Strategic Matter- Spring 2012 V1

Door Number Three

Door Number Two

Net Realizations We all hear arguments regarding clients not paying for so or hard cost recoveries, and while it is true that some clients are taking a very hard stance against them, the vast majority of clients will and do pay for reason- able, well-documented charges. is fact, then, leads us to examine the status of hard costs versus so costs. When comparing hard versus so costs, the key is in the net realiza- tion. Net realization is the di erence between what the rm bills and actually collects while also taking into account what is being written o internally by the billing attorneys and externally by the clients. e average net realization on so costs is right around y percent (50%) while the average hard cost realization is approximately 98%. e di erence lies in trust and veri ca- tion. Both internal resources and external clients trust that hard costs are legitimate charges, and trust in the legitimacy of the charges directly manifests in a signi cantly increased collection on the costs.

Mattern Plan B™ Right about now, you should be asking yourself: • Should I be converting my rm’s operations to more of a hard cost operation? • Won't this require a change in the way I sta , equip and manage my rm’s on-site operations? If your rm is outsourced and is su ering from poor realizations, then Mattern Plan B Cost Recovery may be the way you will want to migrate your operation. is is where you convert your on-site operation into a hard cost operation. It may require changing the way you sta , equip and manage your rm’s on-site opera- tions. e advantages of this type of set-up are that it lowers costs, lowers billable rates to your clients, and increases realizations for your rm. Your rm will also be out of the cost recovery business. In the end, change is di cult. If your rm has been operating on price reduction as a lead negotiation strategy, it is di cult to change that concept. If your rm is experiencing

poor realizations and is considering migrating to a more hard cost opera- tion, that, too, will come with changes in the culture that are di cult. But change is only di cult in the short run; in the long run, the business of running a law rm is not a game won in the short term, but one that is managed for the long term with strategies that bene t the entire organization.

Mattern Plan B™ Cost Recovery may be the way you will want to migrate your operation. The advantages of this type of set-up are that it lowers costs, lowers billable rates to your clients, and increases realizations for your rm. Your rmwill also be out of the cost recovery business.

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