This article discusses using the AdvoLogix Accounting Seed integration for contingency billing. For the intent of this article, contingency billing is generally defined by the following characteristics:
- The client is not billed for fees until the conclusion of the matter.
- The billable fees are (typically) based on the settlement amount, not an hourly rate.
- Time may be tracked but not for billable purposes.
- The firm's out of pocket expenses can be billed prior to the conclusion of the matter.
1. Time and Expense Tracking Overview
The AdvoLogix Accounting Seed (AS) integration creates AS billings from AdvoLogix time and/or expense entries. In the case of contingency billing, the time component of the integration's create billing process becomes less relevant.
1.1. Tracking Time
For contingency matters, we advise setting the time entry disposition to Do Not Bill. This will ensure the time entry will not be transferred to AS when expense-only bills are created through the AdvoLogix integration.
1.2. Tracking Expenses
AdvoLogix has several options to support contingency billing for expenses. If your firm intends to bill for expense reimbursement on an ongoing basis, simply enter your expenses with the default disposition of Bill. This will ensure expenses are transferred to AS billings during the billing process. If your firm wishes to temporarily refrain from billing a matter's expense(s) , simply place the expense(s) on Hold until the expense(s) are ready to be billed.
Using Automation
Consider using the built-in capabilities of AdvoLogix to enforce the disposition settings for time and expenses. For instance, an automation rule can be created to force the disposition of time entries to Do Not Bill (for contingency matters).
2. The Billing Process
The AdvoLogix AS integration provides the option to create new bills ad-hoc, on a periodic basis, or a combination of both. For instance, contingency fee bills are likely to be processed ad-hoc or for a specific matter (when the matter settles). On the other hand, the organization may wish to recoup expenses on a periodic basis. In all cases, Disposition plays an important role.
2.1. The Impact of Disposition
- When Do Not Bill is used, these records are marked as processed during create bill. By marking the items as processed these items can be removed from the billing preview and will not be subsequently processed during the create billing exercise.
- When Hold is used, these records are ignored and will not be flagged as processed. This allows the underlying item to be included in a future bill.
In summary, Do Not Bill will prevent records from being processed during future create bill exercises while Hold keeps the items available for future processing (presumably after they are changed to Bill or Do Not Bill).
2.2. Typical Use Case
The workflow for a periodic billing cycle would be as follows:
Periodically
- Time entries are logged by staff, the Disposition is set to Do Not Bill.
- Expense entries are logged by staff and/or accounting personnel, the Disposition is defaulted to Bill.
- On a designated date (each period) the billing preview is reviewed for accuracy. Keeping in mind previously processed time and expenses are not shown (by default).
- On a designated date, subsequent to the review, use the batch billing process to create bills for expenses. The billing process will also flag the time entries as processed.
Upon Matter Settlement (ad-hoc)
- Upon matter settlement, create a final expense bill for the given matter.
- Using Accounting Seed, add the relevant fee line items to the bill.
- When necessary, time reports can be exported for external reporting purposes.