Disbursements: the money a practice quietly loses

A practice pays for searches, filing fees, agents, couriers and experts on behalf of clients, constantly and in small amounts.

Each one is too small to chase individually, which is precisely why the total is large and invisible.

The cost is real money, paid in advance

A disbursement leaves the practice's account and returns only if somebody records it, bills it and collects it. Any break in that chain loses it entirely.

Unlike unbilled time, this is cash already gone rather than an opportunity missed.

Record it on the day, against the matter

A cost recorded weekly from a bank statement loses the connection to the matter. A cost recorded monthly loses it completely.

The moment of spending is the only moment the matter is obvious. Everything after that is reconstruction.

Automate the ones that arrive as data

Providers of searches and filing services bill electronically, with a reference attached. Nobody should retype those by hand.

Importing them against the matter removes both the transcription error and the delay, which are the two ways they go missing.

Watch the ones that arrive as paper

Couriers, parking, witness expenses and small agent accounts are the categories that vanish. They arrive as receipts in pockets.

A single place to put those, with the matter number written on them, recovers most of what a practice currently absorbs.

Bill them at the same time as the fees

Disbursements held back for a tidier bill get forgotten or become too old to explain. A client queries a search fee from eight months ago far more readily than a recent one.

Current disbursements on a current bill get paid without comment, which is the entire objective.

Know which ones the practice absorbs

Some costs are genuinely overheads and some are recoverable. Confusing the two either loses money or produces a bill a client disputes.

A written list of what this practice charges and what it absorbs makes that consistent, and consistency is what stops clients arguing.

Reconcile the total once a month

Disbursements paid, against disbursements billed, across a month. The gap is what the practice absorbed without any decision.

Most firms doing this for the first time find a number that changes their billing habits immediately.

Anticipate the large ones

Counsel fees, expert reports and transcript costs are large enough to affect cashflow and large enough to surprise a client.

Asking for funds in advance of those is ordinary practice, and it protects both the client's expectations and the firm's account.

A practice that funds those from its own account is lending money to clients without interest, at a scale most principals have never measured.

Trust money and disbursements are different questions

Money held for a client and money the practice has advanced are distinct, and treating them as one creates problems far larger than recovery.

Our guide to what goes on every trust ledger entry covers the side that carries the obligations.

Agree the approach in the costs disclosure

A client who hears at the start how disbursements work queries them far less at the end.

That sentence costs nothing to include and prevents the most common small dispute in a practice.

Large disbursements deserve their own mention, because an expert report can exceed the fees on a modest matter and rarely arrives as a welcome surprise.

What to change first

• Every disbursement records against its matter on the day it is paid
• Electronic provider accounts import rather than reaching a keyboard
• One place collects the paper receipts, with matter numbers on them
• Disbursements bill alongside the fees, not later
• A written list settles what the practice charges and what it absorbs
• Paid against billed reconciles monthly