Payment On Account

What Are Payments On Account?

The legal profession has one of the highest Debtor ratios of any profession. This has led to many firms insisting on payments on account. This means paying money up front towards the legal costs before the work is done. This can apply at the start of the matter and/or during it's conduct.

Will All Solicitors Ask For Payments On Account?

Most lawyers will ask for some money up front at the start of a case, unless it is to be funded by a conditional fee agreement. It can often be a good acid test to see whether the client truly believes in their case.

Some solicitors will only conduct work as long as they have money up front. Others ask for some money up front to cover any anticipated disbursements, such as Court fees or expert fees. Others may be prepared to front the whole of the cost of the case.

Unless there is provision for money to be payable during the contract, whether to cover disbursements or the costs incurred by the solicitor to date, then the solicitor is not entitled to be paid until the work has been completed. Even if the solicitor is entitled to ask for a payment on account, the request must also be reasonable.

Where Does The Payment On Account Go?

Until the solicitor bills for the work, the money still belongs to the client and must remain in the solicitor's client account. Whether there is any interest earned and who gets this depends on the amount, any term covering this in the retainer and how long it stays there.

What If You Don't Make A Payment On Account?

Where a solicitor makes a valid request for a payment on account and the client fails to make the payment, then the solicitor can refuse to act any further, as long as this is a term of the retainer. It is not unknown for solicitors to make unrealistic demands for a payment on account to give them grounds to sack a client if they get themselves into a situation they want to get out of.

What Are Bills On Account?

There are various requirements as to what amounts to a bill to a client. Most bills during the course of the case will be bills on account, whereby the solicitor is merely asking for further monies on account. This means you cannot be sued for non-payment and the time limit for challenging those costs does not start to run until a final bill is issued. Where bills relate to interim costs there has to be an agreement within the retainer enabling the solicitor to issue interim "statute" bills (final bills for the work covered by the bill only) otherwise interim bills are always bills on account. It is only when a final bill is drawn up and issued the solicitor is entitled to claim the monies on account and give credit for these against the bill.