Did you know that the net percentage of soft costs that were paid by clients only dropped by 4% from 2004 to 2016?

Is 40% percent of something better than 0% of nothing? In regard to cost recovery, most people would say “yes” — as long as the cost to recover that 40% is less than the amount recovered.

For copies, prints and scans, if your firm’s recovery percentages are within industry standards/benchmarks, actual costs are in-line and the recovery rates your firm uses are acceptable, your firm probably recovers in the 35% to 45% range.

For most firms, when it comes to telephone, postage, and facsimile charges, chances are that the volume and/or costs to collect and process the data do not warrant further recovery. If your firm is recovering, and the internal cost of management and the collection system do not exceed your recoveries, let it ride.

For litigation support and eDiscovery services, many firms are struggling to develop a model that captures and accurately recovers this exploding data storage area. Some of the hurdles are:

  • Infrastructure and software costs have been an in-house cost that was not historically recovered
  • Developing a clear and defensible charge back model in a buyer’s market
  • The hybrid nature of this area with a combination of in-house and outsourced costs

In areas such as legal research (the most attacked area of cost recovery), firms are questioning whether to forego this recovery stream or continue to collect the 10% to 15% net realization that most firms collect.

How do you know what to do with your cost recovery strategy? Should your firm procure a new system and continue on the same course, or is it time to examine your strategy? Should your firm abandon cost recovery altogether? Should your firm migrate your recovery to a hard cost model which has much higher realizations?

A lot of questions and not a lot of clear cut answers.

One answer is Mattern & Associates, LLC, unbiased back and middle office consultants and cost recovery experts.

We will analyze your firm’s existing cost recovery strategy, current rates and workflow and benchmark these against the industry and your peers. We will then tell you how your firm compares to the market and outline a detailed blueprint on how to improve the recovery of costs based on the client mandates under which your firm is operating.

As one of clients stated:

Each project with Mattern produced incremental recovery revenue for the Firm. By employing best practices, the Firm was able to recover about 60% of its lost expenses; and later implementing new hardware and software, the Firm was able to recoup the rest of its loss.
Chief Financial Officer
Amlaw 100 Firm