Client Carl Is Reviewing the Representation Agreement Presented to Him

question 6

Multiple Choice

Client Carl is reviewing the representation agreement presented to him by his new lawyer, Lulu. Lulu's agreement provides that her hourly rate is $240 and her paralegal's rate is $100. The contract further provides that "these rates may be adjusted from time to time without notice to the client." This clause is

• A) illegal because it is an important part of the contract that appears to be in the sole control of the lawyer.
• B) legal, normal, and perfectly fine because it is a clause that many law firms use.
• C) probably fine so long as Lulu does not abuse it.
• D) legal but bad business practice because it may frighten some clients away.

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Definitions:

Total Costs

The sum of all expenses incurred by a business in producing goods or services, including fixed and variable costs.

Prime Cost

Direct materials cost plus direct labor cost.

Cost Of Goods Manufactured

The total expense incurred to produce goods over a specific period, including labor, materials, and overhead.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the financial health of a company's core activities.