travel and expense management for law firms

Introduction

Creating an effective expense policy requires more than just copying other firms or downloading a generic template. For UK law firms, the challenge is unique: you must strictly control overheads while simultaneously ensuring every penny of client-related spend is accurately captured for recharge.

Whether you are a boutique firm scaling up or an established practice modernising its finance function, the pressure on margins means that "good enough" is no longer acceptable. With manual expense reports costing an estimated £23.14 per report to process (Source: Levvel Research), the cost of inaction is high. These 11 best practices will help you improve cost recovery, ensure robust HMRC compliance, and drastically reduce administrative friction for your highest-value fee earners.

01. Implement a per-diem system

Moving to a Subsistence Allowance (often called Scale Rates) is one of the most effective ways to streamline food and drink expenses. The traditional method of reimbursing actual costs for every sandwich or coffee creates a disproportionate administrative burden for both the claimant and the finance team.

Instead, firms can pay HMRC's tax-free "Benchmark Scale Rates" (e.g., £5 for 5+ hours, £10 for 10+ hours of travel).

• For the Firm: It drastically reduces the time Finance teams spend auditing low-value receipts. There is no longer a need to verify whether a £4.50 coffee receipt is legitimate; the flat rate covers it all.
• For Fee Earners: It provides clarity and speed. They know exactly what they can claim without fear of breaching policy or needing to hoard paper receipts for weeks.

Compliance: It aligns perfectly with HMRC "dispensation" rules. Provided you have a system to track eligibility (time left/time returned), these payments are free of Income Tax and National Insurance, removing a compliance headache.

02. Mandate Pre-Approvals for Billable Spend

In legal firms, "surprise" expenses are a leading cause of write-offs. A recent industry report found that 64% of law firms are seeing client write-offs increase year-on-year (Source: BigHand), often because costs fall outside Outside Counsel Guidelines (OCG) or weren't authorised in advance. By requiring pre-approval for significant travel, you create an instant audit trail before the money is even spent.

Crucially, this ensures that costs are assigned to the correct Matter Number and Client Code at the point of booking. This simple step prevents the month-end headache of "unallocated expenses"—where finance teams waste days chasing partners to identify which client should be charged for a flight—and ensures that billable costs are ready to be recharged to the client immediately.

03. Roll Out Corporate Cards (and Capture VAT)

Asking fee earners to pay on personal cards and claim reimbursement is inefficient and often leads to "leakage" (where small legitimate expenses go unclaimed). However, the bigger issue is tax compliance.

Moving to a corporate card programme—whether physical or virtual—gives you total visibility over spend. More importantly, modern expense platforms can automatically match card transactions to digital receipts. This is vital for VAT recovery. It is estimated that UK businesses lose 12% of potential revenue due to unclaimed VAT on expenses. UK law firms lose significant sums annually by failing to reclaim the 20% input tax on travel simply because a valid VAT receipt was lost or the data wasn't captured correctly. Automated matching plugs this leak instantly.

04. Automate policy enforcement

Your Expense Policy should be a digital rule, not a PDF document hidden on the intranet. Manual policy enforcement relies on a finance junior spotting an error and having an awkward conversation with a senior partner—a dynamic that often results in the error being ignored.

Modern platforms allow you to build rules directly into the system as "preventative controls." If a fee earner tries to book a First Class train ticket on a route where the policy only permits Standard, or attempts to book a hotel exceeding the London cap, the system can block it or require a Partner's justification before the purchase happens. This removes the friction of "policing" retrospectively and stops out-of-policy spend at the source.

05. Codify Your Approval Matrix

Law firms often have complex hierarchies that don't map neatly to simple expense structures. Approval workflows should be clearly defined and automated based on your firm's specific "Delegation of Authority" to ensure governance without creating bottlenecks.

For example:

• Associates: Approved by Line Manager or Matter Partner.
• Over £500: Requires Partner sign-off.
• Client Entertainment: Requires Practice Area Head approval to ensure compliance with anti-bribery policies.

Automating this ensures that no claim slips through without the correct level of sign-off, protecting the firm from unauthorised spend while ensuring junior lawyers aren't left out of pocket waiting for a busy partner to check their inbox.

06. Move to Risk-Based Auditing

Manually checking 100% of expense reports is an inefficient use of skilled finance staff. Studies show that up to 19% of expense reports contain errors (Source: GBTA), yet firms often overpay on expenses by up to 14% (Source: Rydoo) due to missed policy breaches. The vast majority of claims—train tickets, taxis, scale rates—are compliant, so checking them all is wasted effort.

Instead, adopt a risk-based audit approach. Configure your system to auto-approve standard, low-risk claims (like fixed-rate subsistence or regular commute routes) and flag only the high-risk items for human review.

• High Risk: Client entertainment, gifts, international travel, and claims from "repeat offenders" or those close to specific threshold limits.

Result: Your team spends time where the risk is, protecting the firm against fraud and regulatory breaches (e.g., UK Bribery Act), rather than checking £3 Tesco meal deal receipts.

07. Remove Friction to Reduce "Leakage"

Fee earners bill their time in six-minute units. If a Partner charges £600+ per hour, spending 20 minutes (Source: GBTA) wrestling with a spreadsheet-based expense report costs the firm £200 in lost billable opportunity. Furthermore, if the process is difficult, they may simply not bother claiming small, legitimate items.

While this might seem like a saving, it contributes to the estimated 30% of potential billable revenue (Source: Quiss Technology) that is lost to "leakage" in professional services. It distorts the true profitability of your Matters and lowers your realisation rates. Make mobile receipt capture easy—snap and go—so every legitimate business cost is recorded against the file. Conversely, strictly block "future-dated" expenses to keep your cash flow reporting accurate and prevent confusion in month-end accruals.

08. Take care of your travellers

Under the Health and Safety at Work Act, firms have a duty of care to staff travelling for business. This responsibility extends beyond the office walls.

Your expense and travel data shouldn't just be for accounting; it is a critical safety tool. If a Partner is travelling to a high-risk jurisdiction, or if there is a transport strike, civil unrest, or a weather emergency, you need to know exactly where they are. Integrating travel booking with risk management tools provides this visibility instantly, allowing the firm to fulfill its legal and moral obligations to staff.

09. Integrate with your Practice Management System (PMS)

Siloed data is useless. Your expense management platform must "talk" directly to your Practice Management System (e.g., Elite 3E, Aderant Expert, or Thomson Reuters).

Centralising this process ensures that as soon as an expense is approved, it is posted as a disbursement or soft cost to the client ledger without manual re-keying. This speeds up the "WIP-to-Cash" cycle. If expenses are delayed, you risk sending a bill to a client that misses significant costs, leading to awkward "supplementary bills" later—or worse, having to write those costs off entirely.

10. Stop cutting cheques

If you are still cutting cheques or manually building BACS files at the end of the month, you are adding unnecessary delay and error risk to your Accounts Payable process.

Modern expense platforms can automate reimbursements directly to employees via Faster Payments. This improves staff satisfaction significantly—getting reimbursed in days rather than weeks matters, especially for junior staff and support teams. It also removes manual keying errors from the process, ensuring the right amount goes to the right account every time.

11. Leverage your leverage

Law firms spend significant sums on rail, flights, and hotels. However, this spend is often fragmented across booking channels.

Use your centralised expense data to identify volume. If you see your London team stays at the same Manchester hotel 200 nights a year, use that data to negotiate a corporate rate. Additionally, use analytics to spot internal trends—such as unbilled disbursements or excessive spending in specific practice areas—to improve the firm's overall financial hygiene and leverage your purchasing power.

The Bottom Line

Many firms still treat expense management as a back-office admin task. Forward-thinking firms view it as a lever for profitability. By automating these processes, you free up your fee earners to focus on what they do best: looking after clients.

What if your client recharges were audit-ready by default?

Learn more about modernising your firm's expense handling

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