Law Practice Management-- How To Determine Your Fees
Identifying costs is a hard law practice management job for most attorneys when thinking through their law practice marketing strategies. In determining charges for specific services, lawyers often fall short of what they need to charge. When making their law firm marketing strategies, too lots of lawyers are afraid of even charging the competitive cost for their services. Further, they make the prices choices often with no information or conceptual structure. Furthermore, 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 typically actually can frighten potential customers who believe there is something missing from a service that is " low-cost". Furthermore lots of lawyers do not realize that a lot of buyers in the market by far are "value purchasers" and not looking for " low-cost".
Before you sit down and begin believing through your law practice management pricing method you require some differences around prices typically used in law firm marketing preparation. Do know a law practice management law firm marketing plan is not reliable if you just bring in individuals who desire to pay the least expensive fee for a service. Instead, you want to focus your law practice management and law firm marketing plans on drawing in clients who will become long term assets to the company.
There are basically 4 methods of figuring out how much you must be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Rates
This is one great way of figuring out pricing. Get your assistant to support you in this law practice management job and invest some time finding what the series of prices remains in the neighborhood. Have her do a " secret shopper" study by calling around as if he/she were a potential customer and discover what your competitors state on the phone to her around prices. She might require to call from her house phone to avoid caller ID. As another alternative you might have him/her call other assistants or paralegals at your rivals and provide to exchange your fees for their charges or you could do that with other legal representatives yourself in your market. If you truly wish to enter into it and have maximum data you can write possibly a few dozen competitors in your marketplace and state you are doing a charge study and if they would send you their fee list you will produce a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most typical services used in your practice area. Now you will see what people are charging for services comparable to those you use. You ought to have the ability to develop a range of rates. Use this range to set rates for your own services. My suggestion in law practice marketing preparation is to charge at the he said 75% level of the list. So you must be at or in the top 25% of the costs.
Keep in mind that in general it is not a excellent law practice management technique to compete on rate. Most potential customers will see pricing that is too low as a signal that there is something missing out on either from the service, the company, or the company.
The Expense Technique in Law Practice Management Prices
This law practice management prices method is really straightforward actually. One merely determines what the costs are to deliver services or products and includes on a sensible earnings, someplace in between fifteen percent at the least and possibly thirty three percent at the most. The most common error in law practice management using this method is to overlook to include some form of your expense. Solo and little firm lawyers tend to not include their own income!
In law practice management often you count yourself out of the costs and you need to include yourself in the expenses. Often you are doing at least some of the management work. If you are all 3 of these in one, you must consider one wage as due you for your time and competence as the technician and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the technique used by many auto mechanics (it is called "the flat rate book") and other service providers. This technique is where you figure out a fixed rate for different jobs and charge that rate no matter what. He makes more if the mechanic spends less time than set aside for the job. you can find out more He makes less if he spends more time than designated. However in the end, everything levels (well, normally to the mechanics' favor if you ask me). Another example using this method is how managed health care has utilized this system with hospitals and medical professionals . Attorneys can use this system if they want.
The " Guideline of Three" in Law Practice Management Rates
This " general rule" called the "rule of 3" utilized in law practice management is not what your CPA may inform you and it does not fail you either. Ask your Certified Public Accountant what they consider it and they will like it. To begin we are going to be thinking in thirds. For the first 3rd we will take the total quantity of salaries/bonuses (not benefits simply incomes-- benefits enter into the second 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are producing profits) and call that our very first 3rd. So add up the salaries of the lawyers, paralegals, and legal secretaries who generate earnings or are timekeepers and call this your very first third (lets simply state that number was $100,000 to keep it basic). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" (thus that 2nd 3rd is $100,000 and don't forget you if you are doing some handling partner type duties since that part of your time goes here in overhead). Take that same number and we will call that your last third, which we will call gross profits (another $100,000). What you need to do is take the total quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how numerous contingency cost cases won to be sure you struck the target we must hit given our very first third number times three (in this example $300,000).
This technique shows you how much per hour you need to charge. If you are the owner of the practice you deserve a fair profit as well don't you agree? If this approach is a bit too confusing do feel free to contact me and I will assist you sort it out in a few minutes on the phone.
It is a good concept to analyze all of these pricing methods in identifying your law practice management rates technique prior to setting a cost and continuing with a law firm marketing plan to guarantee you are thoroughly exploring all choices. Keep in mind the propensity for most legal representatives is to price too low. Don't do that! In another article I will inform you how to talk to possible clients so you never ever have a issue getting the fee you should have.