Feature Article: Contingency Billing

March 2018    Tags: , , ,

There are several ways you might handle billing for a contingency case, but in the end you still need to adjust the amount owed based on the outcome. So what options does Tabs3 provide?

Contingency billing occurs when a firm performs work for a client and gets paid contingent upon a settlement. There are many variations for this type of arrangement, such as whether or not costs will be billed, percentage amounts of the settlement, etc. When billing contingency clients, you typically bill them after the matter is settled; however, you may also want to bill them during the course of the matter. When billing during the course of the matter, you may want to bill only expenses or advances. You may also want the client to see the services rendered for a particular time frame without actually billing the fees. Then, once the matter is settled, you can write the fees/costs up or down and send the client a final bill.

For example, let’s say that you have a contingency client and you want to bill them monthly for all costs incurred, but not include fees on the statement. You must first create a statement template that will include the desired information on the statement, and then assign it to the contingency client.

To create a statement template for costs only

  1. From the Statements menu, point to Statement Setup and select Statement Templates.
  2. In the Template ID field, enter a name for your template.
  3. On the Fee Format tab, select a Fee Format of No Fees.
  4. On the Cost/Payment Format tab, select the desired Expense Format and Advance Format.
  5. Select any other settings as desired.
  6. Press Ctrl+S.

To assign a statement template to a client

  1. From the File menu, point to Open and select Client.
  2. Select the desired Client ID.
  3. On the Statement Options tab, select the desired Draft Template and Final Template (e.g., the template we created in the previous set of steps).
  4. Press Ctrl+S.

Using our example, let’s say that the matter has been resolved with a particularly good outcome. You determine that you need to write-up the client’s fees by $5,000 in order to meet the agreed upon percentage of the settlement that your firm will receive.

To write-up fees by an amount

  1. From the Statements menu, point to Statement Preparation and select Write-Up/Write-Down Fees & Costs.
  2. Select the desired Client ID.
  3. In the Transaction Type section, select Fees.
  4. Click the Calculate Client Total button.
  5. In the Amount Adjustment Type section
    1. Select Amount.
    2. In the New Total field, enter the total amount in fees you want to bill the client.
  6. Click OK.

You can now change the matter’s Final Template to a statement template that has a Fee Format of Standard and generate a final statement for your client. (As an alternative, you can select the statement template via Generate Statements.)

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