What should I ask about fees and scope in a shareholder dispute?

How to use this guide

Do not begin with “What will the whole case cost?” A shareholder dispute may stop after an advice note, negotiation or corrected company process, or develop into urgent proceedings, a Companies Act remedy or a separate contractual claim. A staged scope gives a more useful answer: what will the lawyer do now, what decision will that work enable, and what further work needs fresh approval?

First identify the client

Ask: “Are you acting for the company, for me as a shareholder, for me as a director, or for more than one person?” Those positions are not interchangeable. Under section 66 of the Companies Act, the board manages the company subject to the Act and its memorandum of incorporation. Holding shares does not by itself authorise a person to instruct a lawyer or spend company money on the company's behalf.

The answer affects confidentiality, conflicts, control of the mandate, access to advice and who receives the bill. If the company and an individual initially appear aligned, ask what happens if their interests later diverge. Give the firm the company name, registration number and the names of shareholders, directors, related entities and known opposing advisers before sending detailed information so it can perform a conflict check.

Do not assume that copying several shareholders into an email makes them joint clients. Ask for the client identity and authorised instructor to be recorded expressly.

Ask whether the first paid stage includes classifying whose loss and cause of action are actually in issue. Hlumisa Investment Holdings v Kirkinis distinguishes a company's loss from a shareholder's personal claim, so work on a possible company claim, derivative route or individual remedy should not disappear inside an undefined “shareholder dispute” mandate.

Define the first stage by its output

Useful first stages are concrete. For example, the mandate might cover an authority and urgency review, a chronology-based advice note, review of a proposed meeting notice, preparation for a without-prejudice discussion, or an opinion on available Companies Act and contractual routes. Ask what you will receive at the end: a written note, marked-up notice, risk call, settlement proposal or procedural plan.

Also ask what is outside that stage. Common exclusions may include drafting court papers, appearing at a meeting, briefing counsel, forensic accounting, tax advice, labour advice, business-rescue work, tracing assets, reviewing large electronic datasets or negotiating a settlement. An exclusion is not necessarily a problem; an unexplained assumption is.

The complete shareholder-dispute evidence handoff belongs in the documents-to-prepare guide. Use that guide to assemble the file, but keep the fee discussion focused on which parts of it the lawyer will actually review during the agreed stage.

Ask how fees are calculated

Clarify whether work is charged by time, by a fixed amount for a defined output, by a capped stage, or through another lawful arrangement. For time-based work, ask for the rates of each likely team member, the billing unit, whether internal conferences are charged, and which tasks may be delegated. For a fixed or capped stage, ask which assumptions support the amount and what event takes the work outside it.

Request examples of chargeable work that are easy to overlook: reading correspondence, calls, research, travel, waiting at a hearing, preparing bundles, reviewing metadata, project management and communication with other advisers. Ask whether routine administration is charged at a different rate and whether the firm uses a minimum charge for short communications.

The current consolidated Legal Practice Act still marks section 35(7) to (12), including the proposed written cost-estimate notice provisions, as awaiting commencement. Treat a written scope, rate schedule and estimate as prudent engagement practice, not as a claim that those uncommenced provisions already create a universal statutory entitlement.

Separate professional fees from other costs

Ask which figures are professional fees and which are disbursements or third-party costs. Depending on the route, these may include counsel, experts, forensic accountants, mediators, process servers, sheriffs, couriers, travel, transcripts, searches, filing charges, electronic discovery or venue costs.

For each likely third party, ask:

• who selects and instructs that person;
• whether you will see a quote before appointment;
• whether funds must be held in advance;
• whether the law firm adds an administration charge;
• whether cancellation costs can arise; and
• whether the third party reports to the lawyer, the company or the individual client.

Confirm whether every amount is stated inclusive or exclusive of VAT. Ask how deposits are held and applied, how often they may need replenishment, and whether unused money is reconciled when a stage finishes.

Identify the urgent-work rule

Shareholder disputes often become expensive when a meeting, vote, transfer, payment, removal step or court date is close. Ask what the firm treats as urgent work, whether a different rate applies, who must approve it and what minimum information is needed before the lawyer can act responsibly.

The lawyer should not promise that every urgent request can be accepted. Conflict clearance, authority, availability, forum, evidence and the actual deadline all matter. Ask what the firm will do if it cannot meet the date, and whether the initial stage is only triage rather than a commitment to conduct later proceedings.

Set approval and change-control points

Agree who can authorise additional work and in what form. A useful mandate states an approval threshold, names the authorised instructor and prevents a broad group chat or informal request from silently expanding the file.

Ask the firm to explain scope changes before doing the extra work, except where the mandate expressly permits a necessary emergency step. A change note should identify the new fact, the additional output, the revised cost basis, the timing effect and any new third-party expense.

If the dispute has several possible routes, ask for decision gates. The first gate might be after authority and document review; the next after the opponent responds; another before counsel, expert work, Companies Tribunal referral or court proceedings. An Act-based company dispute may qualify for the Tribunal's amended alternative-dispute-resolution process, but the Tribunal is not a general forum for every private shareholder-agreement dispute. Forum classification should therefore precede a budget for that route.

Agree how reporting and accounts will work

Ask how often you will receive a work summary, fee-to-date figure, disbursement update and next-stage forecast. Decide who receives reports if the client is a company and whether individual stakeholders may be copied. Ask how the firm records decisions when board or shareholder authority is disputed.

For accounts, ask for enough narrative to connect the work to the agreed stage. Raise an unclear entry while the work is recent. The Legal Practice Council publishes a fee-assessment framework for certain disputes about professional fees and reasonable disbursements, but its scope and prerequisites matter; it is not a substitute for clarifying the mandate early.

Ask what happens if the mandate ends

Before signing, ask when either side may terminate, what notice applies, what work must stop, how urgent deadlines will be handed over, how the final account and deposit are reconciled, and how the client file can be transferred lawfully and securely. Ask which material belongs to the client, which internal work product may be treated differently, and whether outstanding fees can affect release of anything.

Termination does not erase a court date, meeting date or statutory step. The mandate should identify what the firm will report at closure and who remains responsible for the next deadline.

A focused question list

Use these questions in the engagement discussion:

1. Who exactly is the client, and who may give binding instructions?
2. Which conflicts have been checked, and what would happen if interests diverge?
3. What is the first stage and its tangible output?
4. What work and legal routes are excluded?
5. Which assumptions support the estimate or cap?
6. Who will work on the matter and at what rates?
7. Which disbursements, counsel or experts may be needed?
8. Are the figures inclusive of VAT?
9. What deposit, replenishment and account cycle applies?
10. What requires new written approval?
11. How will urgent work and unavailable capacity be handled?
12. What reports will identify work done, cost to date and the next decision?
13. How can the mandate end, and how will the file and deadlines be handed over?

The commercial-law service page explains the wider practice area. If you are still deciding which firm to approach, use the questions-before-booking guide first. The shareholders' agreement glossary provides a useful orientation to one governing instrument, but the agreement, MOI and Companies Act must be read together for the actual dispute.

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