What does a small business attorney cost in South Africa?

A small business attorney in South Africa charges in two ways: by the hour for advice and disputes, and by fixed fee for documents. Expect an hourly rate somewhere between R1 200 and R3 500 depending on seniority and city, a fixed fee of a few thousand rand to review a contract, and a fixed fee in the tens of thousands for a bespoke shareholders' agreement or a full POPIA compliance package. Debt collection is priced step by step, and disbursements such as sheriff's fees and court fees come on top.

All the figures on this page are typical ranges excluding VAT. No attorney is bound by them. A commercial firm in Sandton or the Cape Town city centre will sit at or above the top of every range. A sole practitioner in a smaller town will often sit near the bottom for the same work.

What each fee actually buys

The consultation. An hour, sometimes free for a first meeting. You describe the business, the attorney tells you what you have, what you are missing and what it will cost to fix. A good consultation ends with a written list of documents and fixed fee quotes for each.

The hourly rate. This is what you pay for advice, correspondence, negotiation and anything without a fixed scope. Rates vary with seniority. A candidate attorney or junior is at the low end, a director with twenty years of commercial experience at the top. Ask who will do the work, because a partner's rate for a junior's task is a common complaint.

Reviewing a contract. Reading a contract someone else drafted, flagging the risks, and either marking it up or writing you a short memo. Price depends on length, so ask for a fixed fee based on page count.

Drafting a supplier or service agreement. A bespoke document built around your business: parties, scope, price, delivery, warranties, liability, termination and disputes, with Consumer Protection Act 68 of 2008 compliance if you sell to consumers. The fee usually includes one round of revisions. Read what should be in a basic supplier or service contract first, so that you arrive with a term sheet.

Drafting a shareholders' agreement. More complex, more negotiated, and priced accordingly. The fee usually covers a first draft, a meeting with the shareholders and revisions, and it should include checking the Memorandum of Incorporation for conflicts, because where the two clash the Memorandum wins. Amending the Memorandum with the Companies and Intellectual Property Commission is extra. See do I need a shareholders' agreement.

A POPIA compliance review. The Protection of Personal Information Act 4 of 2013 requires you to process personal information lawfully, secure it, and be able to show how. A compliance package usually includes a review of what information you hold and why, a privacy policy, a data breach procedure, an operator agreement for suppliers who handle your data, consent wording for marketing, help registering your Information Officer with the Information Regulator, and a PAIA manual, which is the document the Promotion of Access to Information Act 2 of 2000 requires you to publish. Read does POPIA apply to my small business.

A letter of demand. A fixed fee for a formal letter on the firm's letterhead stating the debt, the deadline and the consequence. Cheap and often effective.

An undefended debt collection to judgment. Summons, service by the sheriff, a default judgment application, and a warrant of execution. Priced as a bundle of fixed steps. Sheriff's fees and court fees are disbursements on top, and they change. If the debtor defends, the fixed fee ends and hourly billing begins.

Mediation of a partner dispute. Two costs: the mediator's fee, which is usually a day rate split between the parties, and your own attorney's fee for preparing and attending. Mediation is expensive for a day but cheap compared to a High Court oppression application, which starts in six figures.

Fixed fee versus hourly

Fixed fee means you agree a price for a defined piece of work before it starts. It is the right model for documents: contracts, agreements, policies, letters of demand. You know the cost, the attorney carries the risk of it taking longer, and the scope is written down. The trap is scope creep. Ask what the fixed fee includes and what triggers extra billing.

Hourly is the right model for work whose scope cannot be predicted: negotiation with the other side, a defended claim, advice as a dispute develops. The trap is the meter running when you are not watching. Set a cap and ask for itemised invoices.

A worked budget: setting up properly

The figures are illustrative and sit around the middle of the ranges above.

Ayanda and Sizwe register a design agency company with two shareholders, one employee, twelve clients on retainer, and a mailing list.

The shareholders' agreement is the biggest line and the one most people skip. It is also the one whose absence costs the most later, as the partner dispute guide shows.

Done on the cheap, with a CIPC registration and a downloaded template, the same set-up costs a few hundred rand in filing fees. That is right for a business testing an idea and wrong for one with clients, staff and two owners.

A worked budget: collecting a bad debt

Same illustrative basis. A plumbing company is owed R48 000 by a property developer that has stopped answering the phone.

Most of this is recoverable from the debtor in principle, as costs on the judgment, but only if the debtor pays. That is why the first question is whether the developer has anything to attach. If the answer is no, the R16 500 is good money after bad. If the debtor defends the claim, none of the fixed fees above apply and a defended trial can cost more than the debt.

Note that a company cannot use the Small Claims Court. If the plumber traded as a sole proprietor and the debt was within the limit, the same claim would cost almost nothing in fees. See the Small Claims Court calculator and how to recover a debt from a customer who will not pay.

What you can do yourself

• Register the company with the CIPC. The online process is designed for the public. See how to register a company with CIPC.
• Register your Information Officer with the Information Regulator on its portal. See how to register an Information Officer.
• Write your first set of terms and conditions from a checklist, and pay only for a review.
• Send your own reminders and first demand. Pay for the attorney's letter only when yours is ignored.
• Use the Small Claims Court if you are a natural person and the debt is within the limit.
• Register for UIF, the Compensation Fund and PAYE yourself. The portals are free and the Department of Employment and Labour helps. See your obligations when you hire your first employee.
• Check dates yourself with the prescription checker and the debt interest and in duplum calculator before you ask an attorney whether a debt is worth chasing.

Questions to ask before you instruct anyone

• What is your hourly rate, and the rate of each person who will work on my file?
• Is this a fixed fee, and exactly what does it include?
• How many rounds of revisions are included?
• Will you check the Memorandum of Incorporation for conflicts, and is amending it extra?
• What disbursements should I expect: CIPC fees, sheriff's fees, court fees, mediator's fees?
• What happens to the fee if the debtor defends?
• Will you tell me before the bill passes an agreed amount?

Get the answers in a written mandate before work starts.

Common cost mistakes

• Paying for a bespoke agreement when a template plus review would do. For a simple two person company, a review of a decent local template is often enough.
• Not setting a cap on hourly work. Disputes drift, and so does the bill.
• Suing a debtor with no assets. Check first. A judgment is not money.
• Buying a POPIA "certificate". There is no such thing. POPIA compliance is a process, not a badge, and anyone selling a certificate is selling paper.
• Skipping the shareholders' agreement to save R15 000 and paying R150 000 in a dispute three years later.
• Letting a debt pass three years. Once prescribed, no fee recovers it.

The free route

You are not shut out if there is no budget. The Companies and Intellectual Property Commission registers companies and publishes the standard Memorandum of Incorporation online. The Information Regulator's website has the registration portal, guidance notes and template forms at no charge. The Small Enterprise Development Agency offers free business advice, mentoring and sometimes subsidised legal support. The Companies Tribunal provides alternative dispute resolution for certain company disputes at little or no cost. The CCMA on 0861 16 16 16 and the Department of Employment and Labour answer employment questions for free. The Small Claims Court is open to a natural person, without attorneys, for debts within its limit. University law clinics take on small business matters, subject to means tests. Legal Aid South Africa on 0800 110 110 applies a means test and rarely acts for a business, but may assist you as an individual.

LawMatch is not a law firm and does not give legal advice. These figures are a guide to help you have an informed conversation with an attorney about fees.