Under the New Code of Professional Conduct for British Columbia:
Items such as photocopies, scanning fees, word processing, paralegal fees, file opening fees (sometimes referred to as ‘soft costs’- in other words, items that have been traditionally billed by the firm but are not payable or required to be paid to a third party) must be accounted for differently from “disbursements”.
The new Code requires you to place these ‘soft costs’ in the "Fees" area of the invoice (and not in the "Disbursements" area of the invoice) under a new heading: "Other Charges".
Items that would fall within this category of "Other Charges" would be internal costs that law firms traditionally bill to the clients. A partial list would be as follows:
- photocopy costs
- scanning costs
- printing costs
- courier or service fees (if you use a staff member to deliver the package)
- filing agent fees (if you use a staff member to file the documents)
- paralegal costs (if the paralegal is part of your office)
- filing agent fees (if the agent is a staff member)
- file opening or file documentation fees
- search fees (ie taxes, utilities, government registries) (if the firm charges for a staff member to do the search, excluding the fees charged by the government registry or service)
- basically any "soft costs" that the law firm seeks to recover from the client by a charge (that doesn't involve an amount or invoice payable to a third party)
In Brief Accounting, in order to ensure that expenses as above are categorized as Other Charges, they must be assigned a 4700 series GL account on the disbursement slip. You will likely need to create a new 4700 GL Account to accommodate this - see below article on how to create a new GL Account:
The new GL Account would be created similar to below:
NOTE: You can use any 4700 series GL Account for these costs (i.e. any GL Account number beginning with 47).
If you use codes to enter soft costs, you need to change the GL acocunt on the code to a 4700 series code. If you do not use codes as a shortcut for entering Disbursement slips, below is information on how to set them up. Shortcut codes are particularly useful to ensure the correct GL account is assigned to Other Charges:
Once this is done, you need to make the following setting change under the Company module > Defaults tab > Settings side menu option:
When entering a new disbursement slip for a cost that will be classified as Other Charge, use the 4700 series GL on the slip (rather than the 4500 series GL):
Then, when printing the Prebill/Invoice the Summarize Soft Costs option must be selected:
After you click Print (or Post) in the Billing module, click the Options button on the first window:
Then select "Summarize Soft Costs" and click the Default button so that this option becomes the default printing option:
Once this is done, the Other Charges that were entered using a 4700 series GL account, will appear as Other Charges separate from the Disbursement section on the invoice: