How to document and settle a court substitution – contract, invoice, taxes

This article is the product of observing a market in which substitutions are still instructed by phone, „on someone's word", and settlement comes down to a bank transfer with no invoice or – worse still – to an invoice issued three months after the fact, when no one remembers what was agreed. That is how a large part of the substitution market operates. And that is not how it should operate.

The basis for the arrangement – what contract binds the client and the provider?

A civil-law relationship arises between the lead representative and the substitute – in practice a contract of mandate (art. 734 et seq. k.c.) or a contract for the provision of services, to which the provisions on mandate apply accordingly (art. 750 k.c.). Both parties usually act as businesses, so we are dealing with a classic B2B relationship between law firms.

Does the contract have to be in writing?

It does not – an oral instruction is valid. That said, in my experience, where there are no written terms, disputes always concern the same three issues: the fee when a hearing is adjourned, the scope of the work („he was only supposed to appear, yet he was questioning the witness"), and the payment deadline. A one-page confirmation by e-mail or in a system is enough to cut these disputes short. Documentary form costs five minutes; its absence can cost a professional relationship.

What the terms should cover

• case reference number, court, courtroom, date and time;
• scope of the work (passive attendance / active participation / evidentiary motions);
• the fee and the rules for a cancelled hearing or a case dropped from the cause list;
• the deadline and method for delivering the report;
• the payment deadline.

The invoice for a court substitution – in practice

The provider issues the client (the law firm, not the end client!) a VAT invoice for the legal service. A few points that younger colleagues most often ask about:

The VAT rate and the description of the service

Legal services are subject to the standard 23% rate. In the description it is enough to write „court substitution – appearance at the hearing on … , case ref. …". There is no need (or sense) to disclose the end client's details on the invoice – professional secrecy also applies to accounting paperwork.

The point of performance

As a rule, the tax obligation arises upon performance of the service, that is on the day of the hearing or action. The invoice must be issued no later than the 15th day of the month following the month of performance. Putting off invoicing „until later" is asking for chaos – both fiscal and financial.

And when the hearing has been dropped from the cause list?

That question deserves a paragraph of its own. If the provider appeared at the court and the hearing was cancelled on the spot – the service of readiness and attendance was in effect performed and the fee (full, or the agreed partial amount) is due. If the cancellation came in advance – the parties' arrangements decide. This is precisely why „kill fee" rules are worth agreeing in advance, in writing.

Settling with the end client

The client bills its own client on the existing terms – the cost of the substitute is its own cost of performing the service (a tax-deductible cost), not the client's expense re-invoiced „one to one", unless the contract with the client provides otherwise. It is worth making sure the contract with the client allows for the use of a substitute – that eliminates any argument.

The most common documentation sins

1. No record of the terms whatsoever – only a phone call.

2. An invoice issued late or not at all („we'll settle up sometime").

3. No report on the work done – the client has no idea what happened in the courtroom.

4. Payment „once the client pays" – shifting the credit risk onto the provider without their consent.

5. A substitution power of attorney signed on the fly, with no case reference or scope.

Every one of these sins is curable by a single simple decision: a process. The terms, the substitution document, the report and the invoice should all be produced in one repeatable workflow.

In summary

The substitution market is professionalising before our eyes, and documentation is the litmus test of it. Written terms, an invoice on time and a report on the work done are the minimum that should be required – and that is worth offering.

Wokanda.net brings order to this whole workflow: the terms of an instruction are recorded in the system, documents are generated automatically, and payment through the platform is arranged so that the provider never has to chase a transfer.

See what settlement looks like on Wokanda →