Prepaid expenses

A prepaid expense is defined as any form of payment that is made in advance to accommodate expenses and services that will be provided at a future time. since the payment made covers expenses that will be incurred in future, it is recorded as a current asset on the balance sheet and these payments include insurance premiums and retainer fees as is the case with Kirkland & Ellis.

Kirkland & Ellis are one of the top international law firms in the world and they specialize in private equity, litigation, government and white-collar disputes, intellectual property matters and other corporate transactions. In its 100 years of experience, firm has established 15 offices around the world and has employed more than 2700 attorneys to handle its clients’ needs (Kirkland & Ellis, 2020). The law firm works with a diverse workforce that has helped the organization to attract bright legal talent to form a dynamic team.

The organization’s prepaid expenses are as a result of the prepaid legal fees that its clients are expected to pay as retainer. A legal retainer is the advance payment that is issues to a law firm or a lawyer to secure legal services of attorney offered to the client. The law firm determines a fee that is determined by the number of hours the firm will represent the client as well as the nature of services to be offered. The amount paid is recorded as a debit to Kirkland & Ellis’ account and also as a credit to the cash account (Kirkland & Ellis, 2020). Once the service has been provided by the firm, the payment is credited to the prepaid fee account and debited in the legal fee expenses account. Since the money paid to the Kirkland & Ellis acts as an advance payment for the services that the firm is willing to offer and any costs incurred in the process, the retainer is thus the firm’s prepaid expense.

 

 

References

Kirkland & Ellis, (2020) “About Kirkland” retrieved from, https://www.kirkland.com/content/about-kirkland