Written fee terms: 4 items to give a client before work

Before work begins, give the client written terms covering scope, fee basis and rate, expenses, and how changes will be handled.

Key takeaways

List the work you include and exclude.
State the fee basis, rate, and payment timing.
Explain expense charges and when approval is needed.
Agree on how you will communicate and accept changes.

The client pictured a quick fix, and the invoice shows a longer job. The owner assumed travel was included, and the client assumed it was billed separately. A bookkeeper assumed month-end close was part of a monthly retainer, and the client assumed it was extra work. Each gap is small on its own. Together they can turn a good working relationship into an argument about money.

The fix is simple to describe and easy to skip: state the fee terms in writing before the work begins. This post covers four items to give a client before you start. They are the scope of the work, the fee basis and rate, the expenses the client will pay, and how changes to any of these will be handled. A short written statement can help you explain these terms.

Some of the quotes below come from a state court rule on fees for lawyers. We use them because lawyer conduct rules are some of the clearest public statements of what a fee agreement should contain. They are not a rulebook for your trade, and the rules that apply to you may differ. Treat this post as general information, not legal advice. If you are unsure how your own rules apply, ask a professional who knows your field and location before you rely on a particular term.

The scope of the work

Scope is the description of what you will do. Owners often describe it loosely, and that is where many problems start. "Bookkeeping" can mean entering a few transactions a month for a sole trader, or it can mean running a full accounting system, reconciling several bank accounts, handling payroll, and preparing reports for a lender. The price for those two jobs should not be the same, and the client should know which one they are buying.

Scope also depends on who the client is. A business owner who hires you may have a partner, a spouse, or a board that expects to see the terms. If more than one person will give instructions or approve invoices, name them in the agreement. Otherwise you may end up taking direction from someone who never agreed to pay for it.

The state rule puts the timing point plainly. It says that the scope of the representation and the basis or rate of the fee and expenses for which the client will be responsible "shall be communicated to the client, preferably in writing, before or within a reasonable time after commencing the representation, except when the lawyer will charge a regularly represented client on the same basis or rate." Minnesota Office of the Revisor of Statutes, MN Court Rules

Two things stand out in that quote. The first is the word "preferably." The rule prefers writing, and the phrase "before or within a reasonable time after" means timing matters. The safe practice is to put the scope in writing before the first hour of work. The second is the exception for regularly represented clients of lawyers covered by this rule. Even then, a short written reminder protects both sides.

Write the scope as a list. For each item, say what is included and what is not. Here is an example for a bookkeeping engagement:

categorizing bank and card transactions for the named accounts, monthly bank reconciliations for those accounts, and a monthly profit and loss report are covered.
payroll processing, sales tax filings, year-end tax preparation, and any accounts beyond the named ones are not covered.

The exclusions matter as much as the inclusions. Many disputes come from work the client assumed was covered. If you exclude something the client is likely to expect, say so in plain words and offer to add it for a separate quote. "Payroll is not included; we can quote it separately" leaves far less room for surprise than silence does.

Scope also needs a stopping point. Say whether the engagement ends at a set deliverable, at the end of a period, or when either side gives notice. A monthly retainer should state how long it runs and how either side can end it.

The fee basis and rate

The client needs both. A rate without a basis leaves open whether the client pays for a whole month or only for the hours used. A basis without a rate is not a price at all.

The state rule uses the same two words, "basis or rate," and applies them to both the fee and the expenses. It also sets a standard that applies no matter which basis you choose. In the rule's words, "A lawyer shall not make an agreement for, charge, or collect an unreasonable fee or an unreasonable amount for expenses." Minnesota Office of the Revisor of Statutes, MN Court Rules The rule then lists factors for judging whether a fee is reasonable and states that "The factors specified in (1) through (8) are not exclusive." That means a fee can be judged unreasonable for reasons that are not on the list.

For an owner or bookkeeper, the practical lesson is this. A high price is not automatically a problem, but a price that looks out of line with the work should be explained in writing before it is charged. Explain the rate at the start rather than introducing it on an invoice.

Do not assume a fixed fee protects you. A fixed fee covers a defined job. Write what the fixed price covers, what triggers a new quote, and what happens if the client sends you twice the paperwork you expected. The same logic applies to retainers. Say whether unused hours carry over, whether the retainer is billed in advance, and what happens when the work goes past the hours the retainer covers.

Some fee types deserve special attention. The state rule names a contingent fee for representing a defendant in a criminal case as one arrangement it addresses specifically. Minnesota Office of the Revisor of Statutes, MN Court Rules If your work involves a share of a result, such as a percentage of savings you find or money you recover, check the rules for your profession before you quote one. Do not assume a general business contract covers it.

Payment in something other than money needs the same care. The state rule says that "A lawyer may accept property in payment for services, such as an ownership interest in an enterprise, providing this does not involve acquisition of a proprietary interest in the cause of action or subject matter of the litigation contrary to Rule 1.8(i)." The rule also notes that "a fee paid in property instead of money may be subject to the requirements of Rule 1.8(a) because such fees often have the essential qualities of a business transaction with the client." Minnesota Office of the Revisor of Statutes, MN Court Rules For owners who are offered equity, a share of a product, or barter credit, the arrangement may be a separate business deal with its own rules. Write it down as one, and get advice before you accept it.

Finally, state how and when you invoice and when payment is due. For related billing setup, see invoice payment schedules.

The expenses the client pays

Expenses are the costs you incur on the client's behalf or in doing the work. They include filing fees, software charges, shipping, mileage, outside vendors, printing, and sometimes subcontractor time. Expenses are easy to overlook because each one seems small. A client who agreed to an hourly rate may not expect a line for a courier or a software seat.

For each type of expense, state three things:

whether it is included in your price or billed separately.
if billed separately, whether it is passed through at cost or carries a markup. If you add a markup, say so.
whether you need the client's approval before you spend, and how the client gives it.

If an expense is large or unusual, ask first. A short email that names the amount and asks for a yes creates a written record of the requested approval.

Estimates and caps are different tools, and it helps to know which one you are offering. An estimate is your best guess at a total, and it can move. A cap is a ceiling you promise not to exceed without written approval. If you offer a cap, write what happens when you expect to exceed it, and how far ahead you will warn the client.

Keep records of expenses. Share them when the client asks, and consider attaching them by default for any expense above a level you choose in advance.

How changes will be communicated

The client adds a bank account, a new property, or a second company. The paperwork doubles. The rate goes up after a year. The fee agreement cannot predict all of this, but it can say how changes are handled.

The state rule is direct on this point: "Any changes in the basis or rate of the fee or expenses shall also be communicated to the client." Minnesota Office of the Revisor of Statutes, MN Court Rules

A change process in your agreement might include:

the triggers for a change: a larger scope, new accounts, a request outside the agreed list, or a scheduled rate review.
how you give notice: in writing, before the new terms apply, and early enough that the client can act on them.
how the client accepts it: a signed amendment, a reply email, or a clear written statement of what happens if the client keeps the work going. Language about continued work counting as acceptance should be checked against the rules where you operate before you rely on it.
what happens if the client does not accept: whether you stop, pause, or finish the current phase.

Put the change process in the agreement at the start. Working out how to handle a change while a dispute is already under way is much harder. Honest notice given early protects both sides.

Make the change process part of your regular habits, too. When you notice the scope drifting, pause and write a short note: what is new, what it will cost, and what you need from the client. Send it before you do the extra work. Keep the notice with the client's response. For related guidance, see hourly rate changes.

Common mistakes to avoid

Several errors come up again and again. The first is relying on a verbal agreement. If the terms matter, write them down and send them to the client.

The second is hiding terms in an attachment the client never opens. If the rate is in a separate price sheet and the exclusions are in a footer, the client may never see them. Put the key terms in the body of the agreement or on the first page of the proposal.

The third is vague words. "As needed," "reasonable," and "standard" mean different things to different people. Replace them with a number, a list, or a defined process.

The fourth is waiting for the first invoice to explain the terms. The invoice is the wrong place to introduce a new rate, a new expense, or a minimum charge. By then the client has already decided how they feel about the work.

The fifth is forgetting the client's side. Ask them to repeat the main points back to you, or to confirm the scope and rate in their own words. That short exchange often reveals a gap before it becomes a dispute.

Sample wording for the core terms

You can adapt the wording below to your own work.

> Scope. We will categorize transactions for the bank accounts listed in the attached schedule and prepare a monthly profit and loss report. Payroll, sales tax filings, and tax return preparation are not included. We can quote any of these separately on request. > > Fee basis and rate. Work is billed at the hourly rate in the attached schedule. Our monthly retainer, stated in the same schedule, covers the scope above and is billed in advance at the start of each month. > > Expenses. Filing fees and third-party software are billed at cost. We will not add a markup without telling you first. Any single expense above the amount listed in the attached schedule requires your written approval before we incur it. > > Changes. We will give you written notice of any change to the scope, fee, or expenses before the change applies. If you do not accept a change, we will tell you what happens to the work already in progress.

Notice what the sample does. Each paragraph answers one question the client would otherwise have to ask. Adjust the wording to match what you actually do. Do not copy a clause you do not intend to follow.

Illustrative example: a fixed fee and expense cap

The client then requests work outside that list. Before starting it, write down the additional scope and proposed price, and ask for written acceptance. Keep that response with the original terms. These figures illustrate the process, not suggested prices.

Putting the four items together

Before you send the agreement, check four questions:

Does it say what I am doing, and what I am not doing?
Does it state the fee basis and the rate, and explain what happens if the work grows?
Does it list the expenses the client pays, how they are billed, and when approval is needed?
Does it explain how changes to the scope, fee, or expenses will be communicated and accepted?

If you can answer yes to all four, you have covered the core of a written fee agreement. Keep a signed or confirmed copy in the client file, and make sure the client has one too. Revisit the agreement when the work changes, and update it in writing rather than by habit.

An agreement is not a substitute for advice about your duties in your profession or location.

Today, open the terms for your next client job and check them against these four questions. Write down any missing term before work begins.

Common questions

What should written fee terms cover?

Written fee terms should cover scope, fee basis and rate, expenses, and the process for changes. Include what is excluded as well as what is included.

Does the Minnesota rule apply to every trade?

The quoted Minnesota rule governs lawyers covered by that rule. Check the requirements for your own profession and location before relying on a particular term.

What should I do when the client requests extra work?

Agree in writing on the additional scope and pricing before doing the extra work. Keep the client's response with the original agreement.