Legal Disbursements

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, although along with many other items within the law most lawyers know them when they see them.  That does not help clients work out what they have to pay.  The Solicitors Accounts Rules define them as any sum that a solicitor spends or is going to spend on behalf of the client or trust, including any VAT element, which is a very wide definition.  The starting point for recoverability of any disbursement is whether it is covered in the contract.

Disbursements are generally expenses that 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.  In this respect they have to be distinguished between what is already covered in the solicitor's hourly rate and what is not.

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, for faxes and 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 when considered against the work that is being or has been done then the additional amount may be recovered.  An example would be photocopying, where amounts in excess of 1,000 pages are usually recoverable.

With the advent of the Internet it is becoming less common for there to need 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 that 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.

It would be disproportionate to expect a solicitor to ask the client for approval before incurring small disbursements, 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.  The matter is not helped by the fact that the tax man's definition of disbursements is different to that 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.   The client may be able to avoid them by paying direct.

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