Fees and Disbursements: A reminder

The CLC’s Estimates and Terms of Engagement Code requires you to state the fees and disbursements (plus any VAT) you propose to charge to your client and how fees for abortive work will be calculated.  The purpose is to avoid any misunderstanding about the level of costs which will need to be paid and how they are made up.

Any expenses incurred by you which are not charged to the client at cost must be billed as fees, rather than disbursements.  One example is a telegraphic transfer fee where the sum charged to the client is more than the direct cost charged by the bank to the practice.  These are described as ‘profit costs’.

A number of lenders now charge an annual panel management fee to practices to offset the cost of managing those panels.  The CLC considers that those charges are an overhead for the practice.  Some panels are now introducing a fee per transaction.  Provided the client has been advised as soon as it becomes apparent that the charge is to be incurred, it is acceptable for that charge to be passed on to the client as an expense (and therefore charged as part of the profit costs due to the practice).  However, the CLC’s view is that this charge is not a liability incurred to a third party on behalf of a Client and therefore should not be charged to the client as a disbursement.

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