Common Legal Fee Structures for Establishing a Business Entity

Common Legal Fee Structures for Establishing a Business Entity

Common Legal Fee Structures for Establishing a Business Entity In order for a business owner or a new business entity creator to further his or her plans in the commerce world, it is vital that he or she is aware of various legal aspects. One of these is the structure of legal fees and how to stretch his dollars. There are alternative and standard formats for common legal fees and billing.


This means researching what methods are available, and how they are most put to use for the owner or partners of the new company. Some have risks, but the benefits could outweigh these concerns based on which is most compatible with the business entity being established. One of the most important aspects of dealing with legal fees, structures and establishing a new business entity is hiring a lawyer.


These legal representatives often have the insight and experienced needed so that research and energy wasted in attempting to try different approaches is removed from the situation. When a business has clients that expect value for goods and services, legal complications arise often. This means for clients and associates, that the value of what is supplied must exceed the actual monetary amount for the person or company to feel it was beneficial and a positive experience. This is more easily handled through lawyer assistance.


 The Fixed Fee Explained When providing services for legal matters, or when a business is established, some clients may have fixed fees for the situation. This means that a pre-arranged amount is paid upfront by the owner so that money is given for completed work. When this is the route taken, there are no surprises, and the total amount is already known. The value of services is often higher when the agreement is set.


There are no collection complications, and work starts after payment. However, assessments of what needs to be accomplished may be difficult before becoming part of the project for the professional. Any additional hours worked may not be compensated. This could also lead to losses for the service provider. Another aspect of the fixed fee is one for the phase, stage or part of a project. This is incremental which means that the service provider is given payment based on each portion of the entirety of the job completed.

This could also be determined through a time limit, restriction or period. The total funds provided are sectioned into each part of the whole. There is less of a risk for additional unpaid hours. If the fees need to be reevaluated, this is more easily accomplished after each phase has been completed. This option has a greater flexibility and is often the best choice for long-term services and complications such as litigation with legal representation.


 The Capped Fee and Blended Rate Capped fees are usually when the client pays the professional service by the hour. The cap is on the maximum hours of the project which are frequently predetermined. This does give the client a form of peace of mind in knowing there is a limit on how much he or she must pay. The perceived value is considered greater if the cap is respected. There is also less risk that hours will be unpaid at the end. However, the capped hours may not be easy to determine before the project starts. The risk of unpaid hours may still exist, and billing and payment is generally only provided after the project is completed. Blended rate fee structures are single rates with reduced hours.


The client pays a set rate which is often lower than what is provided to other professionals in the same field. This means staff hired is less experienced and charge less. The same hourly rate is applied to these different situations by the client. This could increase the perceived value of the client, but the staff is afforded little benefit. When a law firm is attached to these projects, there is no risk of extra hours being unpaid.