Law Society of Ontario (LSO) Paralegal Practice Exam

Which term refers to an expense that the paralegal pays on behalf of the client?

1. Retainer

2. Fee

3. Disbursement

4. Commission

The correct answer is: Disbursement

The term that refers to an expense that the paralegal pays on behalf of the client is "disbursement." In the context of legal services, disbursements are costs incurred during the process of handling a client’s case, which can include fees for court filings, expert witness fees, or other necessary expenses directly related to the client's legal matter. When a paralegal makes a payment for these costs upfront and later seeks reimbursement from the client, it is categorized as a disbursement. This reflects the nature of the expense as being specifically tied to the client's matter and distinct from the paralegal's service fees. Recognizing the concept of disbursements is crucial for understanding budgeting and accounting in legal practice, as it helps delineate what constitutes service income versus reimbursable costs incurred on the client's behalf. In contrast, terms like "retainer" refer to the upfront payment made by clients to secure services, "fee" relates to the payment for the services provided by the paralegal, and "commission" is typically associated with payments made for services related to sales or real estate transactions, not legal work.