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
Example Final Invoice
When creating or editing a Matter, you can specify the contingency recipient and percentage rate in the "Billing preferences" section of the Matter creation form.
Once the rate is specified, and a Contingency Fee Matter is created, you will see an Update Award button in the "Financial" section of the Matter page.
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 default to non-billable time. This way you can track time spent on a matter in terms of hours, but also overall cost. These entries will not appear on an invoice. Flat fee time entries will behave the same way: it will appear as an activity with an amount, but is non-billable and will not show up on an invoice.
The settings of the non-billable checkbox can also be toggled off. For more information about this, click here.
On a Matter with a contingency fee, you will track expenses as usual and they will get billed on an invoice. 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 Vendor field. You can then filter the expenses by vendor if you so choose.
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 "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.
If you will be receiving the full amount of the award in trust for the client, you should record a deposit under the Matter's Transactions tab.
Input the appropriate information to show the deposit of funds.
Click "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. As mentioned before, any time and flat based entries for work done towards the matter will not appear. The trust balance showing the amount of the award received on behalf of the client will appear as well, unless the bill theme is edited to not. For more information on this, click here.
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 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.
On the "Record payment" screen, select the trust account as the source of the funds and pay the Bill.
Once you select "Record Payment" and the invoice is paid, you will see your client's trust account has adjusted appropriately.
Once you have received payment to trust, you must disburse the remaining amount to the client.
After entering the disbursement, the invoice will also be updated.
Example Final Invoice
After completing this workflow, your final invoice should look something like this: