Lawyer fees and the engagement letter (hoja de encargo)

Terms used

• Hoja de encargo — The hoja de encargo is the written engagement letter setting out the lawyer's work, fees and extras.
• Iguala — An iguala is a monthly fee paid to a lawyer for ongoing advice.
• IVA — IVA is Spain's value-added tax, added to most fees and goods.
• Provisión de fondos — The provisión de fondos is an advance payment to the lawyer on account of fees and expenses.
• Procurador — A procurador is the court representative who files documents for you in court, paid separately from the lawyer.
• Costas — Costas are the legal costs of a court case, usually paid by the losing side.
• NIE — The NIE is the identification number Spain gives to foreigners.

Key rules

• Fees: Lawyer fees are freely negotiated, so agree every figure in writing before work starts.
• IVA: Lawyer fees carry IVA at 21%, shown on the invoice.
• Result bonus: A fee that depends only on winning is not allowed, but a reasonable fixed fee plus a bonus tied to the result is, if agreed in writing.
• Procurador and costas: The procurador's fees and any costs awarded against you are separate from the lawyer's fee.

Fees are agreed freely, so get them in writing

No official tariff fixes what a lawyer charges. You and the lawyer agree the fee, and it varies by city and by how complex the matter is. Big cities cost more than smaller towns. The place to record the deal is the hoja de encargo, a written engagement letter. Ask for it before any work starts.

Common fee models

• Fixed fee. Common for defined jobs such as buying a property, a will, residency paperwork or forming a company. NIE-related work is normally a low fixed fee.
• Hourly rate. More common with larger firms and business work.
• Monthly retainer (iguala). A monthly fee for ongoing advice. Mostly used by businesses.
• Percentage. Sometimes used in claims, or for property purchases as a small percentage of the price with a minimum. It is often combined with a fixed part.

An first consultation is usually a modest flat fee. Some lawyers waive it or credit it if you hire them. Simple court cases are usually charged as a fixed fee per stage, and the fee rises with the amount in dispute. Treat all these as typical practice, and compare two or three quotes.

Result-based fees

A fee that depends only on winning is not allowed. A reasonable fixed fee plus a bonus tied to the result is allowed, if it is agreed in writing. If a lawyer offers "no win, no fee", ask for a fixed part as well.

Colegio scales do not set your price

Many local bar associations (Colegios de Abogados) publish guideline rates. They are not binding on you or the lawyer. Courts mainly use them to work out the winner's legal costs, and they are also used in fee disputes. Each Colegio sets its own, so check the one for your area if you want a reference point.

Extras on top of the fee

• IVA. Lawyer fees carry IVA at 21%, shown on the invoice. The Canary Islands, Ceuta and Melilla use different indirect taxes. Ask whether the quote includes IVA or adds it.
• Provisión de fondos. An advance payment on account of fees and expenses. Ask how much it is, what it covers and how it is deducted from the final bill.
• Procurador. In most court cases above minor ones you also need a procurador, who represents you before the court. Their fees follow a regulated scale based on the amount in dispute and are separate from the lawyer's. Ask for an estimate.
• Costas. In most first-instance civil cases the loser pays the winner's costs, unless there are serious doubts about the facts or the law. Recoverable lawyer fees are capped at one third of the amount in dispute per party, with exceptions for bad faith or exceptional complexity. You pay your own lawyer and procurador first, then recover what you can. If you lose, you may also owe the other side's costs.

What the hoja de encargo should say

It should name the parties and describe the work, including what is not covered. It should give the fee or how it is calculated, IVA, expenses, procurador, payment terms and the provisión. It should also cover the effect of costas, your right to end the arrangement, and how to complain or ask for a fee review. Use the checklist below when you read it, and use the decision tool to choose a fee model.

If you are a private person, you do not withhold tax from the invoice. Withholding applies only when the client is a business or self-employed professional.

Choosing between options

Which fee model should you agree with your lawyer?

• Fixed fee: Best for a defined job such as buying a property, a will, residency paperwork or a NIE. You know the total cost upfront.

• Hourly rate: Fits open-ended or business work where the scope is hard to predict. Ask for an estimate of the hours and a cap.

• Monthly retainer (iguala): Fits ongoing advice, for example if you run a business in Spain and need regular help.

• Fixed fee plus a result bonus: Fits claims where you want the lawyer to share the upside. A percentage of the amount recovered is added to a reasonable fixed fee, agreed in writing.

Choose a fixed fee when the job is clear, an hourly rate or retainer when the work is open-ended, and a bonus only on top of a reasonable fixed part. Whatever you pick, put it in the engagement letter.

Fee levels vary by city and case, so ask for a written quote and compare it with your Colegio's guideline criteria.

What to get in writing before a lawyer starts work

Terms to get in writing before work starts

• Check that the letter describes exactly what the lawyer will do, and what is not included.

• Confirm the fee model in writing: a fixed fee, an hourly rate or a mix of the two.

• Ask for the total fee in euros and what each stage costs.

• Check that the letter says whether the fee includes VAT at 21% or adds it on top.

• Ask how much advance payment (provisión de fondos) you must pay and what it covers.

• Ask who pays the procurador, the court representative needed in some cases, and the estimated cost.

• Ask what happens to the costs if you lose a case and the other side's costs are awarded against you.

• If the lawyer wants a bonus tied to the result, make sure it is agreed in writing on top of a fixed fee.

• Agree which language the letter, your documents and your calls will be in, and ask for an English copy if you need one.

• Agree how and how often the lawyer will update you, and who your contact person is.

• Ask what extra costs may come up, such as notary, translations or travel, and how they will be billed.

• Sign the letter and keep a copy before you pay anything.

Frequently asked questions

Can a Spanish lawyer charge me a percentage of what I recover?

Yes, a percentage of the amount claimed or recovered is allowed, but usually as a variable bonus on top of a fixed part. The fixed part must be reasonable and cover the work, and the whole deal must be in writing. Ask for the percentage and the fixed part to be written separately.

Are the Colegio de Abogados fee scales binding on my lawyer?

No, the scales your Colegio publishes are only guidelines and bind neither you nor the lawyer. Courts use them as a reference to calculate costs, and you can use them to challenge a fee you think is too high. Each Colegio sets its own, so check your local one.

Do I have to withhold tax from my lawyer's invoice?

No, a private individual does not withhold anything from a lawyer's invoice. Withholding of 15% (7% for a lawyer in the first three years) applies only when the client is a business or a self-employed professional.

How much can I recover from the other side if I win?

The lawyer fees you can recover are capped at one third of the amount in dispute, except in cases of bad faith or exceptional complexity. You pay your own lawyer and procurador first, then recover through a court assessment of costs. The losing side usually pays, unless the case raised serious doubts.