Law Practice Management-- How To Determine Your Fees
Identifying costs is a tough law practice management task for many attorneys when analyzing their law office marketing plans. In figuring out costs for particular services, lawyers often fall short of what they must charge. When making their law firm marketing plans, too many lawyers are scared of even charging the competitive price for their services. Further, they make the rates choices frequently with no information or conceptual framework. Additionally, instead of focusing their efforts on how they can justify getting leading dollar for what they provide, they charge a cost that is typically way too low and often actually can frighten potential clients who believe there is something missing from a service that is " low-cost". Additionally numerous attorneys do not recognize that the majority of purchasers in the market by far are " worth buyers" and not looking for " low-cost".
Prior to you sit down and begin thinking through your law practice management pricing strategy you require some differences around pricing commonly used in law company marketing preparation. Do understand a law practice management law firm marketing plan is not effective if you only draw in people who desire to pay the most affordable charge for a service. Rather, you desire to focus your law practice management and law company marketing plans on attracting clients who will become long term assets to the company.
There are essentially 4 methods of figuring out just how much you need to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Rates
This is one good way of identifying prices. Get your assistant to support you in this law practice management task and spend some time discovering what the variety of rates is 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 competitors say on the phone to her around prices. She may need to call from her home phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your rivals and provide to exchange your costs for their costs or you might do that with other attorneys yourself in your market. If you truly desire to enter into it and have maximum information you can write possibly a couple of dozen competitors in your market and state you are doing a charge 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 easy for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what individuals are charging for services comparable to those you offer. You should be able to develop a variety of costs. Use this variety to set costs 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 costs.
Keep in mind that in general it is not a good law practice management technique to contend on cost. Most prospective customers will see prices hop over to these guys that is too low as a signal that there is something missing out on either from the service, the supplier, or the firm.
The Cost Method in Law Practice Management Pricing
This law practice management prices approach is extremely simple really. One just identifies what read here the expenses are to provide products or services and includes on a reasonable profit, someplace between fifteen percent at the least and maybe thirty three percent at the most. The most common error in law practice management utilizing this technique is to overlook to include some type of your cost. Solo and little company lawyers tend to not include their own wage!
In law practice management frequently you count yourself out of the costs and you need to include yourself in the costs. Typically you are doing at least some of the management work. If you are all 3 of these in one, you ought to consider one wage as due you for your time and proficiency as the service technician and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Pricing
This is the technique used by many automobile mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you identify a set rate for various jobs and charge that rate no matter what. Another example utilizing this method is how handled health care has actually utilized this system with health centers and medical professionals .
The "Rule of Three" in Law Practice Management Prices
This " guideline of thumb" called the "rule of three" utilized in law practice management is not what your CPA might inform you and it does not fail you either. Ask your Certified Public Accountant what they consider it and they will like it. To start we are going to be thinking in thirds. For the very first third we will take the total quantity of salaries/bonuses (not advantages just salaries-- benefits go into the 2nd 3rd following) for the income generators and/or timekeepers (this includes you if you are creating earnings) and call that our very first third. Include up the incomes of the attorneys, paralegals, and legal secretaries who create income or are timekeepers and call this your very first 3rd (lets just say that number was $100,000 to keep it simple). Whatever that number is take that number once again and it is your second third which we will call your "overhead" (thus that second third is $100,000 and do not forget you if you are doing some handling partner type tasks since that part of your time goes here in overhead). Take that very same number and we will call that your last third, which we will call gross earnings (another $100,000). What you require to do you could try these out is take the overall 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 offered our very first third number times 3 (in this example $300,000).
This technique shows you how much per hour you require to charge. Considering that you know how numerous billable hours each profits generator can do each month, merely 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 correctly. As long as you strike your targets you will be guaranteed of a 15% to 30% net benefit from your operations. After all if you are the owner of the practice you should have a fair earnings too don't you concur? This technique is called the Rule of Three. If this approach is a bit too confusing do feel free to contact me and I will help you sort it out in a couple of minutes on the phone.
It is a great idea to believe through all of these rates methods in identifying your law practice management rates strategy prior to setting a price and moving ahead with a law firm marketing strategy to guarantee you are completely checking out all choices. In another post I will inform you how to speak to potential customers so you never have a problem getting the cost you deserve.