The SRA has issued new guidance on taking money for your firm’s costs. Most of it is nothing new, but the final section on reimbursing yourselves for money already spent will be warmly welcomed by many firms, and should mean that fewer disbursement-only invoices will be required. The guidance states:
Some firms have asked us whether they need to deliver a bill or written notification of costs incurred if they are looking to move money from the client account to reimburse themselves for disbursements which have already been paid on behalf of the client. For example, where the firm has paid for Land Registry search or court fee using their own money (often by a direct debit from the firm’s business account).
Rule 5.1(a) of the Accounts Rules allows money for paid disbursements to be transferred from the firm’s client account to the business account as the money is being used for the purpose for which it is being held.
We would expect you to explain to your client how and when payments might be made on their behalf from your business account and that you will then be seeking a reimbursement from the client account in accordance with Rule 5. You could do this in your client care letter, terms of engagement or in other communication with your client.
Providing your client understands how their money will be used and has confirmed their instructions, we see no risks to the client in your reimbursing your firm for payments you have already made.
You can read the new guidance here. Clearly, there are conditions around this, such as ensuring that the disbursements have actually been paid or incurred, making sure you comply with VAT regulations (particularly on search fees – see latest guidance here), but this should make life easier (and improve cashflow) for many firms.