Understanding Estimated Fees vs Actual Fees

Introduction

When managing legal matters in Matters.Cloud, understanding the relationship between Estimated Fees and Actual Fees
is crucial for maintaining effective budgeting, client communication, and firm profitability. By comparing these two metrics, we can gain valuable insights into the financial health of our cases and ensure accurate billing practices. 

What Are Actual Fees?

Actual Fees, on the other hand, represent the real, incurred costs associated with the matter. These fees are calculated as work is completed, based on actual time entries, expenses, and other billable items tracked in the system.

Actual fees are influenced by:

• Time entries made by your team members for the work they perform
• Expense entries such as travel costs, materials, or third-party services
• Hourly rates or alternative billing arrangements for tasks worked on

These figures are dynamic and can change throughout a matter. Actual fees reflect the true cost of services rendered.

What Are Estimated Fees?

Estimated Fees are the projected costs for a matter, established at the beginning or during the early stages of a case. These estimates are based on anticipated work, complexity, and historical data from similar matters. The purpose of estimated fees is to provide both the client and the firm with a financial framework to manage expectations and set budgets. 

• Can be calculated according to the plan or manually entered by the User.  Inform the User when a time entry is either within 20% of or surpasses the estimated fee value for the matter. 
• Utilized to assess whether a matter is approaching or exceeding the fee estimate on the dashboard and in the daily insights email.
  

How to Set Estimated Fees with Existing Matter

• Click the drop-down button after the Matter > Edit

The page should show like this.

How to Allocate Estimated Fees

A.) Inform the User when a time entry is either within 20% of or surpasses the estimated fee value for the matter.  

B.) Include the matter within a section called 'Matters exceeding fee estimate threshold' within the daily insights email for the User identified as the Matter Owner

C.) To be included within the following firm-wide tile if you include it on a dashboard:

NOTE: For option B To be effective assign all the active matters to the lead fee earner or partner as the owner.

To do this click on the following option from the All Matters list page:

The Financial Summary in Matters.Cloud will show a side-by-side comparison of estimated vs actual fees, helping you stay informed.

What are fees estimate limit and warning?

Fee Estimate Limits and Warnings are budget control features that help firms monitor matter-related fees, expenses, and hours against predefined estimates. They provide visibility when actual matter activity approaches or exceeds the estimated values configured for a matter.

Warnings notify users when a matter is nearing its budget threshold, allowing them to review spending before limits are exceeded. Fee Estimate Limits can be configured to restrict further billing activity, such as posting time entries or expenses, once the defined threshold has been reached.

These features help firms maintain financial oversight, manage client budgets, reduce billing surprises, and ensure compliance with internal billing policies.

Note: If notifications are enabled on your user profile, matters that exceed their configured fee estimate limit will be included in your Daily Insights email. This allows users to monitor and review matters that have surpassed their estimated fee thresholds.

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