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Settlement checks

Q:  When I receive a settlement check for a contingency case, how can I enter the amount of the settlement broken down into what the client receives, what our firm receives, and the expenses related to the case?

A:  We'll assume you have been billing the client for expenses, with a zero rate for fees.  That is our standard recommendation for contingency cases.  The current matter balance will be zero for fees and some non-zero amount for expenses.

You need to enter three transactions, one fee and two payments:

1. Enter a fixed fee transaction for the firm's fee amount.  The hours should be entered as zero if you have been entering fee transactions with the actual hours but a zero rate.

2. Enter a payment transaction for the full amount of the check, including the client's portion.  Uncheck Automatic Allocation to do this.  Enter the firm's fee plus the client's portion in the Fee box.  Enter the expenses in the Expense box.

3. Enter another payment transaction for the client's portion of the settlement.  Uncheck Automatic Allocation and enter the amount in the Fee box, with a minus sign in front of it.  This is the same as refunding that amount to the client.  Use the description to explain that this is the client's portion of the settlement.

As an example, let's suppose the settlement check is $2,000: $500 for expenses, $600 for the firm's fee, and $900 for the client.  Here are the three transactions you would enter:

  Transaction    Fee   Expense
1. Firm's portion Fixed Fee



2. Settlement check Payment



3. Client portion Payment



View the bill for the matter.  Make sure the cutoff dates include these three transactions (fixed fee, check payment, client portion as a refund).  The bill should show the three transactions and a total due of zero.