How to set and communicate a fee estimate at the start of a matter
A fee estimate is not a formality. It is the document that sets your client's expectations from the outset, and getting it wrong — or not issuing one at all — is the most common source of billing disputes in conveyancing and legal practices.
What to include in the initial estimate
A clear fee estimate answers three concrete questions:
- What will the matter cost? A fixed fee, or if the matter does not allow for one, a range with the criteria that determine where the final figure will fall within that range.
- What is included and what is not? Professional fees and disbursements are different things. Set out clearly which disbursements are passed on to the client and which — if any — the practice absorbs. Land registry fees, stamp duty land tax, search fees, and third-party costs should be itemised separately, even if only as estimates.
- When and how will payment be made? The retainer requested at the outset, any interim billing points if the matter is long, and when the final invoice will be raised. A client who knows from day one when transfers are expected will not be surprised — and will not object — when the invoice arrives.
The retainer
Asking for a retainer before work begins is not about trust. It is a way of organising the matter file and aligning the client's commitment with the work ahead.
The retainer serves two purposes. First, it ensures the practice has funds to cover disbursements without advancing them from its own cash. Second, it signals to the client that the matter has genuinely started.
For longer transactions — land transfers, company formations, estate administration — the retainer can be partial, with a payment schedule tied to key milestones: exchange of contracts, completion, registration.
When to revise the estimate
Your initial estimate is based on the information the client gave you. If that information changes — an undisclosed charge comes to light, the transaction involves more parties than expected, the client requests additional work — the estimate needs to be updated.
Do not wait until the end of the matter to tell the client. As soon as you identify a variation that will exceed ten percent of the original estimate, communicate it in writing before incurring the additional cost or doing the additional work. Early communication is part of the service. A surprise invoice at completion is a reason for a dispute.
How to document the estimate in the matter file
The fee estimate — original and any revisions — belongs in the matter file as part of the client's financial record. Store it with the date it was sent and some record that the client received it: an email reply, a countersigned copy, a dated note on the file.
That record is what resolves a billing dispute before it escalates. If a client challenges the final invoice, you can show exactly what was estimated, when it was revised, and when each change was communicated.
What to avoid when drafting the estimate
Figures without a basis. An amount you cannot justify is the first thing a client will challenge. If there is genuine uncertainty, say so: "between X and Y, depending on whether additional registry work is required."
Disbursements absorbed into the fee without explanation. If the client discovers on the final invoice that there are costs not mentioned in the estimate — even costs you advanced on their behalf — it reads as a lack of transparency. Better to mention them at the outset as estimates or as items to be confirmed.
A single estimate for a matter with many variables. If the retainer could develop into additional work that is hard to predict — litigation, an appeal, a complex land registry query — distinguish between the core engagement and the possible extensions, and estimate each separately.
The estimate as an internal management tool
Beyond its client-facing function, the fee estimate is a management data point. Comparing what was estimated with what was actually billed at the end of a matter tells you whether that type of work was profitable and helps you calibrate future estimates.
If the practice consistently bills less than estimated on a particular type of transaction — residential conveyancing above a certain value, for instance — there is an estimating problem you can fix. If it consistently bills more, there is a communication problem that is creating client friction.
Reviewing this regularly improves both the practice's profitability and the quality of the client relationship.
At VerifyAct we build tools to help practices stay organised and error-free. Get in touch if that sounds useful.