How to charge for a matter that collapses before completion
When a transaction falls through before completion, the question most practices face — often without a ready answer — is a simple one: how do you bill for work that was done but never led to a signed deed?
The answer depends less on firm policy than on what was agreed with the client at the outset and what is recorded in the matter file.
What should be agreed before work starts
The best time to set expectations about fees on a collapsed matter is before any work begins. Most practices address this in the client care letter or terms of engagement: if the transaction does not complete for reasons outside the solicitor's or conveyancer's control, fees accrued to that point remain payable.
The clause does not need to be lengthy. It needs to establish two things: that work done generates fees regardless of outcome, and that the practice will provide an account of work carried out if the matter does not proceed to completion.
If nothing was agreed at the outset, billing is still possible — but it requires stronger supporting documentation.
What needs to be in the matter file
Before you raise an invoice for an incomplete matter, the file should be able to answer one question plainly: what was actually done?
That means having on record:
- Each version of the documents reviewed, with the date received and the date reviewed.
- Correspondence with the client and other parties showing the fee earner acted: requests for documents, comments sent, queries raised.
- A log of steps taken: searches ordered, document checks carried out, client due diligence and authority verification completed.
- The retainer received, if any, with its entry in the billing section of the matter file.
Without that record, it is difficult to defend the invoice if the client challenges it. With it, the invoice is simply a summary of what is already documented.
How to structure the invoice
A fee note on a collapsed matter is not structured the same way as one for a completed transaction. Billing a percentage of the transaction value — which may be standard practice at completion — does not always translate well when there was no completion.
Breaking the invoice down by the work done makes it harder to challenge and clearer in its justification:
- Document and identity review: _X hours or fixed fee_
- Document cross-checks carried out: _X reviews_
- Steps taken before completion: searches, communications, coordination
- Disbursements: search fees, Land Registry requests, other outlays
Two things follow from this. First, itemised billing is more difficult to dispute than a lump sum. Second, it makes clear that the fee corresponds to work done, not to an expected outcome.
The retainer and how to apply it
If a retainer was taken at the start of the matter, the next step is deciding how it is applied:
- Apply it to the fees accrued and raise the invoice for the full amount, noting the retainer as a payment on account.
- If the retainer covers the work done, there is no balance outstanding — raise the invoice and settle it against the retainer.
- If the retainer exceeds the work done, the difference should be returned to the client.
In all cases, the matter file should reflect the full picture: retainer received, work done, invoice raised, balance outstanding or returned.
How and when to tell the client
When a matter collapses, the client is often in a difficult position themselves. Sending an invoice without prior notice tends to make a disputed fee more likely.
What works better in practice is a brief communication that does two things: confirms the matter is now closed on the practice's side, and flags that an invoice for work completed to that point will follow. That gives the client the chance to ask questions before the invoice arrives, and reduces the likelihood of a dispute once it does.
The message does not need to be long. A sentence or two confirming what work was done and that it will be reflected in the invoice is enough.
The file as the foundation of the fee
The practical lesson from collapsed matters is that document review and verification work needs to be logged not only as part of the legal file, but as the supporting record for the billing file. Every document checked, every cross-reference made, and every step completed is also the basis for an invoice if the matter never reaches completion.
Practices that keep that record organised from the start have no difficulty billing when a transaction falls through. Those that do not often end up writing off fees that were perfectly recoverable.
At VerifyAct we build tools to help practices stay organised and error-free. Get in touch if that sounds useful.