Is your firm doing lots of pro bono work? Understanding the costs that may be associated

Pro bono work is an important part of the legal profession. It allows firms to support individuals and organisations that may otherwise struggle to access legal advice.

However, while there may be no fee for the client, that does not mean the work comes at no cost to the firm.

There are a number of financial and practical considerations that are worth keeping in mind.

What are the tax implications of completing pro bono work?

One of the first questions firms often have is whether there are any tax implications when providing services for free.

The answer can depend on the nature of the work and how it is structured. For example, there may be VAT considerations, particularly where costs or expenses are being recovered from a client or a third party.

It is important to understand how pro bono work is being recorded within the firm and whether any associated costs need to be treated differently for tax purposes.

Taking advice early can help avoid unexpected tax issues further down the line.

What are the time implications of completing pro bono work?

Pro bono work still requires the same professional time and resources as paid work. This can include client meetings, correspondence, research, administration and supervision.

For firms carrying out a significant amount of pro bono work, it can be useful to understand how much time is being spent and what that means for overall capacity and profitability.

Recording this time does not take away from the value of the work. Instead, it gives the firm a clearer picture of the resources being committed.

What are the insurance risks of pro bono work?

Providing advice without charging a fee does not necessarily remove professional obligations or risk.

Firms should consider whether their professional indemnity insurance provides appropriate cover for the pro bono work they undertake.

This is particularly important where the work falls outside the firm’s usual areas of practice.

It is worth checking the position with your broker or insurer rather than making assumptions about what is covered.

How can we help?

Understanding the financial implications of pro bono work is imperative when considering undertaking it. While it may seem like a charitable option, it may be worth referring the work to legal aid.

Seeking professional advice is always a good option, we can help you efficiently budget and plan for any financial risks involved with undertaking pro bono work.

Do you want to learn more about how pro bono work may be impacting your finances? Get in touch with our team.