Insolvency matters in Legalsense

The handling of insolvency matters in Legalsense differs from the handling of regular matters because the remuneration of the employee/lawyer in an insolvency matter is determined based on the Recofa guidelines issued by the Dutch Judiciary.

The following topics will be discussed in this article:

• Configuring an insolvency matter
• Calculation of the Recofa rate
• Experience and corresponding factors of users
• Reporting of insolvency matters

Configuring an insolvency matter

To configure a matter as an insolvency matter the following settings are required:

• The user must be activated as an insolvency lawyer or insolvency employee;
• The matter must be set to type 'Recofa'.

When a matter is marked as a Recofa matter, several additional fields are displayed and the pricing scheme is automatically set to Recofa.

Calculation of the Recofa rate

The rate for the lawyer or insolvency employee is calculated as follows:

Hourly rate = experience factor x base hourly rate

Base hourly rate
The base hourly rate corresponds to the rate applicable in the year the time is recorded. This rate is adjusted annually.

Experience factor insolvency lawyer

The experience factor is based on the number of years of professional practice since the date of swearing-in.

The experience factor applies either to the insolvency lawyer or to a colleague from the same firm. A colleague may not have a higher experience factor than the insolvency lawyer.

Experience factor insolvency employee

The hourly rate of insolvency employees is also dependent of their relevant experience

Calculation prior to January 1, 2019

For matters dated before 2019, the rate for the lawyer/employee is calculated using the following formula:

Recofa rate × experience factor × inventory factor = final rate

As specified in the guidelines, the inventory factor depends on the size of the inventory. When the size of the inventory changes, this may result in an increase or decrease of the factor. The inventory cap  determines the maximum amount that can be charged.

Experience and corresponding factors of users

To determine the number of years of experience, it is necessary to specify the start date of the insolvency employee and/or the swearing-in date of the insolvency lawyer in Legalsense. This can be downe from the general overview of an user under 'Users'. 

A begin date must be specified for both insolvency lawyer and employee. The begin date determines the years of experience of the lawyer or employee and is important for the calculation of the experience factor and the associated recofa rate.

Billing in an insolvency matter

The billing process for an insolvency matter differs from that of a regular matter. In Legalsense, the procedure is to first draft an advance on the salary, which is then submitted to the court.

Additionally, a court report is prepared, which is publicly available. This report provides an update on the progress of the bankruptcy and forms the basis for the court's decision regarding the allowable salary for the trustee.

Once the court has reviewed and approved the draft invoice, it issues an official ruling. At that point, the draft invoice should be finalized in Legalsense. Subsequently, the approved amount is transferred from the estate account to the firm’s account, and the outstanding invoice can be reconciled.

Below is a representation of a draft invoice in an insolvency matter:

The description includes the number of years of experience used to calculate the rate. This is shown when editing the invoice:

If an inventory cap has been set, it will never be possible to bill more than this amount. 

Reporting of insolvency matters

If the matter type is 'Recofa' is selected, an Insolvency Report button will become available:

Clicking this button will take you to the next screen:

Here you indicate the period on which you wish to report. It is possible to create a salary invoice simultaneously with the report. You can do this by placing a check mark at 'Create salary invoice'.

The Excel report will include the following sheets:

• Summary categories
• Time entries categories
• Summary employees
• Time entries employees