Law Practice Management-- How To Identify Your Fees
When thinking through their law company marketing plans, determining costs is a difficult law practice management task for many lawyers. In identifying fees for particular services, attorneys typically fall brief of what they should charge. When making their law company marketing strategies, too numerous lawyers are scared of even charging the competitive price for their services. Further, they make the prices decisions often without any information or conceptual framework. Furthermore, rather of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a charge that is often way too low and frequently really can terrify off possible customers who believe there is something missing out on from a service that is " inexpensive". Furthermore numerous attorneys do not recognize that a lot of buyers in the marketplace without a doubt are " worth buyers" and not looking for "cheap".
So before you sit down and start thinking through your law practice management rates strategy you require some differences around pricing typically used in law office marketing planning. Add your rates strategy to your law firm marketing strategies. You need to be sure that you are charging a sufficient charge on whatever to guarantee you a excellent profit not simply a excellent living. Do understand a law practice management law company marketing strategy is ineffective if you only attract individuals who wish to pay the most affordable charge for a service. These are not devoted clients. Instead, you wish to focus your law practice management and law firm marketing intend on attracting clients who will end up being long term assets to the company. Low cost customers are not constructing your base of long term clients I can assure you that.
There are generally four methods of identifying how much you need to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
This is one great way of determining prices. Get your assistant to support you in this law practice management job and spend some time finding what the series of pricing is in the neighborhood. Have her do a " secret shopper" research study by calling around as if he/she were a possible customer and discover what your competitors say on the phone to her around rates. She may require to call from her house phone to avoid caller ID. As another choice you might have him/her call other assistants or paralegals at your competitors and provide to exchange your fees for their costs or you could do that with other lawyers yourself in your market. If you really wish 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 fee survey and if they would send you their cost list you will develop 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 provided in your practice area. Now you will see what individuals are charging for services similar to those you use. You must have the ability to create a variety of rates. Use this variety to set prices for your own services. My recommendation in law practice marketing planning is to charge at the 75% level of the list. So you need to be at or in the top 25% of the costs.
Remember that in general it is not a excellent law practice management strategy to contend on cost. Most prospective customers will see pricing that is too low as a signal that there is something missing either from the service, the supplier, or the firm.
The Expense Approach in Law Practice Management Pricing
This law practice management rates approach is really straightforward actually. One merely identifies what the expenses are to provide items or services and adds on a sensible revenue, somewhere between fifteen percent at the least and possibly thirty three percent at the most. The most common mistake in law practice management utilizing this technique is to overlook to consist of some kind of your expenditure. Solo and little company lawyers tend to not include their own wage!
In law practice management frequently you count yourself out of the expenses 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 wage as due you for your time and know-how as the professional and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the approach used by lots of automobile mechanics (it is called "the flat rate book") and other provider. This method is where you figure out a fixed rate for various tasks and charge that rate no matter what. He makes more if the mechanic spends less time than allotted for the job. He makes less if he invests more time than designated. However in the end, all of it evens out (well, typically to the mechanics' favor if you ask me). Another example utilizing this approach is how managed healthcare has actually used this system with physicians and hospitals . If they prefer, lawyers can use this system.
The "Rule of 3" in Law Practice Management Rates
This "rule of thumb" called the "rule of three" utilized in law practice management is not what your CPA might tell you and it does not fail you either. Ask your CPA what they think of it and they will like it. To begin we are going to be thinking in thirds. For the very first third we will take the overall amount of salaries/bonuses (not benefits just wages-- advantages enter into the second 3rd following) for the income generators and/or timekeepers (this includes you if you are generating income) and call that our first third. So accumulate the incomes of the attorneys, paralegals, and legal secretaries who produce revenue or are timekeepers and call this your first third (lets just state that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your second third which we will call your "overhead" ( hence that second 3rd is $100,000 and don't forget you if you are doing some managing partner type responsibilities since that part of your time goes here in overhead). Then take that very same number and we will call that your last third, which we will call gross earnings (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 news billable hour, per fixed rate or the number of contingency cost cases won to be sure you struck the target we should strike provided our first 3rd number times three (in this example $300,000).
This technique reveals you how much per hour you require to charge. If you are the owner of the practice you deserve a fair profit as well don't you agree? If this technique is a bit too complicated do feel complimentary to contact me and I will help you sort it out in a couple of minutes on the phone.
It is a good concept to think through all of these pricing approaches in identifying your law practice management pricing method prior to setting a price and moving ahead with a law company marketing strategy to ensure you are completely checking out all choices. In another article I will inform you how to speak to prospective customers so you never have a issue getting the charge you deserve.