How To Post Attorney Fees

This document explains a procedure for handling your accounts when they have been turned over to an attorney for collection.

Requirements

- Review help on transactions and transaction types
- Review help on contact plans

Overview

Ordinarily, you may have a client setup with a commission rate. When you setup debtors for this client, the commission rate is automatically displayed in the Rate field of the debtor form. Whenever you post a new transaction for this debtor, the commission rate is displayed on the transaction form and is used to calculate the commission for the transaction you are posting, if there is commission to be calculated.

When an account is turned over to an attorney, you may want to charge a different commission rate. You will want to keep track of the portion that the attorney keeps when a payment is made. You will want to change the status code for the debtor, delete pending contacts and perform other related tasks.

There are several steps to setting up Collect! to handle your legal accounts properly. There are also some additional settings you can create for advanced features. First, we will discuss the basics.

Changes To The Debtor Record

When an account is turned over to an attorney, there are a few areas where you need to change your settings.

1. Commission Rate

If you charge a different commission rate when an account has been turned over to an attorney, enter this new commission rate in the Rate field of the debtor's account as soon as the account goes legal. Then, whenever a payment is posted, the new commission rate will be used to calculate commission.

2. Debtor Status Code

Change the debtor's status code to Legal.

3. Pending Contacts

Choose Contacts from the debtor form and delete all pending contacts for the debtor whose account has been turned over to an attorney.

Posting A Payment Made To An Attorney

When the debtor makes a payment, the attorney may keep their portion and give you the rest. This is an area that needs to be recorded correctly so that the proper information is displayed on your statements and your daily cash report.

1. Posting a Payment

When the debtor makes a payment, post a transaction for the FULL AMOUNT of this payment. (Do not subtract the portion that the attorney keeps. We will handle this later.) When you post the transaction for this payment, you will notice that your legal commission rate is displayed in the transaction automatically. Collect! will calculate your total commission accurately for this transaction.

2. Client Statement

When you generate your statements for this period, the entire payment and total commission will be displayed on the statement.

Keeping Track Of Attorney Fees

Now that you have posted the debtor's payment and handled your client statement and commission, you can handle the internal record-keeping of attorney fees.

Legal Transaction Type

First, you will need a special transaction type for the Attorney Fees that you paid out or the attorney kept. This transaction type should be numbered in the Legal series. (i.e. 200 - 299)

Transactions posted in the 200 series are totaled by Collect! as Total Legal Costs. This is displayed in the Financial Detail form that pops up when you click into the Principal field of the debtor form. Select the Totals tab.

The following settings are switched ON when you create your Attorney Fee transaction type.

Account:

Fee

Reporting:

Write to notes
Omit from client statement

Calculations:

Don't calculate commission
Don't calculate tax

Attorney Fee Calculation

If you intend to enter an actual dollar amount for the attorney fee, switch on Enter amount on posting when you create the transaction type for attorney fees.

If you want Collect! to calculate the dollar amount based on the attorney's commission rate, switch on Percent of principal or Percent of owing. Enter the commission percentage AS A NEGATIVE VALUE in the Commission field when you create the transaction type for attorney fees.

Posting Attorney Fees

Next, we will enter a transaction to keep track of your attorney fees so that your internal record-keeping is accurate.

Follow these steps to accurately record your attorney fees:

1. Create a NEW transaction for the debtor who has just made a payment.

2. Choose your new Attorney Fee for the transaction type.

3. Enter the amount that is the Attorney's portion in the COMMISSION field on the transaction form AS A NEGATIVE AMOUNT.

If you chose to enter a percentage that the attorney keeps, you will notice that Collect! automatically calculates the attorney fee based on the information you entered when you created the transaction type for Attorney Fee.

Advanced Topics

Here are a few additional methods that you can use for working with attorney fees.

Setup An Attorney

You can setup your attorney as a client and report all account activity for this attorney. You will probably never actually add accounts to this record. It is used for linking attorney information to reports.

1. Pull down the Browse menu and choose Clients.

2. Press F3 to create a new client. Enter the attorney's information in the appropriate fields.

3. In the Type field, choose "Attorney" from the pick list.

If you do not see this choice in your pick list, you can add it. Please refer to How To Modify Or Create A Pick List.

4. From the debtor screen, in the Legal field, select your attorney from the Client list.

Reporting Attorney Fees

Once you have recorded your attorney fees, you can include them in your Daily Cash Report or print a separate report.

The code that is displayed here uses transaction type 203 for attorney fees. You can substitute your own code here. You can paste this code into the external Daily Cash Report supplied in the demonstration database.

Use this code as a new report or add it to an existing report.

@varfeeamt$ = 0.00
@varfeetot$ = 0.00
@varforward* = " "

Legal Contact Plan

You can create a contact plan to automate your procedure when a debtor's account is turned over to an attorney.

Some events in this plan might be as follows:

1. Delete all pending contacts.

2. Change the commission to your Legal rate.

3. Change the debtor's status to Legal.

4. Write to the debtor's notes.

5. Schedule a Review by an operator.

6. Perform other functions that your business requires when an account goes to an attorney.

Please refer to How To Design New Contact Plans.

Summary

Now you have a very straightforward method for recording and tracking your attorney fees.

Just remember that this process is basically two-fold: what you display on your client statement and how you keep track internally. This requires two separate transactions as described above.

See Also

- Legal Topics
- Report Sample for sample reports that you can use as is or modify