the market.

Lump Sum With a Maximum of Hours

This model is a mix between the lump sum and hourly rate models, and is preferable as it avoids the drawbacks of both. The parties agree on a lump sum for a specific scope of work and a certain number of hours not to be exceeded. For example, a client may agree with a lawyer to handle a compensation case for a lump sum of AED 100,000, provided the number of working hours does not exceed 60; if exceeded, the hourly rate for extra hours might be AED 1,500 per hour, while the lump sum remains unchanged if fewer than 60 hours are spent.

In this model, lawyers secure their rights for the time spent providing the required service and guarantee their position in the event of unexpected complications, while clients are aware of the estimated budget for the legal task.

Lawyers Should Explain All Costs, Not Only Professional Fees

The lawyer or legal consultant is responsible for clearly explaining that professional fees are exclusive and do not cover other costs, including all taxes, Value Added Tax (VAT), government fees, court fees, notarization charges, attestation charges, stamp duties, disbursement charges, expert fees, urgent government fees, translation charges, and similar items. Such charges are borne solely by the client, and approval for them should be obtained from the client, who may be required to make payment immediately, since delays can create issues in the process.

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