The manufacturer who negotiated a cap

A manufacturer with about 120 staff had claimed for three years with the same adviser on a 20% fee of the benefit received. The claims had been around $250,000 and the fee $50,000, and the relationship was good: the engineers were interviewed every year, the full claim was reviewed before filing, and the one tax authority query had been handled under the review support clause at no extra cost. In year four a new production line meant the claim would be about $500,000. Illustrative figures.

The original letter: 20% of the amount received, no cap, review support included, three months' notice, records returned on request. A fair letter for a $250,000 claim. Illustrative figures.

Three months before the renewal date, the finance director wrote to the adviser. The letter said that the business valued the relationship and wanted to continue; that the claim would roughly double while the work would not, because the projects and the people were the same; and that it proposed a cap of $60,000 per year with the percentage unchanged below it. It offered two things in return: a three year commitment, with the notice period kept at three months, and payment of the fee within 30 days of the benefit arriving rather than 60. The adviser replied within a week, accepted the cap, and asked that it be reviewed if the claim ever exceeded $750,000. Both sides signed an addendum. Illustrative figures.

In year four the uncapped fee would have been $100,000; the capped fee was $60,000. The business kept an adviser it trusted, the adviser kept a client for three more years with a fee that still rose with the claim up to the cap, and the negotiation took two emails and a call. Illustrative figures.

Nothing was missing, which is the point. What made it work was asking before the renewal date rather than after, in writing, with a reason and an offer; the how to negotiate fees guide and the script for asking for a fee cap set out the same approach. The capped fees page shows how the model behaves as a claim grows, and the uncapped success fees red flag page is clear that an uncapped percentage is not a problem for a claim that stays small; it became one here only when the claim doubled, and the business dealt with it at the right moment.