Summary
Expect to learn how the base fee, determined primarily by market norms and your past experiences, ensures profitability by establishing the standard charge for a transaction without exceptional factors.
3 Key Takeaways from this Video
- Establishing the base fee: Determining the standard amount for a transaction without exceptional factors based on market norms.
- Market-driven pricing: Using market information and existing practices to set a starting point for the base fee in different types of transactions.
- Considering experience and profitability: Taking into account past experiences and avoiding unprofitable work to ensure the base fee contributes to the lawyer's bottom line.
Transcript
0:05 So how do you get to that? Well, I think what base fee means is what are you going to ask to be paid if there are no type of exceptional factors, the simplest of, transaction.
0:21 So in an incorporation it might be single incorporator, one Director, non-robust, share structure, simple plain Jane common shares. Just as straight forward as you can imagine where the value is at a base level and the inputs don't require anything extra.
0:43 So I think that's the, that's what it is conceptually. Now how do you get to the right amount?
0:49 I think the base fee is really primarily determined by market, and so almost anything you do, there is a market for it.
0:58 So, you know, on incorporations, or on residential real estate transactions it would be pretty easy to say “the normal charge in our city for acting for a vendor, the sale of the house is between X and X.”
1:12 And that'll give you your starting point for a basic residential real estate vendor transaction.
1:19 So, and I think even in a complex transaction you could say, “oh, I'm going to act for the vendor in the sale of the shares and the company is worth $20 million.”
1:29 And you could ask around and people would say, “oh, that generally is going to cost between X and X.” And so there will be a perceived market value.
1:39 It may have ranges, but I think that's your determining factor in creating the base fee, and the other thing you'll do is you'll look at your experiences.
1:49 And so if you've done lots of incorporations in the past, you'll know about how long it takes to do a basic incorporation. Cause in your pricing even if your client focussed you don't want to be doing work that's unprofitable and doesn't contribute to your bottom line.