Annual accounts for a lawyer: work in progress and client funds
Which figures a law firm has to prepare, how to process hours written but not yet billed and where client funds do and do not belong.
The short answer
A law firm is often a sole proprietorship or a maatschap, whether or not of practice BVs. Only the BV falls under Title 9 and files with the KVK, but every lawyer prepares a balance sheet and statement of income and expenses within six months. Client funds sit on the account of the stichting derdengelden and so not on the firm's balance sheet.
Updated 30 October 2026
Key facts
| Usual legal form | Sole proprietorship or maatschap; partners often take part via a practice BV |
| Balance sheet and statement of income and expenses | Within six months after the financial year (art. 6.5 Verordening op de advocatuur) |
| Client funds | Directly to the person entitled or to the stichting derdengelden (art. 6.19 Verordening) |
| Stichting derdengelden | Mandatory for the lawyer who receives client funds (art. 6.21 Verordening) |
| Hours not yet billed | Revenue in proportion to the work performed (RJ 270.115) |
Maatschap, sole proprietorship or practice BV: who prepares which figures?
The maatschap generally does not fall under Title 9 of Book 2 DCC; a partner's practice BV does. The professional rules fill the gap: the Verordening op de advocatuur requires every lawyer to put a balance sheet and a statement of income and expenses in writing within six months after the financial year, to the extent that this does not already follow from art. 2:10 DCC or art. 3:15i DCC (art. 6.5). The dean supervises this.
| Form | Annual accounts under Title 9 | What you prepare |
|---|---|---|
| Sole proprietorship | No | Balance sheet and statement of income and expenses, also for income tax |
| Maatschap of natural persons | No | Figures of the maatschap and a profit allocation per partner |
| Practice BV that is a partner | Yes | Own annual accounts with its profit share from the maatschap; file with the KVK |
| Firm in a single BV or NV | Yes | Annual accounts of the company; file with the KVK |
How a maatschap builds up its figures is covered in the annual figures of a maatschap. For a practice BV the size criteria determine what becomes public; the audit requirement check only matters for medium-sized and large firms.
Client funds: outside the firm's balance sheet
Client funds (derdengelden) are monies connected with the case but not intended for the lawyer: a settlement amount for the client, damages, a collected claim. Disbursements and court fees do not count. The lawyer ensures that such amounts go directly to the person entitled or to the bank account of the stichting derdengelden (art. 6.19 Verordening). That foundation is a separate legal entity that may only be used to manage client funds.
For the figures that means two things. The funds are in the account of the stichting derdengelden and so not on the firm's balance sheet: neither as a bank balance nor as a debt to the client. And they are not revenue; amounts you receive for someone else do not count as revenue (RJ 270.105a).
Setting off against your own invoice is only allowed if you have agreed that in writing with the person entitled. Whoever receives no client funds need not have a foundation, but notifies the dean of this (art. 6.21).
Hours not yet billed and advances
Hours you worked before the balance sheet date and have not yet billed are earned revenue in an hourly-rate practice: you process a service in proportion to the work performed (RJ 270.115). On the balance sheet they appear as work in progress or amounts still to be invoiced. Include only the hours you will actually bill and for which payment is probable (RJ 270.117).
An advance the client pays you on your own fee is not client funds: it is intended for you. Until you have worked the hours, it is an amount received in advance on the firm's balance sheet.
Worked example: hours, advance and a settlement amount
A law firm BV has, at 31 December, 120 hours written at € 150 in ongoing cases that have not been billed; 90 of those hours are billable. A client paid an advance of € 4,000 in December, of which € 1,500 has been set off against an invoice. In the account of the stichting derdengelden there is € 25,000 of settlement money for another client.
| Item | Calculation | In the firm's annual accounts |
|---|---|---|
| Hours not yet billed | 90 × € 150 | € 13,500 revenue and asset |
| Non-billable hours | 30 hours | No revenue; the payroll costs have already been taken |
| Client advance | € 4.000 − € 1.500 | € 2,500 received in advance, under liabilities |
| Settlement amount | € 25,000 at the stichting | Not on the balance sheet and no turnover |
If the firm included all 120 hours, revenue would be € 4,500 too high.
Common mistakes at law firms
- Leaving client funds in the firm's account or booking them as revenue.
- Including all written hours as work in progress, also the hours that are not billed.
- Counting both an advance on the fee and the final invoice as revenue.
Law firms and Jaarrekening.io
The annual accounts route of Jaarrekening.io is intended for the practice BV or the firm BV: you import an XAF audit file or a trial balance in Excel or CSV and prepare the annual accounts and the publication version. For a sole proprietorship or maatschap, the bookkeeping and tax modules are intended. The software files nothing with the KVK.
Sources
- Nederlandse orde van advocaten (Dutch Bar Association): Verordening op de advocatuur (art. 6.5 and 6.19 up to and including 6.22)
- Nederlandse orde van advocaten (Dutch Bar Association): stichting derdengelden
- Dutch Civil Code Book 2, Title 9
- Dutch Civil Code Book 3, art. 3:15i: record-keeping obligation
- RJ 270 Revenue (RJ-Uiting 2020-15, appendix 2, final)
- KVK: file annual accounts or not?
Frequently asked questions
Does a law firm maatschap have to file annual accounts?
No. Title 9 of Book 2 DCC does not apply to the maatschap, so it files no annual accounts with the KVK. If a partner is a practice BV, that BV files its own annual accounts.
May I set off client funds against my invoice?
Only if you have agreed that in writing with the person entitled. If the person entitled disputes the invoice within a reasonable period, the right to set off lapses. After set-off you confirm this in writing to the person entitled (art. 6.19 Verordening op de advocatuur, the Dutch Bar regulations).
Does every lawyer need a stichting derdengelden?
No. Since 1 January 2017 a stichting derdengelden (client funds foundation) is only mandatory for lawyers who receive client funds. If you do not receive them, you are exempt, but you notify the dean (deken) of this in writing (art. 6.21 Verordening op de advocatuur).
Does the stichting derdengelden itself have to prepare annual accounts?
Its board prepares a balance sheet and a statement of income and expenses every year within six months (art. 2:10(2) DCC). Filing with the KVK is not required: a stichting only falls under Title 9 if it maintains a business that has had at least € 7.5 million of turnover for two consecutive financial years (art. 2:360(3) DCC).
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