Graeme Johnston / 3 March 2026
This article discusses two related practical questions which arise in legal work:
- When is an estimate like a fixed fee?
- How should you respond when out of scope work is needed?
A common factor in addressing both questions is the importance of clear, informed thought, followed by prompt, simple action. This action involves open communication, conversation and doing things in a way which generates useful data for the future. Rather simple things in principle, even where the underlying legal work may be complex. Building a scalable approach to support these ‘simple things’ over time is not trivial: it has become easier with the support of modern technology but still needs a commitment to actually do it.
Question 1: fee-type blurring
An estimate of time-based fees and a fixed fee are, obviously, conceptually different things. But they can come to resemble each other in two main scenarios.
- One scenario is where the fixed fee’s scoping or assumptions are so narrowly drawn that significant work needs to be done outside them. If the default position is, as is often the case, that this out-of-scope work is to be charged on a time-spent basis then the overall effect is obviously changed.
- The other scenario comes at it from the other end. If an estimate is properly scoped with a full list of deliverables and sensible lists of assumptions which are likely to be met, then it becomes something close to a fixed fee because, if the scope and assumptions are in fact met, how can the law firm reasonably propose not to stick to the estimate?
I would suggest that rather than fixing upon the theoretical type, the emphasis should be on the quality of the projection. Substance over form. This involves paying attention to
- The needs of the particular matter
- Adjusting the budget (whether “fixed” or “estimate”) promptly when relevant information becomes known
- Learning from previous matters – which involves laying a foundation by working in a way which generates information which enables such learning in future
Question 2: tales of the unexpected
The reason that I said that the second question was related is that, whatever you call your fee type, sometimes unexpected things arise which have an impact on the time and other costs incurred by a law firm in delivering what is required.
It can, of course, sometimes be said that the new things should have been expected even if in fact they were not. That’s an opportunity to consider how things can be improved.
On other occasions, it may be that the new things were in fact expected (i.e. “lowballing” tactics). That’s an opportunity to consider getting a new lawyer.
But leaving these points aside, and assuming good faith and reasonableness on both sides, what should you actually do?
- One option is for the seller just to swallow the cost. That obviously suits the buyer. And where the amount involved is small, it may be a good option for the seller, avoiding transaction costs (drawing up and discussing a time-based invoice) and ideally gaining relationship or reputation benefits or both.
- A second option is just to bill whatever’s reasonably on the clock for the out of scope work. That obviously suits the seller. Where the amount is not large, it may be a good option for the buyer as well, minimising transaction costs (rescoping and agreeing a new budget in advance) and not materially affecting expenditure.
- A third option is to agree a new fixed or estimated price on the basis of the new information. Where the extra work is material to one or both parties, this is likely to be the most balanced option. Among other things, it allows for the discussion to be had up front of why the extra work is required, whether it truly is and any options for addressing whatever the issue is. Assuming you have credible numbers, the discussion does not require detailed briefing in writing: what’s more important is that the discussion and resolution happen rather quickly, before the work moves on and the issue becomes more difficult to resolve. For this, you need to be on top of things sufficiently to realise that there’s an issue and to do something about it promptly. Each of which can be easy if you’re set up correctly, but hard if you’re not.
- A fourth option where the additional work is material is not to discuss re-budgeting but just to let things roll with a time-based bill being proposed at the end. If you’re the buyer and actually care about managing legal spend, that’s not great as who knows whether the cost / benefit is worth it to you. And there’s only so much realistically you can knock off the bill once the work’s been done. if you’re the seller and have a buyer who cares then you can expect something to be knocked off the bill and hence your margin, or some damage to your relationship or reputation. Or a combination of these. Of course, if you’re a buyer who doesn’t really care about spend or a seller lucky enough to have a client who you’re sure doesn’t care, then there’s no problem. At least for now.
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Acknowledgements: thank you to Molly MacGregor and Libbie Evans for helpful comments on the draft.
Note: for a more detailed discussion of better budgeting in legal work see this recent article by Libbie Evans and me: parts one, two and three.
Image: by Mohamed Alizade on Unsplash