Cost recovery is one of those issues that crops up for discussion several times each year.  It usually begins with a general question of who recovers costs from their clients files and what costs they recover.  It may then go into more detail as to specifics and may include the technology to efficiently capture these costs.  However, the fact that you can’t recapture these costs doesn’t mean that you should.

Most of us know of firms that include, under the expense section of each bill, a portion of their telephone charges for the month, actual postage, the cost of each copy made for the client, overnight express charges and any other costs that they believe should be passed along to the client.  While this may help the firm’s bottom line, it usually ends up aggravating the client.  The client perceives that they are already paying a very high rate for the lawyer’s services; so when you add to that time charges for the preparation of documents or for conducting a phone call, an additional amount for the actual telephone service charge, stamp to mail them a letter, or cost for every copy, the client rapidly becomes disgruntled and feels that they’re being unfairly treated.  Even if you keep your hourly rate lower because you do recover these expenses, the client’s doesn’t see this (or refuses to) and it ends up being detrimental to a healthy attorney-client relationship.

While I’m not advocating foregoing the recovering major expenses such as certified mail fees, the cost to send a package overnight via one of the national delivery services, or charges for large quantities of copies, I don’t believe that trying to recover for every postage stamp, minute of fax or telephone charge and similar expenses results in a better and healthier bottom-line for the attorney nor does it help to maintain a good relationship with the client. So what can you do? There are numerous options to help you recover some percentage of your costs, but allow you to maintain good relations with your client and prevent unhappiness over these expenses appearing on a monthly bill.

In my own practice, I always included an amount for general overhead such as phone calls, first class postage, normal copies, etc. For those charges that I I felt should be recovered, I set forth in my representation agreement language clearly spelling this out for the client. So, for copies, my agreements provided:

Photocopying: $.05 per single sided copy in excess of 50 pages; actual cost for color copies. Large photocopying jobs will be sent to a copy center and charged at actual cost plus staff time to deliver and pick-up.

My clients do upfront that I was only going to charge them for copies if there were a very large amount or if I had to have been copied by an outside service. As a matter of course, I did not charge for general postage, costs to fax to a document or for general office supplies: as I said above, I built an amount into my hourly fee to cover these incidental expenses.

Other attorneys have had success charging a set amount each month to cover normal and customary expenses incurred either by charging a percentage of the amount billed or a set dollar amount of say $10 each month. If you’re going to use this method, I prefer charging a set amount each month to charging a percentage of the amount billed, which can increase rapidly and doesn’t necessarily have any basis in the actual costs. This is because most Rules of Professional Conduct do not allow you to make a profit on your expenses, so you need to carefully review your states rolls before implementing a flat dollar amount or percentage to recover your costs.

After a short time of modifying your cost recovery methodology, you should see improved productivity from your staff and an impact on your bottom line due to the fact that staff is taking less time trying to recover these de minimis costs and spending more time getting your billable work out the door.

If you question the validity of the point I’m trying to make, think back to any medical procedure that you underwent: if you carefully reviewed the bill you should see a charge for everything that was done to you including a cost for each individual aspirin, suture or bandage.  If you’re like me, you scratch your head and become a bit disgruntled when you start going through a bill with so much detail and a growing fear that you’ve paid and paid again.  Now take a look at your own bills to your clients and look at them like you’re looking at one of the medical bills and see if there are any similarities.  If there are, perhaps you should consider the suggestions I’ve made and try to break the cycle that too many lawyers have found themselves in by trying to recover every cost.

It seems at times that PowerPoint is an attorney’s best friend; however, too often lawyers don’t take the time to learn some basic “best” practices when creating their presentations.

Craig Ball is one of the best-known experts on using PowerPoint for lawyers and has done numerous presentations and articles on this very topic, including the article “Power Persuasion, including “Six Ways to Add PowerPoint Pizzazz to Mundane Documents”.  In addition to Craig, run an Internet search on “PowerPoint best practices” and you’ll find numerous links to articles and postings on the best way to get the most out of PowerPoint without boring your audience.

While you should take the time to read some of these, I’ve always been a visual person and find that humor mixed in with the subject matter can make learning easier and more enjoyable.  If you click here, you will go to an online video entitled Friday Fun: How (not) to use PowerPoint on the Law Librarian Blog . In a short period of time, you will learn some of the key “best” practices for using PowerPoint and you should get a good chuckle at the same time.

One of the costs of doing business that lawyer’s face every day is the cost of postage for coandmmunications with clients, courts and other attorneys.  Any increase in postal fees is never a good thing and it appears that the upcoming increase due on May 14, 2007 has some hidden “gotchas” that most may not be aware of.  My good friend Ellen Freedman in Pennsylvania writes in her blog:

This is probably one of the most under-reported events I have experienced in recent years, particularly when it may result in an increase in postage costs of as much as 50% overall to an uneducated law firm. We’re not talking about just an increase of 2¢ per letter. We’re talking about a whole new labor-intensive mailing process, and some significant price increases in actual postage for the bulk of mail which is sent by a law firm. In fact, for most firms the most significant price increases aren’t even on the radar screen.

It seems that the US Postal Service is going to start considering other factors in addition to weight when determining the cost to send a letter or other package.  This new initiative is called Shaped–Based pricing and Ellen links to this site which provides numerous examples of the changes and the costs associated with them that will take effect.

I strongly urge you to read Ellen's entire post and to consider the impact this new initiative will have on your current mailing practices.

With the introduction of My Maps, Google continues to expand its offerings of useful tools on the Internet.  Using a very simple tool set, you can add placemarks, shapes and lines on maps that can be shared with the public or treated much the same way as an unlisted number: only those you provide the map URL to will be able to find it.

You can also link photos and video to your placemarks and the maps can be shown either as a map view, a satellite photo or a hybrid of the two which will also display all of the information you placed on the map.  Thinking about a few legal applications for this new service, one can envision placing indicators on the map for locations of properties, scenes of various alleged crimes, displaying photos or images associated with the locations and much more that can be shared with clients for review and reference. These are, of course, in addition to the standard uses such as creating maps to your office or identifying specific locations in real estate or other business transactions. You can also create maps with the locations of courthouses and nearby parking areas that can be accessed by your clients to make it easier for them when meeting you in court or another location.

Unfortunately, when you print your maps, it does not print your annotations to map nor does a print the aerial photograph either.  This will most likely either be at a later date or someone will create a tool to do this.

Your maps can also be searched and viewed using Google Earth.