In court finance, which term describes funds paid to a third party on behalf of a client?

• A. Payment
• B. Remittance
• C. Allocation
• D. Disbursement

Answer: (D)

The main idea here is a payments activity where the attorney or firm pays someone else on the client’s behalf. This is known as a disbursement. In legal finance, disbursements cover expenses the firm incurs for the client—like court filing fees, service of process, court reporter costs, expert fees, and transcription charges—and these costs are typically billed back to the client. The key is that the money goes out to a third party on the client’s behalf, not just a general payment from one party to another.

A general payment is just any transfer of money from one party to another, which is broader than the specific client-centric, third-party expense nature of a disbursement. Remittance usually refers to sending money to another person or organization, often across distances or borders, rather than to cover a legal expense. Allocation is about designating or earmarking funds for particular accounts or purposes within bookkeeping, not the act of paying external third parties on behalf of a client.