Hard Costs Soft Costs with guest host Rossana Liab

Hello.

And I will get started on the recording. Perfect. Okay, well, welcome to the Legal Accounting Wednesday. We have a special guest with us here today, Rosanna. And let me just grab our slide. One second here and I will open that up and slide right over. So Rosanna is the founder of Next Door Bookkeeping and she is one of our most amazing members in the Accountants Law Lab group that we have on Fridays. Rosanna, please just go ahead and do a mini intro for us and then we can get on to our fun little topic and game today. Yes.

Hi. Thank you. Thank you, Sarah. Hi, everybody. Yes. Like what Sarah said, my name is Rosanna Leib. I'm the founder of Nextdoor Bookkeeping. I'm in Tampa, Florida, and my niche are lawyers. That's why I'm here. So, and I've been doing this several years now. And yeah, and I love it. I love it. And I love being in this group. It's so helpful. And it's such a lot of information that you can get, get out from. So yeah.

Well, we love having you. I see that we have a few of our other members as well hanging out with us today. So welcome, everybody. Thank you. Rosanna, are you ready to play a fun little game with me?

Yeah, yes, sure.

That'll be fun. Let's go to a screen share. I'm going to go to the tab. Okay, here we go. Let me know if you can see this. Hopefully you can. It's— yeah, okay, great.

It's loading. It's loading.

It's loading. Okay.

Now I see it.

Okay, cool. Awesome. Okay. So I made a fun little game and the object here is behind the questions are some questions, true or false, or you can elaborate on underneath hard cost, soft cost, or you tell us. So just call out the color and the column in which you want me to reveal and then we'll kind of go through it together. So I'm ready to get started.

Okay. I would like to see soft cost green.

Green. Okay, you ready?

I'm ready.

Do you like bike rides?

Yes, I do, especially in Florida. Yes, I enjoy it.

Let's go to another one.

Okay, uh, let's go hard cost pink.

Oh my. Okay, ready for this one? You're picking all the fun ones. Let me just tell you. What did you eat for breakfast?

Oh, oh, um, I had some type of cereal with acai and with strawberries, blueberries, and yogurt. Yummy. Delicious.

Yes, delicious.

So I got all my protein in and my fruits. So good breakfast.

Let's see if we can get a hard one in here. Pick another one.

Okay, I'm gonna go hard cost yellow.

Okay, let's do it. Filing fees. Are those hard costs or soft costs?

Filing fees are hard costs.

And are they typically hard costs because—

Yeah, they're typically hard costs because it's go— the lawyer pays them directly till— and then It ends up as accountant— I'm sorry.

No.

Yeah, it's typically advanced client cost. It ends up as advanced client cost where the lawyer— where the client will have to pay back.

And typically it's attached to a matter. So obviously, yeah. So it's something. And to your point, client pays it back. So very well done.

Okay.

Okay.

Thank you.

Next one we want to go to. Okay.

Let's see something easy. Hopefully you, you tell us green.

Okay. Legal research. Where do we tend to find those?

Hard or soft cost?

Okay.

I have a client that does it under soft cost and they have a specific dollar amount and yeah, so the administration Uh, does take care of that part.

Absolutely. That— yep, we see that often. Okay, next one.

Uh, okay, tell us, uh, Ping, you tell us.

Okay, ready?

I'm ready.

Ice cream or cake, which do you prefer?

Ice cream.

Ice cream.

Chocolate chip ice cream.

Oh, very specific. I love that about you.

Yes, that's my favorite.

That's your favorite? Okay, chocolate chip. Okay. Where would you like to go to next?

I would like to see soft cost pink.

Oh, pink. Okay. Sorry.

That's okay.

Fixed or FedEx fees.

Soft cost. Those are definitely soft cost. Yes. Again, it's—

We find them in hard costs once in a while, or advanced client costs, depending on Like you said earlier, the dollar value or the what's being sent. So yeah.

Yeah, and depends how the lawyer want to see it too.

Exactly.

It can be 2 ways.

Okay, next one.

Okay, I like hard cost, uh, green.

Hard cost green. Okay, witness fees.

Oh, witness fee. Um, I Would be hot cost.

I mean, yeah, they really are. I mean, it's funny, this is great for us to review because sometimes we see them in the wrong place and we don't know, or the way they're discussed by the firm with us, we have to navigate and make sure it's attributed to a client if it's being charged back to Typically, we find those to be hard costs. If they're general overhead expenses like legal research or FedEx fees that you typically incur but are part of the soft cost, so they're, they're not a direct call-out, I guess you could say. Okay, so where should we go to next?

You tell us, yellow.

You tell us, yellow.

Parking. Oh, it depends, but I say soft cost.

Yep.

So if it's the traveling for a matter or something, that probably would maybe hard cost. Depends again, the lawyer, how they want to enter it in.

Yep. I love that. And I love the way you're answering these because it all also depends on the firm. So, and I guess our last one.

Yay! Outside counsel. That's a good question. That one, is it outside counsel? It's not soft cost. If it's with Meta, it is a hard cost.

Yeah.

So it would be like the mediation.

We see it a lot of times in hard costs.

Okay.

So yeah, yeah, yeah. But I mean, again, these are all great pieces to know, to have conversation. Um, and I'll just move off and go back here. They're great pieces to know, to have conversations with, with folks and, and understand like, okay, um, where do these best align? How does the firm— like you said something key, and this is so true. Sometimes firms have a dollar value, so they know they're going to incur this overhead cost or the, you know, soft cost. But if it reaches over a certain value, they're not going to absorb it. They're going to want to pass it on to the client to pay for their fee. So that's pretty normal, and I love that you brought that up. Um, let's see here if we can go back to our slide. Open this up and see what— oh, we're just going back to the chat. So here, I'll stop sharing, that way we can chat. Do you find, Rosanna, that hard and soft costs tend to be confusing for especially on the newer side of accounting members? Entering into this field. It's a hard one to navigate. Okay.

Oh yes, when I started out, it was a little bit confusing to me because especially like, uh, office— I mean, the, the postage or the, uh, administration, uh, fee, how do you separate them? And I mean, how do you separate with the matter, you know? And, and like how you said, like postage, uh, I mean, they, the lawyers, they pay a monthly uh, expense on a— for a postage company, like $100 or $300. And then, uh, and then how they separated with the matter, because then they do a certification maybe for $7 or, uh, $22 for some other mailing for a specific matter. So instead doing that, it's just gonna go directly as an expense, and then it will even it out whether where the advanced client costs get involved in a, like, a research charge, just an admin fee.

Admin fee. So that's what I was going to ask you, which you touched on it. I'm seeing different trends and engagements where there's a flat rate fee that kind of helps shelter this burden. So it's separate from the legal fee. It's to help with the soft costs, but it's not intended for hard costs. So, um, sometimes when you're asking the questions or you're working with a firm, you kind of have to dive in a little bit more in the operations to understand what basically their understanding of it, because maybe the partner gets it, but the translation to all the other key people in between.

Yes.

That's a tough one. Um, and so, and we tend to see that as a as a moment of clarity, best practice, if we can help them. It allows us to kind of help a little bit more or figure out new ways to help them kind of see within their state guidelines and rules and what they're allowed to do. So, but yeah, I remember initially myself even way back when I was like, oh, wait a minute, what does this mean? What's the terminology and the language? And sometimes you— it is known as hard costs. Otherwise, it's known as advanced client costs. Or in dialogue, you say, as you advance fees on behalf of your client, it's like ding, ding, ding, it clicks for them, right?

Mm-hmm.

Or, and then when you talk about the soft costs, you really have to get tangible. Like you said, with, is this an administration fee? Like, is it a postage fee that you're paying for? Some people still charge for faxes. Yes, that is a thing, which is not modern day, but it does happen. For printing, especially if they're printing big things. So they'll have those costs in there, and how they keep track of it is also kind of a mystery. So learning about that. So we have lots of opportunity, I feel, to help firms grow and learn how to bridge the gap between what is needed in the accounting world and get it in the correct places to the operational side. So But you did so well. Thank you for playing the game with me.

That was fun. That was really fun. I love that.

Yeah. So I have no idea. We're still live on Facebook. I can't tell with this new thing, this new setup. But Rosanna, I just wanted to say thank you so much for joining us today and that we get to highlight you. You are such an important person in our community, in our immediate community with our group on Friday. And we enjoy all those members. And we know that you do a little extra work to help us moderate and keep things going. So I thought it was just a nice way to celebrate you and thank you for that. So yeah.

A pleasure. This is a pleasure. And yes, thank you so much. Thank you for inviting me.

Absolutely. Well, you can find us here next week. Not sure what I'm going to cover yet. See if maybe we spotlight somebody else within our group. And then Linda will have these things posted when she gets a minute and she'll upload all of this. information for us on our other channels and our links and so forth. So again, thank you, Linda, for being our marketing guru and all the wonderful things you do. Enjoy. Goodbye, everybody. Thank you. Bye. Thank you.

Okay, okay, there we go.

We're done?

We're done.

Okay, we're done.