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Client Expenses – Not Whether They Pay, But How Much

by Carolyn Elefant on November 28, 2005 · 4 comments

in Ethics Issues, Law Practice Management, Setting and Collecting Fees

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Over at The Practice, Jonathan Stein ponders whether clients should be billed for smaller incidental costs like photocopying or faxing.  Jon falls on the side of rolling these incidentals into overhead rather than reflecting them on a client bill.

I agree with Jon.  But for me, the much trickier question when it comes to billing clients for expenses is what our obligation is, as attorneys to seek out the lowest cost options when we’re passing the costs on to our clients.  The question is more timely now than ever because with the advent of the Internet, we’re able to gain access to so much more price information and more readily obtain lower prices than a decade ago.

So for example, if I’m traveling for a client on business – and my
client has agreed to pay the expense – can I just go and book whatever
hotel and airfare I feel like?  Or do I have a duty to save my client
money and look into whatever discounts might be available on Hotwire or
Travelocity.  What about when it comes to deposition transcripts?  Do I
have a duty to find the lowest cost provider (in my area, there’s
substantial variation in the per page costs) – or just use whomever is
convenient?

From an ethics perspective, I know that my only obligation is that
my overall fee be reasonable or “not excessive.”  But from my
perspective, I don’t know if the ethical perspective provides the right
answer here.  I know that no matter how much my financial situation
improves, I’ll always be shopping around on price, looking for the best
balance between cost and quality.  In other words, while I no longer
stay in $35/night hostels, I don’t see the need to pay top dollar when
nice places can be found online for lower rates.  Don’t I owe my clients the same courtesy when I’m  spending their money?

  • http://buechelandconley.com joe conley

    If you were doing this on your own dime, would you look for the cheapest rates for two or three days? No. Would you comparison ship a little bit — two or three different options — and then take the best deal: price, quality, reputation all considered? Yes. You should probably do no more or less for a client.

  • http://buechelandconley.com joe conley

    If you were doing this on your own dime, would you look for the cheapest rates for two or three days? No. Would you comparison ship a little bit — two or three different options — and then take the best deal: price, quality, reputation all considered? Yes. You should probably do no more or less for a client.

  • http://www.dayontorts.com John Day

    I think clients should be billed for copying, fed ex charges, etc. Why not? Each client then pays for exactly what they “use” as opposed to having some clients subsidize the “big user” clients? I have some clients generate 500 photocopies and some generate 250,000. It only seems fair to me that those who generate more should pay more.
    (We have found that on “big” copy jobs we can save the client money by outsourcing – and we do so.)
    The key is disclosure and setting a reasonable rate of reimbursement.
    Regarding airfare and hotels: My clients (PI and WD plaintiffs) do not want me flying first class or staying at the Ritz. So I don’t. But I have had business clients in the past who actually wanted me to do so. So I did.
    Once again, what is fair depends on the circumstances. It requires open, honest and direct communication and full disclosure.

  • http://www.dayontorts.com John Day

    I think clients should be billed for copying, fed ex charges, etc. Why not? Each client then pays for exactly what they “use” as opposed to having some clients subsidize the “big user” clients? I have some clients generate 500 photocopies and some generate 250,000. It only seems fair to me that those who generate more should pay more.
    (We have found that on “big” copy jobs we can save the client money by outsourcing – and we do so.)
    The key is disclosure and setting a reasonable rate of reimbursement.
    Regarding airfare and hotels: My clients (PI and WD plaintiffs) do not want me flying first class or staying at the Ritz. So I don’t. But I have had business clients in the past who actually wanted me to do so. So I did.
    Once again, what is fair depends on the circumstances. It requires open, honest and direct communication and full disclosure.

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