Legal
Books and taxes for employment law firms.
Court-awarded attorney fees that land separately from a settlement, agency charges billed light before litigation starts, and defense-side retainers running alongside it all. Gus sorts it, an accountant checks every transaction, and you get one number a month.
- From $197 a month
- An accountant on every transaction
- Cancel whenever
August came in at $13,000. The court awarded attorney fees on the Whitcomb case separately from the client's settlement, so I booked that award as its own line instead of folding it into the settlement number.
- Whitcomb fee award, court orderedCourt-awarded fees
- Employer defense retainer drawDefense retainer billing
- EEOC charge intake feeAgency charge billing
- Court reporter, depositionDeposition and court costs
- Vocational expert retainerExpert witness fees
Why your books are different
Employment law books go wrong in the same few places.
A generalist sees a settlement and calls it one payment. Your business is a court-awarded fee that lands separately from the client's own recovery, an agency charge stage billed lightly before real litigation begins, and defense-side retainer work running alongside it.
-
1
A court-awarded fee is not the same deposit as the settlement
Under many employment statutes, a court can order the losing employer to pay the winning employee's attorney fees directly, separate from the client's own damages, and if that fee award is not tracked apart from a negotiated settlement, the two get confused.
What we doBooks a court-awarded fee as its own line, separate from any settlement the client also received, so each source of the firm's income is clear. -
2
The agency stage and the litigation stage price differently
Filing and pursuing an agency charge is often billed lightly or included in an initial fee, while the case turns into real hourly or contingency work once litigation actually starts, and blending the two stages hides what each phase actually costs to run.
What we doKeeps agency charge work in its own category, separate from litigation billing, so the two phases of a case stay easy to tell apart. -
3
Plaintiff and defense work run on opposite economics
A firm handling both plaintiff cases on contingency and employer defense work on hourly retainer has two very different cash flow patterns living in the same practice, and mixed together it is hard to tell which side is actually carrying the firm.
What we doKeeps plaintiff contingency income and defense retainer income in separate lines, so each side of the practice shows its own real picture. -
4
A settlement can bundle damages, fees, and costs in one check
A settlement deposit sometimes includes the client's damages, the firm's fee, and reimbursement for costs the firm advanced, all in one wire, and booked as one lump of income, the month looks bigger than what the firm actually earned.
What we doSplits a settlement deposit into the firm's fee, cost reimbursement, and the client's pass-through amount, so only the firm's own earnings count as income. -
5
Referral fees between plaintiff-side firms get missed
A referring attorney's fee on a plaintiff case can go untracked if it is lumped in with case costs or overhead, which hides how much a referral relationship is actually worth to the firm.
What we doKeeps referral fees paid and received in their own line, separate from case costs and staff pay.
Your categories
The categories Gus keeps for an employment law firm.
Set up once for how each side of the practice gets paid. You never pick a category. He does, and an accountant checks it.
Money in
- Court-awarded feesAttorney fees ordered by a court, separate from a client's own settlement or damages.
- Settlement contingency feesThe firm's negotiated share of a plaintiff settlement.
- Agency charge billingFees for filing and pursuing an agency charge before litigation begins.
- Defense retainer billingHourly work billed against a retainer for employer-side clients.
Money out
- Deposition and court costsCourt reporter, filing, and transcript fees on active litigation.
- Expert witness feesVocational or damages experts retained for a case.
- Referral fees paidWhat goes to another attorney who sent the firm a case.
- Staff and paralegal wagesThe people who manage discovery on both plaintiff and defense matters.
- Legal researchEmployment-specific research services and general legal databases.
- Malpractice insuranceAnnual or quarterly professional liability premiums.
What we watch for you
- Plaintiff to defense mix
How much of the month is contingency plaintiff work versus hourly defense retainers.
- Fee award share
How much income came from court-awarded fees rather than negotiated settlements, since the two arrive on different timelines.
- Referral fee share
What the firm pays out or takes in on referred cases against what those cases bring in.
- The set-aside
What the firm will owe, tracked every month, so tax season is a number you already know.
Ask Gus
Things employment law attorneys ask Gus.
Text him like you would text anybody. He answers in plain English, and when a question is above his pay grade, an accountant looks and gets back to you.
As its own line. I keep a court-awarded fee apart from a client's settlement, so you can see exactly what the firm earned from each source.
Yes, I keep agency charge billing separate from litigation work, so you can see what each stage actually brought in and cost to run.
If you paid them $2,000 or more this year and they are not on your payroll, that is a 1099-NEC due January 31, and I already have them tracked.
The tax side
The tax side of an employment law practice.
Most of what goes wrong here is treating a court-awarded fee like a normal settlement, or losing track of which side of the practice, plaintiff or defense, is actually paying the bills.
What your return has to get right
Your accountant signs it, so it gets done right the first time.
- Court-awarded fees are counted when receivedA fee ordered by a court is income once it is actually paid, which can land well after the underlying case resolved and separately from any client settlement.
- A big fee award year can hit the deduction ceilingMost owners can deduct up to 20 percent of business profit, but law counts as a specified service trade, so a year with a large court-awarded fee can push taxable income above $201,750 single or $403,500 joint, where the deduction begins to shrink.
- Contractor 1099s for referring attorneys and expertsA referring attorney, expert witness, or contract paralegal paid $2,000 or more in 2026 and not on payroll gets a 1099-NEC by January 31.
- Quarterly estimated taxes on mixed incomeAn owner without steady payroll withholding typically owes estimated payments on April 15, June 15, September 15, and January 15, and a mix of contingency and hourly income makes that number swing more than a single revenue model would.
Deductions employment law firms miss
Your bookkeeper knows what to look for in your statements. You never have to.
- Bar dues and CLE
- Malpractice insurance
- Legal research subscriptions
- Case management software
- Expert witness fees on the firm's own dime
- Court reporter and transcript costs
- Mileage to depositions and court
- E-filing and PACER fees
- Payment processing fees
- Office rent and utilities
- Marketing for plaintiff or defense referrals
- Answering or intake service fees
General information about 2026 federal rules, not advice for your business. Your accountant looks at your actual numbers before anything gets filed.
All year, not just April
An employment law year, kept every month.
Fee awards and settlements land on the court's schedule, not the calendar. Gus keeps the set-aside honest either way. Every month in between, your bookkeeper closes the books and speaks up the moment something looks off.
- January
Plan the year
Last year's return gets started, the 1099 list for referring attorneys and experts is ready, and a monthly set-aside is planned around a mix of contingency and hourly work.
- April
Filed, plaintiff side and defense side
Your return is filed and signed, whatever mix of plaintiff contingency and defense retainer income the year brought. No surprise bill, because the set-aside has been running since January.
- July
Halfway check
Where the firm stands, whether plaintiff or defense work is carrying the year so far, and whether the set-aside still fits.
- October
Before year end
A look at any equipment or software worth buying before December, and a check on court-awarded fees still outstanding.
What you get
What you pay depends on what your business needs, and it does not move after that, busy season or slow. No hourly bills, no surprise invoices, no setup fee.
Book a call- Monthly bookkeeping
Every transaction sorted into categories set up for employment law firms. You never categorize a thing.
- An accountant checks every transaction
Real review, every month, before your books close. Not a spot check.
- Your business tax return, filed
Prepared, reviewed, and signed by that same accountant every year.
- The monthly number
What you made, what you spent, what to set aside for taxes.
- Your own bookkeeper
A real person assigned to your business, in the app whenever you need them. No hold music.
- On your books all year
Every month, not just in April. Your team speaks up whenever something is worth your attention.
- Cancel any time
No contract. No cancellation call. Your books are yours.
Straight answers
Questions employment law attorneys ask first.
Why does Gus book a court-awarded fee separately from a client's settlement?
Because they are legally two different payments, often on different timelines. Keeping them apart shows exactly what the firm earned from the fee award versus what the client received.
We handle both plaintiff and defense work. Can Gus keep those separate?
Yes. Plaintiff contingency income and defense retainer income stay in their own lines, since they run on very different cash flow patterns, so you can see which side is actually carrying the firm.
An agency charge we billed lightly turned into full litigation. Does that change the books?
It does, and Gus tracks it. Agency charge billing and litigation billing stay in separate categories, so the shift between the two stages is visible instead of blended together.
A settlement check included the client's damages and our fee together. How is that split?
Gus splits the deposit into the firm's fee, any cost reimbursement, and the client's own share, so only what the firm actually earned counts as its income.
Our income swings a lot depending on how cases resolve. Does that hurt our taxes?
No. Gus builds the set-aside from what actually lands each month, so whichever side of the practice, plaintiff or defense, has the stronger stretch, the number stays accurate.
Can Gus show me whether plaintiff work or defense work is actually paying the bills?
Yes. Plaintiff contingency income and defense retainer income stay in separate lines, so over a few months you can see which side of the practice is actually carrying it.
Is a real accountant checking my books?
Yes. You get your own bookkeeper, Gus does the first pass on every transaction, and an accountant checks every one before your month closes. That same accountant prepares, signs, and files your business return. Goatkeeper is not a CPA firm, and we never pretend a person looked when they did not.
What does it cost, and can I cancel?
It starts at $197 a month, depending on what your business needs. No setup fee, no hourly bills, no contract. Cancel any time from the app, and your books go with you.
More in legal
We keep books for the business next door too.
- Court reporters
- Legal document preparers
- Mediators
- Private investigators
- Process servers
- Bail bonds agencies
- Business formation attorneys
- Elder law attorneys
- IP & trademark attorneys
- Real estate attorneys
- Traffic ticket attorneys
- Bankruptcy attorneys
- Estate planning attorneys
- Immigration attorneys
- Social Security disability attorneys
- Criminal defense attorneys
- DUI attorneys
- Family law & divorce firms
- Workers' compensation attorneys
- Personal injury law firms
- Banner & large-format printers
- Label printers
- Mailing houses & lettershops
- Trade show display producers
- 1031 exchange intermediaries
- Answering services
- Apostille services
- Background check companies
- Business valuation firms
- Crop insurance agents
What makes a bookkeeper worth paying for Every business we keep books for
Book a call
Pick a time. That's the whole signup.
Fifteen minutes with a real person on our team. They look at where your books are, tell you straight what it takes to get caught up, and get you set up on the spot if it fits.
- $197 a month to start
- An accountant on every transaction
- Cancel whenever