How To Request A Legal Fee Advance From Your Client

This is a quick tour to illustrate the steps involved when you want to request an advance from your client for legal fees. This may be used to request advance payment from your client for legal fees, such as court costs and to keep track of receiving and reimbursing the advance.

We will cover:

• Legal Advance Request: Posting a fee transaction for the requested advance amount.
• Legal Advance Received: Posting a payment for the amount of the advance when it has been received from your client.
• Legal Advance Reimbursed: Posting a payment for the amount recovered and reimbursed to your client when the debtor makes a payment.

We will create a transaction type to use for each of the steps outlined above and post the necessary transactions to a debtor's account.

If you are not familiar with creating transaction types or posting transactions, before proceeding, please refer to How To Post A Transaction.

Legal Advance Request

The first step is to post the requested advance. This is charged by posting a Fee transaction for the debtor whose legal fees you need to cover.

Collect! considers 200 series transactions as Legal transactions so we will create a Legal Fee transaction type in the 200 series. The settings for the Legal Fee Advance Request are shown below. This transaction type may be used to request an advance from your client to cover legal fees, such as court costs.

Legal Fee Advance Request Transaction Type

Once this transaction type has been created, post a transaction as shown below to the debtor's account to request the advance. Notice that the amount of the advance is entered in the Commission Amount field as a POSITIVE value.

This sample transaction shown below is requesting a $200 advance from the client for legal fees.

Legal Fee Advance Request Transaction

When the month end statement is printed, the Legal Fee Advance Request transaction will appear as a commission amount that the client owes you. This begins the paper trail for keeping track of the amount that has been requested, received and reimbursed.

These transactions will not affect your Daily Cash Report. A custom Daily Cash Report may be used to keep track of these monies on a daily basis.

You can have these separated out on your Client Statement. Please contact Technical Support for more information.

Legal Advance Received

Depending on your Client's remittance setup, you may have recovered the fees from your collections, for example, a Net client.

Otherwise, when the client pays their Statement, post a payment as a regular Client Payment.

Legal Advance Reimbursement

If you are allowed to charge the Debtor for legal fees, then when you posted the transaction for the fee advance to the client, you would also post a Legal Fee to the debtor.

You can post them both as the same transaction where To Us was ($200) and Commission Amount was $200.

When a payment is received from the debtor, you will need to reimburse the client for the amount of the advance. This is taken from the amount collected from the debtor. One method is to use a separate transaction type like Legal Fee Advance Recovered payment transaction type as shown below.

Legal Fee Advance Recovered Transaction Type

Once this transaction type has been created, we can post a transaction to the debtor for the amount that has been recovered.

Below is a sample of posting $200.00 recovered from a debtor and reimbursed to the client.

Legal Fee Advance Recovered Transaction

A more common method is to post the payment normally like Check or Cash. They key in both cases is to setup the Commission where the Agency receives 0% of the Legal breakdown.

Payment with 100% Commission on Legal Breakdown

When you generate your month end statement, you will notice that the entire amount of the transaction posted is credit to your client.

This payment will not be reflected in your daily cash report. It is necessary to use a specific daily cash report designed for your advances. This report is available upon request from Collect! Technical Services and may be edited for your particular setup.

Summary

We have demonstrated the entire process of handling a request for a legal advance from your client.

This includes:

• Recording the request as a fee posted to the debtor's account
• Posting a payment when the advance was received from the client
• Posting a reimbursement when the funds were recovered from the debtor

Samples of the legal advance request may be found in the Demonstration database that ships with Collect!