Cost estimates in this article are taken from Mondaq.com.
The price of a binding financial agreement (BFA) can range from $2000 to $20,000 or even more, depending on its complexity. There are a lot of different factors that affect the cost. Different law firms may have their own approach to how they set their fees. Here’s our guide to understanding how BFA legal fees are typically handled and how to find the right assistance.
Key takeaways
Different factors go into determining the final cost of a BFA.
Proper legal advice is essential to meet the legal requirements of a BFA.
Trying to reduce your expenses can lead to future legal issues.
There are factors to consider to find the right advice at a reasonable price.
What drives the cost of binding financial agreement
The main influences on the cost of a BFA are the complexity of the assets involved and the provisions you want to include. Here’s what you might expect based on the nature of your particular case.
The assets and liabilities you are dividing
While every asset pool is unique to the property involved and the interests each party has. However, many marital pools contain some common assets, such as:
A marital home.
Mortgage.
Personal debts.
Bank accounts.
More complex pools can have assets that may require the specialised knowledge of professional valuers, accountants, and financial advisers. These can include:
Business interests.
Multiple investment properties.
Stock and cryptocurrency portfolios.
Family trusts.
Overseas assets.
Artwork and collectibles.
Financial resources such as inheritances.
Negotiating the provisions
Sometimes parties have already agreed to a property division. This can save on costs significantly and allow the agreement to be drafted and finalised quickly. However, if your lawyer needs to engage in lengthy negotiations with your partner’s lawyer, the process can get expensive.
BFAs can be a popular way for a party to organise a property settlement that contains precise provisions that may not be possible with a consent order. This can be important when managing issues like a family business and you’re concerned about maintaining ownership.
Why you both need independent legal advice
The Family Law Act 1975 requires both parties to receive independent legal advice to make the BFA a legally binding contract. Since BFAs don’t require court approval when they’re formed, parties need to demonstrate that they’ve accessed professional advice. Using a legal review service helps to support a compliant agreement and avoid future court proceedings.
What happens if you try to cut costs?
Some parties may be tempted to try to find ways to make the process more cost-effective. But this can come at the cost of the agreement’s quality or enforceability. Here are some pitfalls that some clients can fall into:
You shouldn’t use the same lawyer as the other party. It’s important to get advice independently of each other.
One of the major benefits of a BFA is that it may be drafted in a way that is tailored to your specific circumstances. But some law firms may opt for basic templates that don’t accurately reflect the needs of the client.
Minimising the importance of negotiation can lead to agreements that don’t adequately meet the needs of the parties. This is a critical process to help the parties argue for their interests. If you don’t invest enough time at this point, you may face costly legal battles later on.
What happens if it goes wrong?
BFAs and consent orders have criteria you have to meet for them to be enforceable. Problems can arise which may have expensive consequences, such as the following.
The BFA isn't binding
In order for you agreement to hold up in court, you need to satisfy some specific criteria, including:
Getting independent legal advice.
Both parties signing the draft agreement.
Each party receiving a legal advice certificate.
If you don’t satisfy one of those steps, the agreement may not hold up in court.
Facing a challenge in the future
BFAs tend to be easier to challenge than a court order. The Court may set aside an existing agreement for various reasons, such as:
The agreement was made under duress or through undue influence.
One party acts with unconscionable conduct by knowingly exploiting a vulnerability of the party.
There was a material change in circumstances relating to the care, welfare and development of a child, and the agreement would cause hardship to the child or to a party who has caring responsibility for the child.
When an agreement gets overturned, parties may incur further expenses to get the agreement redrafted or pursue a different method of asset division.
Inadequate financial disclosure
It’s crucial that both parties provide proper disclosure to fully demonstrate their financial position. There are many reasons why parties can fail to disclose their finances, such as:
Providing old or inaccurate valuations.
Hiding assets through property transfers to third parties.
Shifting assets overseas to avoid disclosure.
If you don’t have full financial disclosure, the BFA won’t accurately reflect the needs and entitlements of the parties.
Substandard legal advice
To make an informed decision, it’s crucial to get effective advice from separate lawyers. If your lawyer isn’t equipped to speak to you about the potential consequences of a proposed BFA, you can end up with an agreement that doesn’t benefit you. This can have repurcussions beyond legal fees for your future.
Getting an accurate quote
Married couples and parties in a de facto relationship can both create a BFA. But it’s important to get separate legal representation before making financial arrangements. There are various things to keep in mind when considering what assistance is right for you. Here are some factors to consider.
Fee structure
It’s important to be clear about how a law firm prices their legal services. Many offer a fixed-fee service. However, there can be caveats to how the fees are offered.
Some firms may predicate a fixed fee on certain conditions being met. For example, they could require you to have completed your financial disclosure. Asking the lawyer to help with disclosure can take time and lead to additional costs.
They may also want an agreement to already be in place. This eliminates the need for them to spend time in negotiations. If negotiation is required, these sessions may be priced by the hour. Depending on their experience, a family lawyer typically charges $300-$600 per hour.
Fixed-fee tiers
Fixed fees may also be organised into tiers based on what your asset pool includes. This allows lawyers to offer fixed rates while accounting for different complexity levels. Here’s an example of how tiers may be set out:
Simple BFA ($2,000-$5,000). Small marital pool with no complex asset structures.
Moderate BFA ($5,000-$10,000). Investment properties and superannuation splitting included.
Complex BFAs ($10,000 – $20,000+). Multiple complex assets like businesses, superannuation interests, properties, family trusts, and exotic assets requiring specialised valuations.
What to look for in a quote
A quote shouldn’t just be a single figure. The firm should provide critical details so you know exactly what you’re paying and the services you will receive. Here’s some of the information to expect from a quote:
The fixed fees the firm offers.
Any conditions the fixed fee is based on.
Hourly rates and when they will be applied.
An estimated timeline for the case.
How communications, such as emails and phone calls, will be priced.
How unforeseen circumstances will be handled.
It’s good to get quotes from two or three different firms so you have an idea of the average cost you can expect for your case. Keep in mind that the lowest quote isn’t necessarily the one you should go with. Think about the services you need and how you get along with them interpersonally.
Are you looking for a qualified BFA service?
Bateys Law Firm has been working with clients to arrange for their financial future for over a decade. Contact us today to find out how our services can help you organise a private agreement.
Disclaimer: This article provides general information only. It is not legal advice. Family law outcomes depend on your circumstances. You should speak with a family lawyer before making decisions about your matter.
