Question

The law firm of Greenberg Traurig LLP has been asked to represent a local client. All legal proceedings will be held out of town in Boston. The law firm's accountant has asked you to help determine the incremental cost of accepting this client. Classify each of the following items on the basis of their relationship to this engagement.

a) Direct costs related to representing the client.

b) Indirect costs associated with holding legal proceedings in Boston.

c) Costs that would have been incurred regardless of accepting the client.

d) Additional costs specific to this engagement.

Answer 1

The incremental cost of accepting the client for Greenberg Traurig LLP can be classified into direct costs, indirect costs, costs that would have been incurred regardless, and additional costs specific to this engagement.

Step-by-step explanation:

To calculate the incremental cost of accepting this client for Greenberg Traurig LLP, we need to classify each item based on its relationship to the engagement.

1. Direct costs related to representing the client: These are costs directly associated with the client, such as attorney fees and expenses specific to the case.
2. Indirect costs associated with holding legal proceedings in Boston: These are costs incurred due to the location of the legal proceedings, such as travel expenses and accommodations.
3. Costs that would have been incurred regardless of accepting the client: These are costs that would have been incurred regardless of this specific client, such as office rent and general staff salaries.
4. Additional costs specific to this engagement: These are costs that are unique to this specific engagement, such as expert witness fees and court filing fees.