Normally, receipts are applied to accounts receivable based on a client's method to apply payments and receipt allocation by invoice method. However, you can create fee compensation rules that allocate percentages off the top of receipts to specified timekeepers or the firm.

Simple Examples

Examples with Percentages Greater than 100%

Frequently Asked Questions

Simple Examples

The following portrays several examples, with each example adding an additional level of complexity:

Example A: You want all working timekeepers to receive what they billed (i.e., gross amount). This occurs automatically when no fee compensation rules table is defined. If rules are already defined, simply click the Clear All button in the Fee Compensation Rules Table window for the client to delete the rules.

Example B: You want the firm to receive 5% of all payments applied to fees. In the Fee Compensation Rule window, select Firm, enter "5.00%" in the Will Receive field and select "ALL - All Timekeepers" in the Taken from field. Make sure the All Statements and All Receipts options are selected.

Example C: You want Primary Timekeeper 1 to receive 15% of all payments applied to fees performed by paralegals. In the Fee Compensation Rule window, select Timekeeper and enter "1" in the Timekeeper field. Select "Primary" in the Type drop-down field. Enter "15.00%" in the Will Receive field and select the paralegal timekeeper level in the Taken from field. Make sure the All Statements and All Receipts options are selected.

Example D: You want Originating Timekeeper 5 to receive 10% of all fee receipts that apply to statements dated on or after November 1, 2026. In the Fee Compensation Rule window, select Timekeeper and enter "5" in the Timekeeper field. Select "Originating" in the Type drop-down field. Enter "10.00%" in the Will Receive field and select "ALL - All Timekeepers" in the Taken from field. Select the Statements Dated mm/dd/yyyy through mm/dd/yyyy option and enter in "11/01/2026" through "mm/dd/yyyy". Make sure the All Receipts options is selected.

Example E: You want Secondary Timekeeper 2 to receive 100% of the first $1,000.00 of all fee receipts. In the Fee Compensation Rule window, select Timekeeper and enter "2" in the Timekeeper field. Select "Secondary" in the Type drop-down field. Enter "100.00%" in the Will Receive field and select "ALL - All Timekeepers" in the Taken from field. Make sure the All Statements option is selected. Select the Receipts of $xxxx through $xxxx option and enter in the range of "0.00" through "1000.00". (Note: All Timekeepers must be selected in the Taken from field when receipt amounts are specified.)

Example F: You want Primary Timekeeper 3 to receive 20% of all fee receipts applied to statements dated on or before September 30, 2026, but to receive no more than $3,000.00 total. In the Fee Compensation Rule window, select Timekeeper and enter "3" in the Timekeeper field. Select "Primary" in the Type drop-down field. Enter "20.00%" in the Will Receive field and select "ALL - All Timekeepers" in the Taken from field. Select the Statements Dated mm/dd/yyyy through mm/dd/yyyy option and enter in "mm/dd/yyyy" through "09/30/2026". Select the Receipts of $xxxx through $xxxx option and enter in the range of "0.00" through "3000.00".(Note: All Timekeepers must be selected in the Taken from field when receipt amounts are specified.)

Example G: You want Primary Timekeeper 1 to receive 5% of all payments applied to fees performed by Working Timekeeper 10 and all paralegals (i.e, Timekeeper Level of "Paralegal"). Timekeeper 10 is also a paralegal. In the Fee Compensation Rule window, select Timekeeper and enter "1" in the Timekeeper field. Select "Primary" in the Type drop-down field. Enter "5.00%" in the Will Receive field. Click the drop-down button for the Taken from field and select Working Timekeeper 10 and LVL - Paralegal (found towards the bottom of the lookup window). It is important to note that in this example, Primary Timekeeper 1 will not receive 5% from Working Timekeeper 10 twice. However, if two separate rules had been defined (i.e., one rule for Primary Timekeeper 1 receiving 5% of all payments applied to fees performed by Working Timekeeper 10 and a second rule for Primary Timekeeper 1 receiving 5% of all payments applied to fees performed by paralegals), then Primary Timekeeper 1 would receive the 5% twice.

Examples with Percentages Greater than 100%

In instances where rule allocations total more than 100% for any working timekeeper, the order of the rules becomes important. Additionally, when more than 100% is specified, allocation occurs based on the aggregate amounts for all statements as opposed to applying to individual statements one at a time. This typically is not an issue because most fee compensation rules tables do not exceed 100% for a working timekeeper.

The following portrays two different examples where more than 100% is specified for an individual timekeeper.

Example H: You set up two fee compensation rules for one client. The first rule indicates that Primary Timekeeper 5 receives 100% of Working Timekeeper 2's receipts. The second rule indicates that Secondary Timekeeper 1 receives 5% of receipts from all working timekeepers. If a statement of $100 is billed (all fees by Working Timekeeper 2) and a payment of $100 is allocated to that statement, Primary Timekeeper 5 would receive 100% of that amount leaving no payment amount left for Secondary Timekeeper 1 to receive. If you want Secondary Timekeeper 1 to receive 5% first and then allocate the remainder to Primary Timekeeper 5, you would need to switch the order of the fee compensation rules on the table by highlighting the second rule and pressing Ctrl+Up (or clicking ) to move the rule above the first rule. When the rules are switched, Secondary Timekeeper 1 would receive $5, Primary Timekeeper 5 would receive $95 and Working Timekeeper 2 would receive $0.

Example I: You set up two fee compensation rules for a client. The first rule indicates that Primary Timekeeper 10 receives 100% of all receipts applied to updated statements with a statement date on or after 11/01/2026. The second rule indicates that Secondary Timekeeper 20 receives 100% of all fee receipts for all working timekeepers up to $150. Let's say that two statements have been billed and updated as follows:

  Working
Timekeeper
----------		 Statement
Number
---------		 Statement
Date
---------		 Gross
Amount
------
      1     1 10/31/2026 100.00
      2     2 11/04/2026 100.00

When a $200 payment is allocated, you might expect that Primary Timekeeper 10 would receive $100 and Secondary Timekeeper 20 would receive $150 according to the rules. Because more than 100% is specified of a working timekeeper's receipts, the payment is allocated as follows. The first rule applies as expected, taking the entire gross amount from Working Timekeeper 2. The second rule specifies that the next $150 in receipts should be given to Secondary Timekeeper 20. Because the aggregate billed amount is $200 and each timekeeper billed 50%, Tabs3 attempts to allocate amounts for the second rule by allocating $75 to Working Timekeeper 1 and $75 to Working Timekeeper 2. Because Working Timekeeper 2 no longer has any amount left, Tabs3 can only apply $75 for the second rule $75 to Secondary Timekeeper 20. The remaining $25 is allocated to Working Timekeeper 1.

  Timekeeper
----------		 Applied
-------		 Net Paid
--------
  Primary 10    0.00   100.00
  Primary 20    0.00    75.00
  Working 1  100.00    25.00
  Working 2  100.00     0.00

Frequently Asked Questions

Can I configure fee compensation rules for more than one originating timekeeper?
Yes, you can create multiple fee compensation rules using a timekeeper Type of Originating. In fact, there is no limit to the number of fee compensation rules you can assign for a client, nor is there a limit to the number of fee compensation rules you can have for each type of timekeeper.

Can I configure a fee compensation rule to give the firm or timekeeper a specific amount?
Yes, you can easily do this by specifying 100% of receipts taken from all timekeepers and specifying the receipt amount. For example, let's say you want the firm to receive the first $200 of fee receipts taken from all timekeepers for a particular client. Simply add a fee compensation rules table for the client with a rule for the firm to receive 100% of receipts taken from all timekeepers. Under Receipt Options, instead of selecting All Receipts, select Receipts of $0.00 through $200.00. (Note: All Timekeepers must be selected in the Taken from field when receipt amounts are specified.)

When I'm setting up fee compensation rules for a client, do I have to create a rule for the Firm?
No. Creation of fee compensation rules is optional, and how those rules are defined is entirely up to your firm. Tabs3 does not require that you create a fee compensation rule for the Firm. This is a new feature that is available for those firms that want to designate a percentage of receipts to be allocated to the firm for overhead compensation purposes.

Do I have to set up fee compensation rules before I do my billing?
No, you may continue to do your billing without setting up any fee compensation rules. However, if you want to use fee compensation rules for a client, they need to be set up before entering any payments for that client. If you have work-in-process (WIP) payments that were entered prior to setting up your fee compensation rules, you can use the following procedure if you want to re-allocate those WIP payments based on the new fee compensation rules:

  1. From the File menu, point to Data Entry, and then select Payment.
  2. In the Client ID field, select the client whose payment you want to re-allocate.
  3. In the Reference field, enter the reference number of the WIP payment.
  4. Click the button to display the Payment Allocation window.
  5. If you had previously edited the payment allocation, click the Clear All Allocations button and re-enter your allocation amounts. If you had not previously edited the payment allocation, click the Reset to Defaults button to re-allocate the payment based on your new fee compensation rules. To view the fee compensation rule allocations, select Fee Compensation Information from the Tree Control.
  6. Click Done.
  7. From the File menu, select Save.

Note: For payments no longer in WIP, i.e. processed payments, you must first undo the updated statement on which the payments were billed. Doing so will put all transactions (fees, costs, and payments) on that statement back into WIP, allowing you to use the above procedure to re-allocate your payments. Remember to finalize and update the same statement when you are done.

See also:   Knowledge Base Article R11090, "Examples of Complex Fee Compensation Rules"