United Arab Emirates: 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 time 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 the clients to meet with those lawyers who propose initial free consultation before getting involved in complicated understanding or agreement with lawyers and provide them with all their legal matter facts. The initial consultation allows lawyers to understand the legal matter factors and evaluate the 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 cases.

It is worth mentioning here 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 stability of the scope of work, especially when it comes to handling a dispute or a lawsuit, or a negotiation against the opponent party. But it is less critical if the task is a corporate task such as providing a client with a piece of legal advice or opinion or drafting a contract or restructuring a group of companies or similar tasks.

Unless lawyers sufficiently study the various assumptions and estimate the expected working hours and any expected difficulties that may face during the work on the task, there will be complications and conflicts in the legal fee arrangement.

An example of issues that may lead to conflicts of the legal professional fees, assuming the scope of work, is filing a case against an opposing party to claim compensation or negotiating with an opponent party for compensation on behalf of the client, in such cases it is very difficult to estimate the length of the process due to the unclear expectations of the opponent party defense or reactions, in some cases, the opponent party files counterclaims for unpaid dues or initiate other actions against the client such as travel ban or Provisional Attachment or insert the third party in the case, accordingly make the process longer and more complicated, so it is very important to include the legal fees agreement all assumptions. Or sign a different legal fees agreement model or at least add clear limitations of the scope of work or the time limit for the scope of work.  

CHARGING PER HOUR

Hourly rate is the price that lawyers charge per hour for tasks. The process of charging happens by tracking the number of hours lawyers spent working for the client and billing at the end of the project or on an agreed cycle time. Charging by hourly rate agreements, which is not preferable in the Middle E

during the work on the task, there will be complications and conflicts in the legal fee arrangement.

An example of issues that may lead to conflicts of the legal professional fees, assuming the scope of work, is filing a case against an opposing party to claim compensation or negotiating with an opponent party for compensation on behalf of the client, in such cases it is very difficult to estimate the length of the process due to the unclear expectations of the opponent party defense or reactions, in some cases, the opponent party files counterclaims for unpaid dues or initiate other actions against the client such as travel ban or Provisional Attachment or insert the third party in the case, accordingly make the process longer and more complicated, so it is very important to include the legal fees agreement all assumptions. Or sign a different legal fees agreement model or at least add clear limitations of the scope of work or the time limit for the scope of work.  

CHARGING PER HOUR

Hourly rate is the price that lawyers charge per hour for tasks. The process of charging happens by tracking the number of hours lawyers spent working for the client and billing at the end of the project or on an agreed cycle time.

Charging by hourly rate agreements, which is not preferable in the Middle East and United Arab Emirates, protects both parties' lawyers and clients from any conflicts as long as the spent hours are in the right place and the lawyer is giving the client his expectation.

When lawyers and clients are not able to know all the circumstances of the situation and process, it is preferable to proceed with the hourly model, for example attending a settlement and negotiation sessions where the lawyer work along with the client to handle such a situation from a legal perspective, should be on the hourly bases as such matters might be finished in a short time or a much longer time. And the lawyer will move and spend hours based on the client's instructions.

The hourly charge is the preferred model when parties are not fully aware of the factors affecting the legal situation and the process. The value of the hour depends on the nature of the task and the experiences of the legal consultant who will handle the task.

In Dubai, the average hourly rate for lawyers is AED 2,240, noting that there are lawyers and legal consultants who are willing to reduce such amount up to 50 % for their regular clients or for tasks that require long hours and do not require efforts from senior lawyers.

Some law firms and legal consultation offices offer a fixed rate per hour, regardless of the lawyer and his experience who is handling the legal work.  Such a mechanism is called Blended Hourly Rate, which means the average of the combined hourly rate to be charged for two or more key resources engaged in providing Services. While some firms offer a separate hourly rate for each lawyer separately based on the experience and lawyers job title, meaning if a partner spends an hour, his/her rate will be higher than the senior associate. The senior hourly rate is higher than the associate and the paralegal hourly rates.  

Generally, this model is not preferred by clients in the Middle East and United Arab Emirates for reasons relating to the trust between the client and the lawyer, as the clients are not accustomed to it and because clients prefer to pre-determine the budget for the legal work before engaging with the lawyers and initiate their case. But recently, with the increase in the numbers of organized and large legal consultation offices and international law firms' branches, this hourly model began to increase in the market.

LUMP SUM WITH A MAXIMUM OF HOURS

This model is a mix between the lump sum model and the hourly rate model. This model is preferable as it avoids the conflicts and negativity in both above-mentioned models, as 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, the client agrees with the lawyer to handle a compensation case for a lump sum amount of AED 100,000/- provided that the number of working hours does not exceed 60 hours, and in case the said number

of hours is exceeded, the hourly rate for extra hours shall be AED 1500 per hour noting that if the spent hours to finalize the case were less than 60 hours the agreed lump sum of AED 100,000/- shall remain the same.

In this model, lawyers secure their rights for the time that will be spent in providing the required service and guarantee their rights in the event of unexpected complications and longer processes. On the other hand, the client will be aware of the estimated budget for the legal task.

LAWYERS ARE UNDER AN OBLIGATION TO EXPLAIN TO THEIR CLIENTS NOT ONLY THE PROFESSIONAL FEES BUT ALSO THE OTHER COSTS.

The lawyer or the legal consultant is responsible for explaining clearly that the professional fees are exclusive and do not cover any other fees, including all taxes, Value Added Tax (VAT), any/all Government Fees, Court Fees, notarization charges, attestation charges, stamp duties, disbursement charges, expert's fees, urgent government fees, translation charges, etc. And all such charges shall be borne solely by the Client, and such payments shall be informed. Approval for such charges shall be obtained by the Client, who might be required to make the payment immediately because any delays might lead to creating issues in the process.

Originally Published 08 December 2022

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.