In Australia, a specialist construction lawyer will charge anywhere from about $2,500 to upwards of $15,000 (ex GST) to review a construction contract. Yes, this is a big range. This article explains why, and gives some suggestions on how to avoid spending more than you need to.
What affects the cost of a contract review?
The reason the price range is so broad is because the cost will depend on a number of variables. Broadly speaking, these variables fall into one of three categories:
- the features of the contract;
- your requirements, as the client; and
- your choice of lawyer.
These are explained below.
How is the contract itself relevant to the price of a review?
A key driver of the cost of a legal review is will be the amount of work involved. That, in turn, will depend on the nature of the contract itself, such as:
- the length of the document;
- whether the contract is in a standard form, such as a commonly used Australian Standard;
- if the document is in a standard form, the number of amendments that have been made;
- the complexity of the intended contract model; and
- how well the contract reflects the principal’s commercial intent, noting that contracts are regularly issued with mistakes, inconsistencies and terms that do not align with the principal’s true commercial intentions.
Importantly, the value of the project will not affect the amount of time it will take a lawyer to review the contract.
If the project size means that you don’t want your lawyer to conduct a ‘full scale’ review, you will need to tell your lawyer this before they start their review. You will also need to accept that the lawyer’s advice will then need to be qualified, to reflect the limited nature of their review.
This leads us to the second category of variables that will affect the cost of a contract review: your requirements.
What do you really want (or need) from your review?
Different lawyers produce contract reviews in different forms, for different clients and for different purposes. There is no ‘one size fits all’ approach.
You are likely to find some forms of review more helpful than others. However, what you will find useful will depend on your circumstances. For example:
- How familiar are you with construction contracts?
- How much guidance will you need from your lawyer – both in the review document itself, and after you have received it?
- What will you do with the review, after you receive it? Keep in mind that preparing tender qualifications or drafting contract amendments is normally quoted separately from the cost of conducting a review (purely because a lawyer won’t know how much work there will be until after the review process has been completed).
- Do you want the lawyer to review the whole contract, or just look at specific clauses or issues?
- Do you want the lawyer to highlight all risks (however immaterial), or maybe just the ‘top five’, or something in between? If you don’t want a full review, will you be happy to receive a qualified advice?
- How much detail would you like to see in writing?
All of these factors will affect the amount of work required by the lawyer, and therefore are likely to influence the final price.
Sometimes, you might not know what you want (or need) until after you have been through the process. Indeed, an experienced construction lawyer may have a better idea than you, based on their experience in working with other clients.
Usually, it’s a matter of starting a conversation and then finding a lawyer you feel like you could potentially work with. And then, you can fine-tune the process to better meet your specific requirements. This fine-tuning process happens over time, noting that your requirements as a client will change over time as well. This is why, at Turtons, we produce different types of reviews for different clients and/or for different projects, and at different price points.
How will your choice of lawyer affect cost?
Different lawyers (and law firms) will charge different amounts for conducting a contract review.
Sometimes the difference in quoted prices can be significant.
The main reason for this is that different lawyers will have different views about what should be captured in a review. That assessment will be based primarily on the lawyer’s (or law firm’s) assessment of what you really need to know, taking into account the main considerations set out above.
As a general rule, and independently of the factors above:
- Big firms will usually be more expensive than small firms. Given their internal risk management processes, they also tend to provide longer, more detailed, and more qualified advice (which may or may not be what you want). Interestingly though, you are more likely to deal directly with more senior lawyers when you engage a small firm, purely because of the way different practices are structured.
- Specialised construction lawyers will often have higher hourly charge rates than more generalised lawyers, but will also be able to perform a review more efficiently and provide more practical (and therefore more valuable) advice.
- Lawyers based in capital cities, and particularly Sydney or Melbourne, will usually charge more than lawyers based elsewhere. But they will also tend to work in more specialised practices and consequently have more specialised expertise.
Where will you get the best value?
Ultimately, this is a question that only you will be able to answer.
The biggest problem is that you’re not likely to be in a position to assess the value of a lawyer’s service unless:
- you have been involved in a major legal dispute;
- you deal with lawyers regularly; and/or
- you are a lawyer yourself.
If you don’t fit into any of these categories, the only way you’re likely to find out is by giving it a try.
If you regularly work in the construction industry but are yet to work with a specialist construction lawyer, you may well be missing out. Again, the only way to find out is by giving it a go. (And if you're not really sure where to start, you're not alone. You can read more about the challenges of finding a good lawyer here.)
Don’t confuse cost with value
Keep in mind that ‘value’ is not the same as ‘cost’.
An impractical or unreliable contract review will be worth nothing to you, regardless of how much (or how little) you pay for it.
Regardless of the specific project you might be thinking about, where you are dealing with a good construction lawyer:
- they will spot things you won’t, and
- you will probably learn something new each time you speak with them (which may or may not be related to the original question you originally contacted them about), and
- they will ask, and answer, questions you won’t have thought of.
How much do we charge for a contract review?
At Turtons, we typically charge between about $5,500 to about $8,000 (ex GST) to produce a document that looks something like this. Sometimes we are asked to provide less detail, and occasionally we are asked to provide more. Again, our overall cost will be a product of the considerations set out above.
Most of the contracts we review are for projects in the range of about $5-40 million, and most are based on an amended form of Australian Standard contract (eg AS 4000, AS 4300, AS 2124, AS 4902 etc).
Most of the time, we will also run through our review with the client to help them identify the key commercial issues, with a view to then developing a set of tender qualifications and/or contract amendments, as needed.
You are right to be wary about the amounts quoted by lawyers to conduct a contract review.
Legal advice is expensive and its true value can be difficult to quantify, particularly where you are thinking of seeking advice from a lawyer you haven’t worked with before.
You will find some lawyers easier to work with than others, and you will find some contract reviews far more useful (and therefore better value) than others, quite independently of their cost.
Again, the only way you will find out is by giving it a try.
If you’d like to try Turtons, a small firm with specialised construction lawyers based in Sydney, you can contact us here or by simply calling us on one of the phone numbers above or below. We’d love to hear from you.