Start a Law Firm
How you charge is as strategic as what you charge. Your billing model shapes your cashflow, the type of client you attract, and how much time you spend on admin rather than law. Choosing deliberately — and explaining it clearly — builds trust and protects your margin.
Why your billing model matters
The same piece of work can be profitable or painful depending on how it is priced and collected. Hourly billing rewards thoroughness but caps your income at the hours you can work and can deter price-sensitive clients. Fixed fees reward efficiency and give clients certainty, but punish poor scoping. Most new firms end up using a blend, matched to the type of matter.
Importantly, the SRA does not tell you which model to use or how much to charge — but it does require you to be clear and transparent about it.
Time-based (hourly) billing
You record time and bill it at an agreed rate. It suits complex, unpredictable matters where the scope cannot be fixed in advance — much litigation, for example. The trade-offs: clients dislike open-ended bills, you must capture time accurately, and your income is limited by billable hours. If you use it, give clients realistic estimates and keep them updated as costs change.
Fixed fees
You agree a set price for a defined piece of work. Clients love the certainty and it is increasingly expected for predictable matters such as conveyancing, wills and uncontested probate. The risk sits with you: scope creep erodes your margin, so define precisely what is — and is not — included, and how variations are charged.
Hybrid models and retainers
Many firms combine approaches — a fixed fee for the predictable stages and an hourly rate for anything unforeseen, or capped fees that give certainty with a ceiling. Monthly retainers can smooth cashflow for ongoing business clients. The right mix depends on your practice area and your appetite for risk.
The SRA transparency rules
If you publicise work in certain areas — including residential conveyancing, uncontested probate, motoring offences, immigration (excluding asylum), unfair and wrongful dismissal employment claims, debt recovery up to £100,000 and licensing applications for business premises — you must publish prescribed cost and service information on your website. That includes your total cost (or an average or range), the basis of your charges, likely disbursements, whether VAT applies, what is included, the key stages and likely timescales, and the experience of those doing the work.
All firms, whatever their area, must also publish their complaints procedure and display the SRA's digital badge. Whatever model you choose, give every client clear, written costs information at the outset.
Choosing and reviewing your model
Start with your matter types: which are predictable enough to fix, and which genuinely need time-based billing? Set rates that cover your overheads, PII and target income, not just the market average. Then review regularly — your first prices are an experiment, and you should expect to adjust them as you learn what your work really costs to deliver.
This article is general guidance, not legal or financial advice. Always check the current SRA Transparency Rules and Code of Conduct, and confirm your own costs with an accountant before setting prices.
Sources & further reading
- SRA — Price transparency
- The Law Society — Price and service transparency: how to comply
- Legal Ombudsman (costs complaints and good practice)
Billing model checklist
- A model matched to each matter type
- Rates that cover overheads, PII and income
- Clear scope and variations for fixed fees
- Written costs information for every client
- SRA transparency info published if required