Jump to section
The settlement offer comes in on a Thursday afternoon. The client wants their money by the weekend. And now you are staring at eighteen months of disbursements scattered across a general ledger, a couple of credit card statements, and a folder of PDF receipts, trying to reconstruct a fee statement that will survive a client who reads every line. If you set it up right on day one, that Thursday is a fifteen-minute job. If you did not, it is a scramble.
Why You Still Track Time on Contingency
Plenty of lawyers stop recording time the moment a file goes contingency. The fee is a percentage of recovery, so who cares how many hours it took? You should, for three reasons.
First, a signed percentage agreement does not end the conversation. In several provinces a contingency fee can be reviewed for fairness and reasonableness, and if it ever is, the single most persuasive thing you can put in front of an assessment officer or a judge is a contemporaneous record of the work you actually did. A clean docket that shows 240 hours over two years turns "you took a third for signing a form" into "you carried this file through examinations, mediation, and two motions."
Second, files settle early sometimes. When a matter you expected to run for three years resolves in four months, the percentage can look large against the hours. Having the time recorded lets you make an informed decision about whether to charge the full contingency, discount it, or convert to an hourly calculation where your agreement and your law society's rules allow.
Third, you cannot manage what you do not measure. Your docket tells you which contingency files are actually profitable and which are quietly draining the firm. That is the same discipline behind realization versus collection, just applied to a file where the collection is deferred to the very end.
Tip. Record time on contingency files exactly as you would on an hourly file, but tag them so they do not flow into your regular unbilled work in progress. You want the data without it distorting your accounts receivable picture.
Keeping Disbursements Off Your Own Books
Disbursements are where contingency files leak money. Expert reports, court filing fees, medical records, process servers, transcripts: on a serious personal injury or civil file these can run into five figures long before any recovery. If you are not tracking every one against the file, you will forget some, and forgotten disbursements come straight out of your fee.
Two habits fix this. Record each disbursement to the specific matter the day it is incurred, not at month end when you have lost the thread. And keep the source document attached to the entry, so the receipt, the invoice, or the registry confirmation lives with the number. When a client questions a two hundred dollar charge for medical records eighteen months later, you want to produce the invoice in one click, not go hunting.
Be deliberate about what your fee agreement says on disbursements and interest. Some firms carry disbursements interest free; others charge the client for the cost of financing them. Whatever you choose, it has to be in the written agreement and it has to match what you actually do. A good disbursement tracking routine is the difference between recovering that money and eating it.
Building the Settlement Statement Clients Understand
When the money lands in trust, the client sees one number: the total settlement. Your job is to walk them from that number down to the cheque they take home, in an order that makes sense. The clearest statements follow the money.
| Line | Amount |
|---|---|
| Total settlement received into trust | $90,000.00 |
| Less: legal fee (33.3% per agreement) | ($29,970.00) |
| Less: applicable tax on fee | ($3,896.10) |
| Less: disbursements (itemized attached) | ($6,240.00) |
| Net payable to client | $49,893.90 |
Attach the itemized disbursement schedule as a second page. Do not bury forty line items inside the summary; give the client a clean top-level statement and a detailed breakdown they can study if they want to. Show the fee percentage, show the base it was calculated on, and show tax as its own line rather than folding it into the fee. A client who can trace every dollar rarely disputes the result.
A settlement statement is the last document your client studies carefully. Make it readable, and make it accurate.
If a dispute does surface, a transparent statement is your best defence. The narratives clients do not question principle applies here too: the clearer the explanation, the less room there is for suspicion.
Getting Approval Before You Distribute
Here is the rule people rush past: the settlement money sits in trust, and it is not yours to disburse until the client has approved the statement in writing. Skipping this step is how a satisfied client becomes a law society complaint.
Send the client the settlement statement, walk them through it, and get a signed direction authorizing the specific payments: your fee, the disbursements, any liens or subrogated claims, and the net amount to them. Only then do you move money out of trust. Watch for third-party interests, a health-services subrogation claim, an outstanding medical lien, a family law obligation, because paying your client the full net when a valid lien exists can leave you personally exposed.
Warn. Do not transfer your fee out of trust until the client has approved the statement and any liens are resolved. Moving trust money on your own say-so is one of the fastest ways to draw a regulatory investigation, even when your math is perfect.
Every trust movement here has to reconcile to the penny. If the mechanics of that feel shaky, walk back through trust reconciliation step by step before the big deposit arrives, not after.
The Records That Protect You Later
Once the client is paid, resist the urge to close the file and forget it. Contingency matters have a long tail. A fee can be challenged, a lien can surface late, an insurer can query a payment. The records that protect you are the ones you kept all along: the signed retainer and contingency agreement, the contemporaneous docket, the itemized disbursements with source documents, the signed settlement direction, and the trust ledger showing every movement in and out.
Keep them together, keep them for the retention period your law society requires, and keep them in a form you can retrieve without reassembling the file from memory. Modern practice tools help here: linking time, disbursements, and trust entries to one matter in a system like A1 CMS means the settlement statement and its backup are already assembled when you need them, which is the whole point of tracking as you go.
If you ever do face a challenge, a calm and well-documented response beats a defensive one every time. The playbook in handling a fee dispute calmly starts from exactly the records described here.
Contingency billing looks risky because the payoff is uncertain and deferred, but the billing itself does not have to be. Track time even though the client is not watching the clock. Record disbursements the day they happen, with the receipt attached. Build a settlement statement your client can follow line by line, get it approved in writing before you touch the trust money, and keep the whole package long after the file closes. For more on running a tidy contingency practice, browse the rest of the Billing and Trust archive or see what else the A1 Team has written.
