Should firms allocate overheads to individual clients or matters?

This is not the same question as 'could' firms allocate overheads - for most firms that record time, the answer here is yes

But with 'should' - there is judgement involved, and typically I'd give a very fence-sitting 'it depends' answer as a consequence

There's an accounting purist view that allocating overheads is somehow 'better' - more accurate, gives more insight and so on

But in practical terms, I think the key question is - what does allocating the overheads achieve, or enable the matter partner to do, that they can't do if the overheads are not allocated to individual matters?

And if I'm honest, I don't think there's a good answer to that practical question - I don't think it achieves or enables all that much

An individual matter partner can control things like (a) how much the client is charged (b) what scope of work is agreed and worked to, and (c) what staff, at what seniority, are allocated to the file and so on

All of these factors drive profits at the matter level, and the effectiveness of the matter partner in doing these things well can be measured by recording time to the file at the cost to employ the fee earner (NB: not their charge rate)

But can any given matter partner control how much rent the firm pays? Or how much the central marketing teams spends? Or the cost of that new IT system?

No

And whilst they sure can argue about the fairness of the method to allocate the overhead(!), to what end?

If ultimately they can't control the underlying expense, I don't believe there's anything to be gained from allocating overheads to individual matters

Given the effort to perform and reconcile the allocation, and the even greater effort to justify and argue about it, I think the time can typically be better spent doing something (anything 🙂) else

Welcome views to the contrary - what practical, actionable benefit does allocating overheads to individual matters bring?