August 10, 2012

Proper recording and billing of disbursements required by rules

August 10, 2012

Disbursements paid by lawyers on behalf of clients can represent a significant expense of running a law practice. If you adopt a practice of properly recording disbursements, your accounts receivable records will be organized and up-to-date. This will help you comply with the Act and rules and reduce the prospect that you will sustain monetary loss. It will also make it easier to bill your clients.

Lawyers must properly record and bill disbursements (section 69(4) of the Legal Profession Act). When you sign your name to an account, you represent that the fees and disbursements are accurate and verifiable.

For billing purposes, disbursements must be:

• reasonably incurred in the circumstances of the client matter or be authorized by the client under s. 71(2)(b) of the Act,
• billed at their actual, rather than estimated costs, and
• properly described in detail in a statement of account.

Lawyers also have a professional duty to meet their financial obligations (Professional Conduct Handbook, Chapter 2, Rule 2). This includes those that are incurred or assumed in the course of practice, apart from any legal liability to do so. You are responsible to pay disbursements if clients do not, and your recourse is to collect the amounts from the clients.

Further, lawyers must record each disbursement properly to comply with the trust accounting rules (Law Society Rules 3-59 to 3-63).

If you have questions about billing in relation to the trust accounting rules, contact the Trust Regulation Department at 604.697.5810 or trustaccounting@lsbc.org. For general inquiries about billing or other topics, contact a Practice Advisor.