On a contingency file the firm normally funds the disbursements as the claim goes along and accounts for them out of the recovery at the end. So the answer to who pays disbursements, in the ordinary case, is that the client pays nothing out of pocket while the claim runs. What happens to them if the claim recovers nothing is a separate question, and it depends on the wording of the retainer agreement and not on any general rule.
Disbursements are the least understood line on a settlement statement. Read this before you sign anything.
Disbursements Are Money Paid to Other People, Not Fees
A fee is what the lawyer charges. A disbursement is money the firm hands to someone else so the claim can be proven: a hospital for a chart, a specialist for a report, the court for a filing, a court reporter for a transcript.
The distinction matters because the two are regulated differently and accounted for separately. A fee can be a share of the recovery. A disbursement is a receipt for an amount already spent, and it is repaid at cost.
The Usual Disbursements on an Injury File
Medical records come first, and they cost money at every source: the family doctor, the hospital, the physiotherapist, the walk-in clinic, the pharmacy printout of everything dispensed since the collision.
Then expert reports. An orthopaedic surgeon’s opinion, a physiatrist’s report on function, an occupational therapist’s cost of future care report, an economist’s calculation of lost income. These are the expensive items on any file, and on a brain injury claim they are the bulk of the spend.
Then the court’s own costs: the fee to file a Statement of Claim, service of documents, the court reporter at discovery, the mediator’s account if the file goes to mediation.
Who Pays Disbursements While the Claim Is Running
The firm advances them. That is the practical meaning of a contingency arrangement, and without it the arrangement would not work, because an injured person who is off work cannot fund a specialist’s report on top of rent.
Advancing them is a decision the firm makes file by file, weighing what each report will prove against what the claim is worth. A report that will not change the outcome is not ordered. That protects the client’s recovery, because every dollar spent on the file is accounted for at the end.
What Happens to Disbursements If the Claim Recovers Nothing
Read this clause in the agreement before you sign. Agreements differ, and this is where they differ most.
Some make the client responsible for disbursements whatever the outcome. Some absorb them if the claim fails. Ask the question directly and get the answer in writing. It is the only financial exposure a contingency client can have, so it should be stated in a sentence you can repeat back.
The Other Side’s Costs Are a Separate Exposure Again
If a claim is lost at trial, a court can order the losing party to pay a share of the winner’s legal costs. That is a costs award, and it is not the same thing as your own disbursements. It is explained in the note on costs awards.
Most claims settle, and a settlement normally resolves costs at the same time, so this exposure rarely arises. Ask about it before an action is started, because the answer affects whether starting one is sensible.
Disbursements Appear As Their Own Block on the Settlement Statement
When the claim resolves, the client gets a statement showing the settlement amount, the fee, the disbursements itemised, any repayments owed out of the money, and the balance payable. Each disbursement line should be an amount someone was actually paid.
Ask for the backup if a line is unclear. A firm that funds disbursements properly keeps the receipts, and a client is entitled to see them. The full anatomy of that document is in the note on the settlement statement.
Taxes and Interest on Disbursements
Some disbursements carry HST and some do not, and the statement should show which. Some firms charge interest on the money they have advanced, and some do not. Neither practice is improper on its own. What is improper is finding out about it at the end.
The way to avoid that is the same as everywhere else in this subject. Ask before you sign, and get the answer written into the agreement instead of relying on memory of a conversation.
Disbursements Are Why a Small Claim Is Sometimes the Wrong Vehicle
The cost of proving a claim of modest value can exceed what it recovers. Two expert reports on a file of limited value can make the exercise pointless for the client, and an honest lawyer will say so at the first meeting and not three years in.
That is one of the real reasons a firm declines a file, and it has nothing to do with whether the client was wronged. The reasoning is set out in the note on why a lawyer declines a case.
The Rules That Sit Behind All of This
Each Atlantic province governs costs and disbursements through its rules of court, and each law society governs what a lawyer may charge and how it must be disclosed. New Brunswick’s Rules of Court and the decisions applying them are published on CanLII, and the other three provinces are published the same way.
The written agreement operates within those rules. It cannot contract out of them, and where it is silent, the rules and the law society’s conduct requirements fill the gap.
Ask the Question at the First Meeting
Ask three questions before anything is signed, at a meeting that costs nothing: who funds the disbursements, what happens to them if the claim fails, and whether interest is charged.
Call the Halifax office to start.