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Traditional Cost Recovery

By Robert Mattern

The Oct. 22, 2012 issue of The Wall Street Journal published the article, “Law Firms Face Fresh Backlash Over Fees” by contributor Jennifer Smith in which she details how clients are raising objections to legal miscellany fees including legal research, photocopies, food, etc. The article cites our Mattern & Associates 2012 Cost Recovery Survey. Smith does a nice job of describing from both sides ' client and law firm ' the increasing refusal to pay and pushback firms are experiencing on the reimbursement of these costs. This is becoming such an issue for law firms that some firms are abandoning the traditional soft-cost recovery model and implementing alternative solutions or just converting the basis of these soft costs into overhead.

However, this move of costs into overhead cannot be taken lightly. The basis for these soft costs such as legal research and the back-office operation (copy, print, scan, IT) can amount to the fourth or fifth highest expense area for a firm, right behind wages, rent and insurances.

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