By the end of 1974, the Law Society by-law established that a maximum one-third allowance on fees to correspondents was permitted but not compulsory. Today, in the absence of an agreement to the contrary, there are no one-third allowances granted by the correspondent attorney. Most newbie practitioners are oblivious to the one-third allowance and how to account for it.
In practice, the correspondent attorney invoices the instructing attorney for the full fee. In turn, the instructing attorney recovers the full fee from the client and then pays the correspondent attorney two thirds thereof. The correspondent attorney should then send a credit note for the one-third which would then allow both practices to round off their books.
In some instances, a referee attorney will invoice a client directly. In this scenario, the referring firm would invoice the referee firm. The challenge in this relationship is keeping track of both the quality of work as well as the fees invoiced as the respective firms have different books of accounts which are not accessible between the firms.
Linklawyer provides a common bookkeeping and document management portal for referred clients which are accessible by both the instructing/referring attorneys and the correspondent/referee attorneys. Linklawyer further provides an environment in which a one-third allowance is sacrosanct.
Linklawyer facilitates the process and ensures that it is completely transparent as it allows the instructing attorney to maintain his relationship with his client without the fear of losing the client by referring him to another attorney. The correspondent attorney, on the other hand, benefits from receiving two-thirds of the fee which is far more feasible than working on a tariff.
It should also be mentioned that there is a common misconception of what a one-third allowance entails. Many practitioners are under the impression that a third allowance is based on tariffs. This is not the case and it should be emphasised that a third allowance is based on fees and therefore much more beneficial for correspondent attorneys than simply working on tariffs.
Our Practice Management System allows both parties to be aware of the fee arrangement at all times and, further, it allows both of the attorneys to monitor the quality of work that is being performed. Linklawyer provides the infrastructure and the services to implement the one-third allowance which promotes collaboration beneficial to both parties.
This practice will be deemed to be implemented unless the contrary is negotiated for all Linklawyer members.
We hope that you enjoyed our article and we welcome any questions about and comments on our one-third allowance practice.
