Yes, Outsourcing is a Passable Expense
Business is complex and few industries are as complex as legal. In order to remain competitive, it’s important to work out your cost of service carefully and bill accordingly. You may have considered whether the cost of record storage and retrieval outsourcing is a passable expense. The short answer is that yes, it is. But let Record Grabber elaborate further.
What is a Passable Expense?
Legal business services always have flexible costs associated with them. You are entitled to bill your client for some services. There are two types of cost that you may bill:
- Hard Costs: the costs of your expertise, knowledge and skills that form part of a standard costing
- Soft Costs: the associated costs of employees’ other work such as research and data capture
These soft costs have a name – “passable expense”. Your practice may not be aware that outsourcing is a passable expense. By using Record Grabber’s services for record retrieval and storage, the costs you incur as part of our service may be billed along with your other services, to your client(s).
What is Not a Passable Expense?
A passable expense is one that a service provider may include when billing a client; it is applicable against individual and specific cases. The costs associated with storing and maintaining electronic records stored on your server or network, however, are not passable. These are typical office expenses considered part of your day-to-day business operations. Any costs should be claimed against your revenue to calculate your taxable profit. Outsourcing is a passable cost, but in-house record retrieval is not.
The Dilemma of How and When to Pass an Expense
The Model Rules of Professional Conduct from the ABA states how professionals ought to record and recover their passable expenses such as record access. Specifically, this centers on full disclosure of when and how a new cost is being recorded and billed. If this is confusing, then perhaps Record Grabber’s outsourced record retrieval and storage service is the ideal solution for your medical legal practice. Passing on the cost is easy. We break our billing down in simple and practical terms. You can bill your client for these costs because it’s a hard cost rather than a soft cost. You’ll never need to calculate percentages because all costs are associated with a specific case.
Are you ready to try out Record Grabber? Get started here!
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