Set up a Contingency Matter
These steps will show you how to do the prep work for contingency matters.
1. Set matter to contingency billing
In the Billing and Rates section of the matter, set the type of billing to contingency and set the contingency fee rate.
2. Enter time entries to track time (optional)
They will be non-billable and serve to track how much time the firm spends on the matter.
3. Enter advanced client costs in QuickBooks Online and billable expenses in LeanLaw
All advanced client costs (hard costs) associated with the case (medical records, police reports, filing fees, etc.) should be recorded in QuickBooks Online either via a check, expense (if paid with a credit card) or bill (if you have not yet paid the vendor). By assigning these costs to the account category set up in your LeanLaw expense sync (usually called Advanced Client Costs, Advanced Client Expenses, etc.) they will flow into LeanLaw as a case expense.
Billable expenses (soft costs) like administrative fees, copying fees, etc. should be entered in LeanLaw.
Prepare to Invoice the Client
Before billing a contingency matter, record the settlement amount as a deposit to trust and prepare all expenses.
1. Record a deposit to trust equal to the settlement amount
When the contingency matter is settled, track the settlement paid to your client's trust with a trust deposit. More detailed instructions on making trust deposits can be found here if needed.
2. Create a Fixed Fee
Calculate the compensation due to your firm by multiplying the settlement amount by the agreed Contingency Fee percentage. Create a fixed fee for that amount. Learn more about splitting revenue allocation here.
3. Open the Contingency Statement Report
On the Contingency Statement report review listed expenses to make sure they are accurate. If any advanced client costs are missing, add them in QuickBooks Online.
Create and Settle the Invoice
1. Show Only Contingency Matters
In Ready to Bill check the box Show Only Contingency Matters and filter for the client and matter.
2. Create the invoice
Follow your regular billing workflow to submit the invoice to QuickBooks Online.
3. On the QuickBooks tab, pay the invoice from trust
1. Pay any 3rd party liens
Write check in QuickBooks Online out of the trust account and use client’s the trust liability as the category.
2. Prepare client check to disburse proceeds and clear trust
Write check in QuickBooks Online out of the trust account and use client’s the trust liability as the category. This amount should be whatever is left over.
3. Create and print the trust statement
The link to this report in LeanLaw is here, just set the filter options like below and click on the right matter.
Then you can click Print For Client.
4. Send the client a copy of the paid invoice (shows all of the expenses), a copy of their trust statement (shows it’s zeroed out), and their proceeds check
5. Archive the matter in LeanLaw and make the client inactive (optional)
Instructions to archive matters can be found here.