Pursuant to By-law 9, s.9.:
9. (1) A licensee may withdraw from a trust account only the following money:
1. Money properly required for payment to a client or to a person on behalf of a client.
2. Money required to reimburse the licensee for money properly expended on behalf of a client or for expenses properly incurred on behalf of a client.
3. Money properly required for or toward payment of fees for services performed by the licensee for which a billing has been delivered.
4. Money that is directly transferred into another trust account and held on behalf of a client.
5. Money that under this Part should not have been paid into a trust account but was through inadvertence paid into a trust account.
This week we are discussing number 2 on the above list. PCLaw can be set to “Allow Trust transfers for WIP” in Options - System Settings – Banking tab.
For example, when you pay the Minister of Finance for a court cost with a general cheque, you are permitted to transfer this amount from trust to reimburse the general account.
When you review the client ledger, you should find the disbursement and a general retainer for the same amount.
Billing – be sure retainers are selected on “Other” tab, so that the general retainer receipt and the disbursement cancel each other out.
Be aware that expense recovery items are sometimes not true disbursements. For example, photocopies may cost you 2 cents but you bill the client 10 cents. This mark-up represents income, and should not be paid from trust until billed.
As always, I invite your comments and suggestions for future post topics. Next Week – PCLaw and Can. Deposit Insurance Corporation.
Clyde
We face challenges of a slightly different kind from some of our clients. When asking for money on account at the start of a case or matter that would be depoisted into Trust, clients insist on a full bill - otherwise they dont pay.
ReplyDeleteIn the past we were faced with no option but to bill our full fees at the commencement of the matter and also bill the estinmated Disbsursements as ANTICIPATED Disbursemnts.
Having larger Ngeative (ANT) Unbilled Disbursements on a matter make us very uncomofortable. This means we have billed for charges/fees that have not yet been incurred/crystalised.
As a company policy we have now added a Retainer Request line on bills even after billing Fees upfront....but some clients still insist on a proper invoice.
To me a Negative Unbilled Disbs is the same as having a negatibe Trust Balance.
How do other firms address these challenges?
In Ontario, what you are suggesting (billing before work is completed) is not allowed. Ontario lawyers can only provide a receipt for funds received in trust. If the client refuses, they must be turned down as a client.
DeleteBut, if they go to any other lawyer in Ontario, they will face the same law society rules. They will have no choice but to provide the funds without receiving an invoice.