We agree on a specific time-based fee (hourly rate). For a project to be defined, we then estimate the amount of time required. At the same time, we agree a fee cap which defines the upper limit of my fees. Should the estimated time expenditure be exceeded, the hourly fee for the additional time expenditure decreases in steps until the fee cap is reached.
The flat fee consists of a basic amount which we agree upon taking into account the economic importance of the matter, its complexity and the scope of the advisory service required (e.g. review of a specific question or full support of a transaction). This basic amount is assigned a time span that reflects the estimated time required. If the time expenditure remains within the defined time span, the basic fee applies. In case the upper time limit is exceeded, the basic amount increases by a degressive time-based fee up to a fee cap to be agreed. In case the lower time limit is not reached, the basic amount decreases up to a minimum fee. In the event of premature termination, the fee payable shall be charged according to the time spent on the basis of the average hourly rate. The average hourly rate is calculated from the ratio of the flat fee to the estimated time required.
Fixed budget agreements ensure predictability. They are particularly suitable when the legal service is clearly defined and the time required depends only to a limited extent on factors outside the advisor’s influence, such as in the preparation of legal opinions. Within the framework of the budget agreement, we agree on the scope of the work to be undertaken and the total fee in a binding manner, taking into account the importance and complexity of the matter and the expected workload. If appropriate, we agree adjustment clauses for precisely described developments that justify a deviation from the defined fixed price.
The time-based fee is still the most standard billing method for business law advice and actually prevails in my own law firm. If time expenditure depends on variables which can be neither estimated with a sufficient degree of probability nor influenced, a time based fee is often the most equitable solution for both client and attorney. When we agree on a time-based fee, I shall provide you a fee estimate and pay attention to the results and economic value of my legal services. I shall inform you in advance and state reasons when the time still to be spent on your matter is likely to exceed my fee estimate.
Please note that unless a success fee (where admissible) is agreed, the minimum fee in contentious matters is defined by the German Act on Lawyers’ Fees (Rechtsanwaltsvergütungsgesetz).
When I am instructed in my capacity as a notary, my fees are exclusively governed by the provisions set out in the German Act on Court Costs in Non-Contentious Matters and Notaries’ Fees (GNotKG).
