Fee Agreement

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A fee agreement is a document signed between a client requesting the services and a service professional that sets out the terms under which a service provider will do the work. The fee agreement contract helps both a client and a hired person know exactly how much to expect for the work or service completed. Use this template by Lawrina to arrange your fees as you need.
workers talking; paper titled "Fee Agreement"; banknotes and coins lying on the opposite sides of the illustration

A fee agreement contract is a legally binding contract between a client and a professional, such as a lawyer or financial advisor, that outlines the terms of payment for a service. This type of contract specifies the payment amount, payment schedule, scope of work, dispute resolution, and other relevant information. Create and purchase a personalized fee agreement from an attorney-drafted template, built using the information you provide. Then you can download the document and use it as is to protect your business interests. 

What Is a Fee Agreement?

A fee agreement is a document signed by a client and a service professional that sets out the terms under which the service provider will do the work. To avoid misunderstandings between the parties, this contract expresses what services will be delivered based on time spent and explicitly states how much money should be paid.

Generally, a printable fee agreement template can be used to explain the payment type (hourly, monthly, or project-based), timeframe (paid in advance, paid upon completion, or paid periodically during the work), dispute management instructions, and other essential details.

Insight

There are many types of fee agreement forms, including general fee agreements, contingent fee agreements, hybrid fee agreements, fixed fee agreements, success fee agreements, and others. 

A sample fee agreement is usually a simple contract that features the specific details of the agreement and should be signed by both parties. This simple retainer agreement usually has basic fee details and explains the services provided. 

Parties of the Fee Agreement

There are two parties in a fee agreement template. They are:

  • The Client — Usually an individual or company seeking to leverage the skills and expertise of a professional. 
  • The Professional — A qualified, specialized professional providing a service to the client. 

Key Terms

If you are not a contract expert, there are some terminologies in a fee share agreement that may be unfamiliar. Some of the most common terms include: 

  • Contingency fee — A payment arrangement in which a professional receives a percentage of a settlement, award, or recovery as payment for services rendered.  
  • Flat fee — A fixed amount paid up front to a service provider irrespective of the hours the professional will spend on the work.
  • Hourly rate — Fees paid for every hour a service provider will spend on work for the client.
  • Performance guarantee — An assurance that the service provider will fulfill his or her obligations according to the terms of an agreement, which can include a money-back guarantee, a warranty, or any other form of compensation in case the professional fails to deliver.
  • Retainer — Money paid in advance to secure the services of a professional.
  • Confidentiality clause — A clause that requires the service provider to not disclose to third parties the details of the engagement with the client.
  • Arbitration clause — A clause requiring disputes between the client and service provider to be settled through arbitration, not court action.

What Should Be Included?

Fee agreements may come in different shapes and sizes. However, a simple fee agreement form will look the same for any type. The most common information and clauses included with every type of fee sharing agreement samples are as follows.

Parties With Contact Information

A standard fee agreement contract PDF will first clearly define the business or legal names of both parties. There will be space to include each party’s residential or registered business address and other appropriate contact information.

Fee

A fee clause is the most important part of an agreement, as it includes the entire fee for the services provided as agreed upon by the parties (a flat fee, hourly rate, or contingency fee).

Insight

Historically, lawyers have determined what fees to charge by a variety of methods. Commonly used are percentage fees and contingent fees (which may vary in accordance with the amount at stake or recovered), hourly rates, flat fee arrangements, or combinations thereof.

If you are consulting with a lawyer on a legal matter, ask the lawyer to estimate the amount of time your case will take so you understand your total costs. Remember that circumstances may change, and your case may require more hours than the lawyer initially expected, as can happen with other professionals as well.

Services Provided & Qualifications

Every blank fee agreement template should include a place to add the explicit list of services provided with a description of every service to ensure that both parties understand the requirements. The services should be defined in accordance with industry standards. For example, consider including key performance indicators (KPIs), certifications, or other relevant success criteria when filling out a service fee agreement template.

Termination of Services

This clause is used to describe the terms and conditions under which the services will be either completed or terminated. The more relevant information that is included here, the clearer the fee agreement template will be for both parties.

Indemnification

This clause is included in case of damages caused by the delivery of services, either incidental or directly resulting from the execution of conditions described in the services portion of the agreement. Indemnification ensures that the contractor is protected and that the client will not initiate a lawsuit against the party providing services.

Governing Law

This clause defines the governing law under which the agreement will be executed, specifying regulations and jurisdiction. Fee agreements may vary depending on the industry and business goals. In addition, the jurisdiction may require specific clauses beyond what has been mentioned here.

How To Write a Fee Agreement

To create a legally binding fee agreement contract, keep a few important steps in mind. 

For Clients

The individual or company seeking the services of a professional should take the following steps:

  1. Determine your needs — Have a clear understanding of the problem, project, or task that you want the professional to handle. Consider how much you are willing to spend on the solution. 

  2. Research professionals — Look for a professional in your area who is experienced with the type of work you need.

  3. Have an initial consultation — Contact your shortlisted candidates and engage them for an initial consultation. Some professionals or firms may charge for an initial consultation, while others will not. Be sure to ask beforehand. During the consultation, ask questions, including how the professional handled issues or projects similar to yours in the past and what their results were. 

  4. Negotiate the terms — Once you select an individual or company to work with, they will prepare a fee agreement for your review and signature. Consider the terms of engagement, such as the scope of work, payment schedule, performance guarantees, and other details. Before signing, make sure the terms match your expectations. 

For Professionals

The client initiates the process, but the professional usually drafts the agreement. The steps to take include the following:

  1. Evaluate the client’s needs — Take time to evaluate the client’s needs by determining the nature of the project, challenge, or issue; the level of effort you’ll need to invest in order to deliver a solution; and any other relevant information. 

  2. Negotiate the terms — Negotiate terms of engagement with the client, setting clear expectations regarding the level of effort, acceptable fees, timeframe, liabilities and guarantees, or any other considerations. 

  3. Finalize and sign the agreement — Once both parties agree to the terms, put the details of the agreement in writing. Then both parties will review and add their signatures. 

Warning

Once a fee arrangement between a client and a professional has been agreed to and signed, the professional should handle the matter efficiently so as to protect the client’s financial interests. No professional should abuse a fee arrangement based on an hourly rate by using wasteful procedures. The hours charged should be equal to the hours worked.

When Should a Fee Agreement Contract Be Used?

Use a fee agreement template whenever a client seeks to secure your professional services. 

Common Use Cases

Some use cases and examples of when to use a fee agreement contract include: 

  • Legal services — Attorneys have fee agreements with clients to define the scope of work, payment terms, and any performance guarantees, if applicable.
  • Consultancy services — Consultants in IT, HR, business, supply chain, financials, environmental, architectural, management, marketing, or any other service use fee agreements to set out the terms of engagement with clients, minimizing the chances of misunderstandings and disruption of work.  

When Not To Use the Fee Agreement

Although other contracts may be required, there are instances of engagement between an individual or entity and a professional when a fee agreement contract is not relevant. Such instances may include: 

  • Volunteer work — If you volunteer your services to an individual or organization, you will not need a fee agreement because there is no expectation of payment. 
  • Pro bono services — A fee agreement is not necessary when a professional extends his or her service for free or as part of a pro bono initiative. 
  • Informal arrangements — Friends or family who have informal service arrangements will not need a fee agreement. 

State Law

The legislation on fee agreements depends on the specific industry in which a particular agreement applies. For example, legal fees are mainly regulated by the American Bar Association’s Model Rules of Professional Conduct. 

The following table lists information about attorney fees in a few select states.

California

If it is reasonably foreseeable that the total expense to a client, including attorney fees, will exceed one thousand dollars ($1,000), the contract for services in the case shall be in writing. At the time the contract is entered into, the attorney shall provide a duplicate copy of the contract signed by both the attorney and the client, or the client’s guardian or representative, to the client or the client’s guardian or representative. The written contract shall contain all of the following:

(1) Any basis of compensation, including but not limited to hourly rates, statutory fees or flat fees, and other standard rates, fees, and charges applicable to the case.

(2) The general nature of the legal services to be provided to the client.

(3) The respective responsibilities of the attorney and the client as to the performance of the contract

Florida

Rule 4-1.5 - FEES AND COSTS FOR LEGAL SERVICES
Illegal, Prohibited, or Clearly Excessive Fees and Costs. A lawyer must not enter into an agreement for, charge, or collect an illegal, prohibited, or clearly excessive fee or cost or a fee generated by employment that was obtained through advertising or solicitation not in compliance with the Rules Regulating The Florida Bar.
 
A fee or cost is clearly excessive when:

(1) after a review of the facts, a lawyer of ordinary prudence would be left with a definite and firm conviction that the fee or the cost exceeds a reasonable fee or cost for services provided to such a degree as to constitute clear overreaching or an unconscionable demand by the lawyer; or

(2) the fee or cost is sought or secured by the lawyer by means of intentional misrepresentation or fraud upon the client, a nonclient party, or any court as to either entitlement to or amount of the fee.
 
Florida Court Rules, Chapter 4, Rule 4.1.5 — Fees and costs for Legal Services

Illinois

Rule 1.5 — Fees
 A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses. The factors to be considered in determining the reasonableness of a fee include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly; 

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.
 
Illinois Court Rules, Illinois Supreme Court Rules, Article VIII, Rule 1,5 Fees

Massachusetts

Rule 1.5 Fees

A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee or collect an unreasonable amount for expenses. The factors to be considered in determining whether a fee is clearly excessive include the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer or lawyers performing the services; and

(8) whether the fee is fixed or contingent.
 
Massachusetts Court Rules, chapter 3, rule 3:07, Part1, Rule 1.5-Fees

Texas

Rule 1.04 — Fees

A lawyer shall not enter into an arrangement for, charge, or collect an illegal fee or unconscionable fee. A fee is unconscionable if a competent lawyer could not form a reasonable belief that the fee is reasonable.
 
Factors that may be considered in determining the reasonableness of a fee include, not to the exclusion of other relevant factors, the following:

(1) the time and labor required, the novelty and difficulty of the questions involved, and the skill requisite to perform the legal service properly;

(2) the likelihood, if apparent to the client, that the acceptance of the particular employment will preclude other employment by the lawyer;

(3) the fee customarily charged in the locality for similar legal services;

(4) the amount involved and the results obtained;

(5) the time limitations imposed by the client or by the circumstances;

(6) the nature and length of the professional relationship with the client;

(7) the experience, reputation, and ability of the lawyer performing the services; and

(8) whether the fee is fixed or contingent on results obtained or uncertainty of collection before the legal services have been rendered.
 
Texas Disciplinary Rules of Professional Conduct, Client-lawyer Relationship — Rule 1.04 Fees

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Frequently Asked Questions

What type of fee agreements must be in writing?

The contingent fee agreements should always be in writing because they define the conditions under which the remuneration for services is dependent on specific requirements, such as the success of a matter. The fee agreement template in word serves as proof that both parties have agreed to such compensation conditions. 

Fee agreements with your lawyer must always be in writing if fees and costs for your case are estimated to exceed $1,000. This is required by law.

What does it mean when fees are waived?

Fees are waived means the reduction of processing fees or a full release from the requirement of payment because of certain conditions that affect standards. 

Is it acceptable to negotiate the terms of a fee agreement with an attorney?

Yes, it’s always recommended to negotiate the terms of a fee agreement with an attorney to make sure your contract includes all the required information and is legally binding, even if you have a ready-to-go fee agreement sample. You can fill in the blank form of the fee agreement and then proofread it with an attorney.

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