This document helps Lawyers manage their disbursements properly

1. Disbursements
Demystified
Disbursement is the act of paying out or
disbursing money, such as money paid out to
run a business, cash expenditures, dividend
payments, and/or the amounts that a lawyer
might have to pay out on a person's behalf in
connection with a transaction.
Simply put, disbursements are expenses
incurred for your client by your law office.
For accounting purposes, you need to keep
record of when you spend, invoice and recover
the expenses for proper book-balancing.
Law society audits require proper disbursement
practices for effective book maintenance.
Record when the
disbursement was paid, how
it was paid, and the reason
for the expense.
Record the client’s name
and the relevant matter
associated with the
expense.
DEFINITION. TYPES OF DISBURSEMENTS.
B I L L A B L E U N I T R AT E
M I L E AG E T R AV E L T I M E
R E C OV E R Y O F E X P E N S E S O N AC T UA L S
R E C OV E R Y O F E X P E N S E S W/ P R O F I T M A R G I N S
O U T S O U R C E D C O N S U LTA N CY W/ P R O F I T M A R G I N S
O U T S O U R C E D C O N S U LTA N CY O N AC T UA L S
MANAGING YOUR DISBURSEMENTS IF PAID FROM GENERAL ACCOUNT
IF PAID WITH A BUSINESS CREDIT CARD OR THE OWNER’S POCKET
WHY NOT PAY STRAIGHT FROM TRUST?
RECOVERING REIMBURSEMENTS
Record the invoice & expense recovery
Recover or get paid for the expense
Pre-bill and then invoice
Decide what portion to invoice and
when to send it to the client
Record the respective
matter and the client.
Record if the disbursement
was paid from bank, credit
card, out of your personal
pocket or by someone else.
Record the method of payment.Record the amount including
the appropriate taxes.
Record the expense
information with the
date.
Court fees and
other fees are
easier to process
if paid from trust.
When expenses
are paid from trust,
you don’t have to
recover them.
It is not your
money, so just
show it as a “Trust”
expense.
Before raising invoices, record
the expense information with a
date and amount. Ensure proper
taxes are affixed in the event of
a markup or markdown.
* Ensure all of your journals and ledgers are updated as per Law Society guidelines.* Ensure all of your journals and ledgers are updated as per Law Society guidelines.* Ensure all of your journals and ledgers are updated as per Law Society guidelines.
If paid by you or by a 3rd party,
move the respective money to
yourself or pay the other party
for the expense.
Next raise your invoice and
get paid for it via Trust
tansfer or a client payment
to general.
During audits, both Trust and General
disbursement ledgers are reviewed.
Every transaction disbursed directly needs to be
recorded in Disbursement ledgers.
Depending on the transaction, the expense is
maintained in either the trust or general ledger.
Each ledger also has a running balance by date.
The samples (pictured on the right) are from the
Law Society and demonstrate a Trust and
General ledger.
LEDGERS REPORTING DISBURSEMENTS
(TRUST & GENERAL)
The Fee Book records all fees and
disbursements raised in an invoice that
need to be recovered from the clients.
The Fee Book also records invoice number,
which client was billed and associated taxes
that were collected for fees &
disbursements.
The sample (pictured on the right)
demonstrates a Fee Book from the Law
Society.
DISBURSEMENTS IN FEE BOOK
During audits, disbursement journals are
reviewed.
Journals are records of a single type of activity,
Disbursement Journals are maintained for both
trust & general.
Journals also record the method of payment,
purpose, etc.
The following samples from the Law Society
demonstrates Trust & General Disbursement
Journals.
DISBURSEMENT JOURNALS
(TRUST & GENERAL)
RECORDS EVENTS AS THEY HAPPEN.
COLLECTS FINANCIAL AND BANK RECORDS,
MAKING RECONCILIATION SIMPLE.
NO MANUAL WORK, THE SOFTWARE
DOES EVERYTHING FOR YOU.
PROVIDES COMPLIANCE, ACCOUNTABILITY,
ANALYTICS, EASE OF USE.
Benefits of Legal
Accounting
Software
GETTING PAID FOR THE INCURRED CLIENT
EXPENSES.
IF MANAGED PROPERLY, DISBURSEMENTS CAN
ADD TO YOUR PROFIT MARGIN.
THERE IS A RISK OF PAYING FOR
DISBURSEMENTS VIA GENERAL ACCOUNTS.
PROVIDES COMPLIANCE, ACCOUNTABILITY,
ANALYTICS, AND EASE OF USE.
Benefits of
Disbursement
Management
TRY NOW
MANAGE DISBURSEMENTS WITH EASE.
TRY ULAWPRACTICE FOR FREE, AND LET US DO YOUR
OFFICE’S LEGAL ACCOUNTING FOR YOU.