Source: International Tax Review

Flexibility and transparency on fees ranked favourably against international counterparts, accord

Tax advisers in South America are among the most transparent in the world when it comes to fees and billing, according to exclusive data from ITR+'s latest What Corporates Want report.

External counsel from the Caribbean, Central America and Eastern Europe were also highly praised by respondents on the same metric.

In-house counsel were asked to rate several factors for their impact on client advocacy on a scale from o to 1, with o being the least important and 1 being the most important.

Clients were also asked, using the same scale, to score their satisfaction with advisers across the factors.

A total of 1,856 in-house tax counsel responded to the surveys.

You can find all our previous reports, which covered topics such as client management and corporate social responsibility, on our What Corporates Want hub page.

This report focuses on fees and billing, and the specific sub-factor of cost transparency. In other words, the degree to which external advisers are upfront and flexible about their fees charged.

Satisfaction scores were highest in Central America (8.2), closely followed by Eastern Europe (8.1), the Caribbean (8.0), Southeast Europe (7.9) and South America (7.8).

Client advocacy ratings were also largely similar, ranging from 6.7 in the Caribbean to 7.2 in Southeast Europe. This suggests that while clients are happy with their advisers' cost transparency, it is not a crucial factor.

Adding weight to this theory, Daniel Cordeiro, group tax manager at Brazilian aerospace company Embraer, says clients "expect" their external counsel to be transparent on fees.

This is for a variety of reasons, including internal pressures from corporate compliance teams to ensure that fees are not being misused or misdirected, as well as the usual budget constraints.

"Understanding costs upfront and in a transparent manner helps managers better budget and forecast for their needs," Embraer notes.

He reports that advisers in Brazil and across South America are "really transparent" about the costs they expect any given project to incur.

He also says advisers tend to be flexible in terms of fee negotiations and payment format. As examples, he cites arrangements where 50% of fees are paid upfront with the remainder paid upon completion of the work, or structures whereby external counsel are paid in equal instalments throughout the year.

"They are also very transparent in terms of out-of-pocket expenses incurred, and the billing of these is normally quite detailed and backed by proof," Embraer says.

Allan Fallet, a tax partner at law firm Duarte Garcia, Serra Netto e Terra in São Paulo, says that the complexity of the South American regulatory environment makes cost predictability a key factor in corporate strategic planning.

"Economic volatility and persistent inflation in several South American countries have further reinforced the role of tax advisers as trusted business advisers, extending beyond traditional tax consultancy," he says.

"In this context, fee transparency not only strengthens client trust but also fosters a more structured and performance-driven corporate environment."

Bottom of the league
There was no surveyed region that scored lower on client satisfaction for cost transparency than the Nordics, at just 6.2 out of 10.

Also near the bottom were Southeast Asia (6.24) and Southern Africa (6.4).

Despite the low satisfaction rating in their region, respondents in the Nordics rated cost transparency at just 6 out of 10 in terms of its impact on client advocacy, indicating that in-house counsel don't feel they are missing out on much.

This sentiment is confirmed by Sanna Jäalinoja, head of transfer pricing at Finnish steel manufacturer Outukumpu.

She believes it could be explained by the fact that Nordic in-house counsel often prefer fixed fees when dealing with external advisers.

"In such cases, the cost structure is not fully transparent and could be for better or worse at the end, but at least you know the cost and are spared from unpleasant surprises," she says.

And even outside of the fixed fees, Jaalinoja is quite satisfied with the prices on offer.

She concludes: "We get a good listing of hourly rates should there be some services outside of the fixed fee's scope."

Methodology

This is now the second instalment of our What Corporates Want series of reports.

Through our primary research with in-house counsel representatives, we asked them to rate a range of attributes and their importance in decision-making when selecting outside counsel.

We have aggregated the responses from our World Tax surveys from 2022 to 2024 and analysed the results in this report series. The data highlights the extent to which in-house counsel's views on these attributes differ between industries, regions, revenue sizes and practice areas.