Why are bills often based on an hourly rate?

Many firms will charge fixed fees for specific types of work, e.g. a trade mark filing. It is harder for them to do so for complex operations where open-ended advice work is needed. This is why you will normally be charged at an hourly rate for such work. All advisors will provide details of hourly rates and they usually log time spent on cases on computerised billing systems – their print outs can be requested.

It is often better to agree regular bills than to wait until your protection is granted and face a significant final invoice. It is common practice for advisors to request advance payments for official fees and other out-of-pocket costs that may be incurred during the protection process. These should be clearly explained and itemised if an advance payment is requested. You should also expect to be told if additional, unexpected fees are likely to be incurred as your cases progress.

Here are some key points for managing your costs:

You should always ask for a quote or estimate for the work you would like your advisor to do, before instructing them.

Bear in mind that there is a difference between an estimate (which is simply a best guess as to the likely cost of the work, and is not binding) and a quote (which is a fixed price offer and once accepted, is binding – though may be subject to specified variations, eg if the scope of the work changes, the cost will change accordingly).  In some cases, it can be difficult to make an accurate estimate.  If the amount billed differs markedly from the estimate, you should ask for an explanation.

Your advisor is subject to certain rules and regulations when they receive payments from you for invoices in advance of the work being performed.

These include the requirement that any payments made by you are kept by them in a specially designated account (known as a “client account”) which is separate from their own account (known as the “office account” and used to pay their own expenses, eg rent, tax and salaries).  This separation protects you by a) ensuring that your money is used for the purpose that you intended; and b) preventing your money from being mixed up with your advisor’s own office money, which could become a problem if, for example, your advisor becomes insolvent.

There are a few circumstances in which your advisor may put your money in their office account rather than in a separate client account:

Where your work has been completed, and an invoice has been issued to you, your payment will be placed in the office account.

Where you are sending a payment for disbursements (third party fees) that have already been paid by your advisor (eg the IPO renewal fees), your payment will be placed in the office account.

Before your advisor starts your work, they may ask for an advance payment.   This will be in the form of either:

a) a general “payment on account”, in which case, the requested amount may be less than the final bill or more; or

b) an invoice for a fixed fee and/or disbursement, in which case you would not expect to receive a further final bill for the same work.

In the case of (b) above, ie where you are making an advance payment for a fixed amount invoice, if your advisor specifically informs you that they wish to treat your advance payment as office money, and you confirm that you consent to this (ie you give “informed consent”), then they can keep your money in their office account.

If your work is then not completed for some reason, your advisor would be expected to refund you the appropriate amount of money from their office account.  Please note that in the unlikely event that you are not refunded, and you have given your informed consent to your money being held in their office account, it will be more difficult for you to seek the return of your money by taking action through the courts.  You would not be protected by any separate compensation fund.

It is therefore important that you properly consider where you want your money to be kept before giving your informed consent to your money being kept in your advisor’s office account, particularly where the amount involved is significant.