Objective:

• What is the difference between a hard and a soft cost?

Environment:

• Clio Manage

Additional Information:

• Hard and Soft costs help firms to accurately classify their expenses, and are important for business intelligence, compliance with audits performed by law societies or bar associations, and for reporting taxes (particularly for firms that are growing larger).

Answer:

Hard costs are expense recoveries paid on behalf of a client to a third party vendor (e.g. court filing fees, translators, medical records).

Soft Costs are expense recoveries that are not directly related to a payment for a third party vendor (e.g. photocopies, postage).