Law Practice Management-- How To Determine Your Fees
Identifying costs is a hard law practice management task for many lawyers when thinking through their law practice marketing strategies. In identifying costs for certain services, attorneys typically disappoint what they should charge. When making their law firm marketing plans, too many lawyers are afraid of even charging the competitive cost for their services. Even more, they make the rates choices typically without any information or conceptual structure. In addition, rather of focusing their efforts on how they can validate getting leading dollar for what they offer, they charge a charge that is frequently way too low and often really can frighten prospective clients who believe there is something missing out on from a service that is " low-cost". In addition numerous lawyers don't understand that most buyers in the market by far are " worth buyers" and not trying to find "cheap".
Prior to you sit down and start thinking through your law practice management pricing method you require some distinctions around prices frequently utilized in law firm marketing planning. Do understand a law practice management law company marketing strategy is not reliable if you just attract people who desire to pay the least expensive cost for a service. Rather, you want to focus your law practice management and law company marketing plans on bring in clients who will end up being long term properties to the firm.
There are essentially four ways of identifying how much you must be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Pricing
This is one excellent method of determining pricing. Get your assistant to support you in this law practice management job and invest some time discovering what the series of rates remains in the community. Have her do a "mystery shopper" study by calling around as if he/she were a prospective customer and discover what your rivals say on the phone to her around prices. She may need to call from her home phone to prevent caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and use to exchange your charges for their costs or you could do that with other attorneys yourself in your market. If you truly wish to enter it and have optimal information you can compose possibly a few dozen competitors in your marketplace and state you are doing a cost survey and if they would send you their fee list you will create a composite list that does not recognize those responding and send them a copy of the results. To keep it basic for them include a stamped, self-addressed envelope with a list of the most common services used in your practice area. Now you will see what individuals are charging for services similar to those you use. You must be able to develop a variety of costs. Use this variety to set rates for your own services. My recommendation in law office marketing preparation is to charge at the 75% level of the list. So you ought to be at or in the leading 25% of the fees.
Keep in mind that in general it is not a excellent law practice management strategy to complete on cost. Most possible clients will see pricing that is too low as a signal that there is something missing either see it here from the service, the company, or the firm.
The Cost Approach in Law Practice Management Prices
This law practice management pricing method is really straightforward actually. One simply identifies what the expenses are to provide services or products and includes on a affordable profit, someplace in between fifteen percent at the least and maybe thirty 3 percent at the most. The most common error in law practice management utilizing this approach is to disregard to include some form of your expense. Solo and small company attorneys tend to not include their own wage!
In law practice management frequently you count yourself out of the costs and you should include yourself in the expenditures. Often you are doing at least some of the management work. If you are all three of these in one, you ought to consider one income as due you for your time and competence as the technician and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Prices
This is the method utilized by lots of automobile mechanics (it is called "the flat rate book") and other service companies. This method is where you figure out a set rate for various tasks and charge that rate no matter what. Another example using this technique is how managed health care has actually used this system with doctors and healthcare facilities .
The "Rule of Three" in Law Practice Management Rates
This " guideline" called the " guideline of three" used in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your Certified Public Accountant what they think about it and they will like it. To begin we are going to be believing in thirds. For the very first third we will take the total amount of salaries/bonuses (not advantages just incomes-- advantages enter into the 2nd third coming next) for the profits generators and/or timekeepers (this includes you if you are creating revenue) and call that our first 3rd. Add up the incomes of the legal representatives, paralegals, and legal secretaries who generate income or are timekeepers and call this your first third (lets just say that number was $100,000 to keep it simple). Whatever that number is take that number again and it is your second third which we will call your "overhead" ( therefore that second third is $100,000 and don't forget you if you are doing some managing partner type responsibilities because that part of your time goes here in overhead). Then take that very same number and we will call that your last 3rd, which we will call gross revenues (another $100,000). What you require to do is take the total amount (in this example $300,000) and now determine how much you need to charge per billable hour, per repaired rate or the number of contingency cost cases won to be sure you struck the target we should hit given our very first 3rd number times three (in this example $300,000).
This technique reveals you how much per hour you require to charge. Given that you know the number of billable hours each profits generator can do per month, just divide that into your total of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out properly. As long as you hit your targets you will be ensured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you should have a fair revenue as well click to find out more do not you agree? This technique is referred to as the Rule of 3. If this method is a bit too confusing do feel complimentary to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a great idea to think through all of these rates approaches in identifying your law practice management rates technique before setting a cost and moving ahead with a law firm marketing strategy to guarantee you are completely checking out all choices. In another short article I will tell you how to speak to potential customers so you never have a problem getting the charge you should have.