Issue link: http://read.uberflip.com/i/83718
www.iltanet.org If you are not getting full value from cost recovery, it is likely because your firm is not capturing enough data. Furthermore, the way law firms view themselves has changed. When I started in this industry more than 20 years ago, law was considered a profession, and firms were not too focused on profitability. That has changed. Most firms now run as a business with a steely-eyed focus on managing and controlling expenses. They need to transfer as much expense as possible to clients. And they need good information to make good decisions in order to minimize whatever expenses remain. Immediate Impact: Cost Recovery 2.0 The statement I often hear that cost recovery is dead is inaccurate. The 8-track player is dead, but portable music is not. The foot switch on your car to turn on high beams is dead, but being able to see at night on a dark road is not. The fact is that the "make a copy, bill for a copy" model is broken. Also dead is the thought that the most a firm should do is recover for copies when the attorneys feel like putting in the client/matter data. But cost recovery is not dead. If you are not getting full value from cost recovery, it is likely because your firm is not capturing enough data. Take a look at how many copies are charged to "firm expense" rather than a client. Are you billing for prints? If not, are you at least tracking them? Are you billing for scans? How effective are you at tracking or billing for hard costs, such as overnight delivery, taxis, couriers and legal research? 42 ILTA White Paper Eating costs that can be recovered is called financial "leakage," and it often starts with a partner who is not willing to enter the proper client number in the cost recovery system when making copies, or when a paralegal overnights a package and doesn't enter the proper account code. That copy job that got the standard 999 code is now hopelessly trapped forever; there is little chance of ever assigning it a proper client and matter number, no way of it ever seeing the light of day on the prebill and no hope of ever getting it recovered from the client. The same can be true for a hard cost, whether it's FedEx, legal research or a car service. Once the transaction is lost, the cost can almost never be recovered. Modern cost recovery systems make it easy to capture all expense data. They allow automated imports of all expense data, including hard costs, as long as the invoices can be delivered electronically. They make it easy for users to input data by anticipating their entries and making suggestions based on prior matters and favorites. And they automate the process of managing exceptions, so users who do not enter proper codes at the MFD can easily add them later or use autocorrecting technology in order to increase accuracy. Collecting more and better data (which older systems simply cannot do) allows a firm to immediately increase the amount it recovers from its clients. But there is a lot more that can be done with that information.