Trends on Recovering Expenses for Law Firms

If you have not reviewed your firm’s procedures on billing costs, this article might help you. As a consultant, I have experience in working in a variety of settings. Some firms are finding creative ways to recover for their  expenses.  Here are a couple of tips I’ve gathered along the way:

1. Some Costs Aren’t Being Billed Anymore

Things have changed in the last few years. Because of the low price of long distance calls, being at .02 cents a minute or less and (Voice over IP (VOIP ), some firms are no longer billing for long distance. Hardly anybody uses a fax anymore and most of the faxes are going to emails. Copies are sent in PDF format, also attached to emails, which means less and less printing and copy expenses.
Separate Soft and Hard Costs

2. Separate Soft and Hard Costs

Soft costs are photocopies, postage, faxes, long distance calls, etc. and hard costs are purchased done in advance for the client. Examples of hard costs would be check or credit card purchases for filing fees, court reporters, and FedEx.

3. Factoring Costs by Calculating a Percentage of Fees

There is a growing trend for law firms calculating soft costs by factoring in a percentage of their rates. This is usually 3 to 4 percent of their fees. They see these costs as an overhead expense. This saves them money on having to pay for cost tracking software and systems.  Your engagement letter can stipulate instances where your soft cost will be separated. This might not work in cases that you will have to submit costs to the court for reimbursement.  

Here are some articles on ABA Rules for recovering expenses.

https://www.abanet.org/tech/ltrc/publications/costrecovery.html