Legal disbursements can be an elusive concept, but make up an essential part of a solicitor's charges. There is no absolute definition of disbursements, but are generally expenses a solicitor has to pay out on behalf of a client, for goods or services provided to the client, or on the client's behalf. The Solicitors Accounts Rules define them as any sum a solicitor spends, or is going to spend on behalf of the client or trust, including any VAT element. The starting point for recoverability of any disbursement is whether it is covered in the contract.
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The hourly rate is designed to cover the costs of the solicitor, office overheads and a profit element. Where an item is included within office overheads it should not be charged separately to a client on top of the hourly rate. Despite this we have come across solicitors who seek to charge administration costs, postage and for copying.
Travel to a local Court less than 10 miles away is usually regarded as included within the overheads, as are postage, telephone calls, faxes, couriers and the such like. However, where the expenses are exceptional or excessive such as photocopying, where an amount exceeds 1,000 pages, these costs are usually recoverable as an extra expense.
With the advent of the Internet, it is becoming less common for there to be excessive overheads which are payable by the client. However, if you refuse to allow your solicitor to communicate by e-mail, there is a risk you will face the additional charges caused by this.
At the start of a case the solicitor is supposed to give the client an estimate of the costs to be incurred. This should include details of common disbursements which are anticipated. The most common disbursements will be court fees
It would be disproportionate to expect a solicitor to ask the client for approval before incurring small disbursements, such as a £3 land registry fee, however specific authority should be obtained for larger disbursements.
Where the legal expenses are liable to VAT, then the client will have to pay this. This is not helped by the tax man's definition of disbursements being different to the one usually applied by a solicitor, with the taxman requiring VAT to be paid if the goods or service were provided to enable the solicitor to render their service to their client. As a result, a solicitor often has to charge VAT on some expenses, even though the solicitor did not pay VAT on them, such as train or air fares. This can be avoided by the client paying for them directly themselves.