Soft Cost

What is a soft cost?

A soft cost is an internally incurred expense charged to a client matter, such as copying, printing, scanning, postage, or research database time. Unlike hard costs, no third party invoices you for it directly; you are recovering the cost of resources you already own. Soft costs are where client expense recovery has eroded most sharply over the past two decades.

Why clients push back hardest here

Billing guidelines increasingly treat soft costs as overhead that should be built into rates rather than passed through. Per-page copying charges and flat research fees are frequent targets for disallowance. The objection is reasonable: a charge of 25 cents per page bears little relation to actual cost. Firms that still bill soft costs aggressively often find the amounts written off anyway, after absorbing the administrative work of tracking them.

Deciding what to charge and what to absorb

Compare what you bill in soft costs against what you actually collect. If recovery runs low, the tracking is costing more than the revenue. Many firms now absorb soft costs entirely and adjust rates to compensate, which simplifies billing and removes a recurring friction point with clients. If you do continue charging, publish the rates in the engagement letter so nothing on the invoice is a surprise.