In Clio, you can specify a contingency fee percentage on a Matter and the award or settlement amount won at the completion of the case. You are then able to generate a bill to provide to your client and you can receive payment from the award in trust.
The following steps describe a sample contingency fee Matter workflow in Clio.
Creating a Contingency Fee Matter
Using Document Automation to Generate a Contingency Fee Agreement
Tracking Time Entries
Recording the Settlement or Award Details
Adding the Award to Trust
Generating the Bill
Receiving Payment from Trust
Disbursing the Remaining Award to the Client
When creating or editing a Matter, you can specify the contingency recipient and percentage rate in the Matter Billing section of the Matter creation form.
For more information about creating Matters, click HERE.
Once the rate is specified, and a Contingency Fee Matter is created, you will see an Update Award button at the upper right.
Once you select Update Award, you will be able to input the expected award amount, or change the percentage that your firm will earn from that amount.
Once the Award is applied and a Bill is generated, the Update Award button will be removed.
Once you have specified a Matter to have a contingency fee, you are able to use contingency fee related merge field tags when generating documents through Clio's Document Automation feature. In particular, you can add the << Matter.Contingency_fee_rate >> tag to your contingency fee agreement template to automatically pull in the agreed upon percentage rate from your Matter.
For more information about using Document Automation and creating document templates, click HERE.
On a Matter with a contingency fee, all hourly time entries that you add will automatically have a rate of $0 (this will overwrite your Activity Description rates). Flat fee time entries will still display an amount but you can manually zero out this rate if you do not want it to be recorded on the Matter. Adding $0 time entries allow you to continue to track and report on the time that you spend working on the Matter without adding to the amount that will be billed to the client at the completion of the Matter.
On a Matter with a contingency fee, you will track expenses as usual. If you are tracking medical expenses that the firm will be paying on behalf of the client, make sure to add the name of the medical vendor or clinic to the expense's "Note" field. You can then filter the expenses by vendor using the Filter keyword "Search" field.
At the completion of the Matter, if an award or settlement has been won, you can add the details of the award by clicking on the "Update Award" button on the Matter's detail page.
In the "Update Contingency Award" window, add the full amount of the award won and the fee earned will be calculated automatically. You can also specify the date of the award and add any notes or details that you would like to display on the client's bill.
Once you have saved the contingency award details, the fee earned will appear on the "Time" sub-tab of the Matter.
You can update the details of the award at any time by clicking the "Update Award" button until the Matter has been billed, at which time the "Update Award" button will no longer be available.
If you will be receiving the amount of the award in trust for the client, you should record a deposit under the Matter's Transactions tab.
Once you have selected "Add", you will be shown the New Transaction window. Input the appropriate information for your deposit of funds.
Select "Record Transaction" and you will see the your client's trust account reflect the new balance.
For more information on how to record a trust transaction in Clio, click HERE.
When you are ready to generate a bill for your client to report on the contingency fee, you will generate the bill as usual. Once the bill has been generated, you can edit the line items on the bill while it is in the Draft state. The time entries will already have a rate of $0. However, the amounts of your expenses will still appear on the bill. If you will not be charging expenses to your client, you have a few options to zero out those expense amounts:
- You can apply a 100% discount to the expense item which will display the original amount of the expense but reduce the total to $0.
- You can manually change the amount of the expense to $0. As long as you do not select the "Update original record" option, then the original expense amount will not be altered on the Matter, only on the bill.
- You can delete the expense line item. Deleting the expense will make it available to be billed at a later time.
- You can leave the expense line items as they are and write off that amount after you have received payment on the bill for the amount of the contingency fee.
For more information on writing off the balance of a bill, click HERE.
Once you are ready to approve the Draft invoice, select "Actions" at the upper right, and from the drop-down select "Approve".
For more information on working with bills in general, view the following articles:
Once you have approved the client's bill, you can immediately receive payment from the award funds that you are holding in trust. To do so, click "Record Payment" at the top of the invoice.
You will now see the New Bill Payment window. Input the appropriate information, such as the account you are withdrawing funds from.
Once you select "Receive Payment" and the invoice is paid, you will see your client's trust account has adjusted appropriately.
For more information on receiving payments in Clio, click HERE.
Once you have received payment from trust, you must disburse the remaining amount to the client. To do so, return to your client's matter, and select the transactions tab inside.
Select "Add" on the right hand side, and you will see the "New Transaction" window. Input the appropriate information regarding the funds you are returning, and input a negative integer in the "Amount" field.
Select "Record Transaction", and you will see the Matter's trust balance adjust accordingly.
You will also see that your client's invoice has updated to reflect the return of funds.
For information on recording that disbursement in Clio, click HERE.