Linda Artesani shows law firms how to track and bill soft costs like postage and office supplies using LeanLaw software. She walks through creating expense entries, assigning them to clients, and configuring admin fees in your billing workflow. The goal: recover overhead without annoying clients.
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Hi there, Linda Artesani, Artesani Accounting. A couple weeks back, we discussed hard costs, direct costs, things like filing fees and maybe witness fees and direct fees that go to one specific matter and how to account for them. So I'll have a link for that inside the blog post so you can ping back to that actual post. But this week we're going to talk about the soft costs, those Fees that are also law firm overhead. They could be copy expenses, postage, things of that nature that you might spend some money FedExing a package to your client, but also use the FedEx for maybe just billing out or something to do with the law firm. So those are the fees that are a little bit more of a gray area. I see it with firms that they might do a price like all postage is just a $10 flat fee. They don't bother figuring out how much was used per client. Some do. Some just say, I'm not bothering with this. This is such a huge extra admin fee that they'll do an admin fee, a percentage, and add that to the bill so that there's just an admin fee. So it's a flat-out admin fee. So they're getting back some of the fees if they're billing hourly. They're getting back some of the fees that it takes for the admin to kind of package everything together. Or some other fees that might come in line under that umbrella. But there's also some law firms, they will just raise their rates to kind of COVID that. So I find that a lot of times with attorneys that having this discussion with them, if you're getting into that advisory role, is important because I know I've been on the other end of getting a bill from an attorney with all these line item things, and that can be like an irritant. So if you just raise the rate a little bit and kind of COVID it, A, it helps with your staff trying to track all that stuff, and B, it'll maybe Take a little bit of the, oh my goodness, they're charging me to lick the stamp kind of a mentality, right? So one of the ways it's easy to track this is using LeanLaw, my favorite app. And I'm going to take you into LeanLaw and QuickBooks and show you how— actually, just take you into LeanLaw to show you how easy it is to track soft costs and add the admin fee. It's a couple of features that are inside the platform. I think you'll really see why I love this software. It works really well with attorneys and QuickBooks. It's a premier app. Let me share my screen. Okay. Show you how it works. So here we are in LeanLaw, a nice bright screen, right? So we have multiple tabs here at the top: Calendar, Time Entries, Expenses, Billing Matters, Reports. So Expenses is where we want to be. And for soft costs, you're not going to be really entering them in QuickBooks. Yes, you will enter the cost for the postage, the cost to pay FedEx, the cost to pay for paper and the ink for the printer. That'll all come through the law firm, but you're really tagging that to exactly what the expense is. Postage, the ink would be under Office Supplies. Those things would go right into— the— indirectly into the actual expense that they are, overhead expenses in the law firm. But this is going to reduce a little bit of this because it's going to show up on your books as billable expense income. It's going to offset some of the expenses because you're going to show this additional income, but it's really the only way to track it. What you do here is you just come over to this green button and click Create an Expense. It's pretty simple. Let me move the picture over here. And then you can just pick your client or matter. You can create templates, which will save you a lot of time if you have these repetitive tasks. You can create templates, and I've got a few here. Postage would be one, and I can just pick the amount. So it automatically came up $10 because I've already set it up that way. But you know, maybe you want to make it $7.50. You can always change it and then hit save, and then you hit save and new. You can start to add them. So when you look at these in the ready to be billed, you will see that now have this $7.50 amount ready to be billed back to the client, and the effect again will go on the income line because it's going to be income that will offset the expenses that we're tracking. Tracking underneath the overhead expenses for the firm. It's that simple. Now I will take you over to settings. I'll move this over here, take you over to settings, and I'll show you where the admin fee is. So if you click on the billing workflow fees, you'll see there's an admin fee and it can be a percentage. So you can pick like 1% or whatever you want to put. You can just Change it here and make it a percentage. And then you can also pick the product or service that you want to book it to and just select it here. So I'm not going to select that, but that is how you can get to that, that particular place inside of LeanLaw to add the administrative fee. Again, this is something that you might want to think about with the attorney. If you want to sit them down, look at how they're doing their workflow. Never go and jump into a client's file and make sweeping changes because they won't— they'll be like, whoa, put the wall up. But as you get to have that, formulate that relationship with the attorney, You might want to sit them down and say, hey, look, I work with these multiple law firms and this is what I'm seeing across the board. A lot of them are just raising the rates and just recouping these expenses. It's helping with adding to keeping clients happy. And also there's less things being written down because attorneys like to write down a lot of their bills. And this way you won't have to write down some of those fees. That's important, keeping that harmony. And remember, most law firms, the way they get clients is referral-based. So keeping happy clients will help keep a happy law firm and help you make a growing law firm as well. So on that note, I hope that this kind of explains soft costs. If you have any questions, comments, feel free to reach out. I have— if you're an attorney that just doesn't understand how this stuff works and maybe you're trying to do it without LeanLaw, reach out. I can help you, maybe get you started to work in LeanLaw. We do get a discount if you work with us. If Also, if you are an accountant or bookkeeper and you're kind of new to this realm of working with attorneys and law firms, you want to learn more, join our Facebook group, Accountants Law Lab. The Accountants Law Lab is a free group. And then we also have a paid private group where we meet one-on-one. So we've got a few options for you. I hope you all have a wonderful, wonderful week. Bye now. Bye.
