Are your clients pushing back when getting charged for legal research?
When I talk to law firms, Cost Recovery is a popular topic for discussion. Let’s first understand the issue.
- Has your firm ever passed on legal research costs?
- Is your firm currently passing on legal research costs?
- Have clients renegotiated the charges allocated to legal research costs?
- Have the number of clients that pay for legal research costs diminished?
There are some firms who will not pass on legal research cost, but for the rest, most of the answers would be “yes”. However, the solutions to overcome these questions are across the board. There are many firms whose clients will pay for some of their legal research costs but the number has drastically declined in the last several years.
Cost Recovery will obviously affect the bottom line as the cost of research is increasing along with fewer clients who are willing to pay for it.
What are your options?
- You could raise hourly rates. But are your increases keeping up with the cost of legal research?
- You could reduce costs by looking at duplicative products or eliminate expensive resources that you are paying for but not using.
- Or, you could just make less money!
All three options come with challenges. The last one is not a logical option but it can happen. Obviously, this is an issue that is discussed in many attorney/client agreements.
Every firm keeps an eye on expenses. But with so many vendors, how do you keep track of the market rate for your resources? When do you know if you are over subscribing? It’s important to do a deep dive with your expenses to make sure you are not leaving money on the table. Yes, this takes time and money, but if you can reduce your expenses, the savings are well worth it.