Law Practice Management-- How To Identify Your Fees
Determining fees is a tough law practice management task for a lot of lawyers when thinking through their law firm marketing plans. In identifying costs for certain services, attorneys often fall short of what they need to charge. Too many attorneys are afraid of even charging the competitive cost for their services when making their law company marketing strategies.
So prior to you take a seat and begin analyzing your law practice management pricing strategy you require some distinctions around pricing frequently utilized in law office marketing planning. Include your pricing technique to your law company marketing plans. You need to be sure that you are charging a enough fee on whatever to guarantee you a excellent profit not simply a great living. Do understand a law practice management law company marketing strategy is not effective if you just bring in individuals who want to pay the least expensive fee for a service. These are not devoted customers. Rather, you wish to focus your law practice management and law office marketing plans on bring in clients who will become long term properties to the company. Low cost clients are not constructing your base of long term clients I can guarantee you that.
There are essentially 4 methods of determining how much you should be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Pricing
This is one good way of identifying prices. Get your assistant to support you in this law practice management job and invest some time finding what the series of prices is in the neighborhood. Have her do a "mystery buyer" research study by calling around as if he/she were a possible client and discover what your rivals state on the phone to her around prices. She may need to call from her home phone to avoid caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and provide to exchange your fees for their fees or you might do that with other legal representatives yourself in your market. If you truly wish to enter it and have maximum information you can write perhaps a couple of dozen competitors in your market and say you are doing a cost survey and if they would send you their fee list you will produce a composite list that does not identify those reacting 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 typical services provided in your practice location. Now you will see what individuals are charging for services similar to those you offer. You should be able to develop a variety of costs. Use this variety to set prices for your own services. My suggestion in law office marketing preparation is to charge at the 75% level of the list. So you should be at or in the leading 25% of the fees.
Keep in mind that in basic it is not a good law practice management technique to compete on price. A lot of prospective customers will see prices that is too low as a signal that there is something missing out on either from the service, the company, or the company.
The Cost Method in Law Practice Management Rates
This law practice management prices technique is extremely uncomplicated truly. One simply determines what the expenses are to provide services or products and adds on a affordable revenue, someplace in between fifteen percent at the least and perhaps thirty three percent at the most. The most typical error in law practice management utilizing this method is to neglect to consist of some form of your expenditure. Solo and little firm lawyers tend to not include their own wage!
OK, let me say it once again. In law practice management typically you count yourself out of the costs and you should include yourself in the expenditures. Why? Often you are doing a minimum of some of the technical work. Yes? Often you are doing a minimum of a few of the management work. Yes? As the owner of business you are due a sensible revenue. Yes? If you are all three of these in one, you must think about one salary as due you for your time and competence as the specialist and manager in addition to a revenue of fifteen to thirty percent due you as the owner. Be sure to include a sensible cost for your technical and supervisory work in the expenses part of this formula.
Fixed Rate Approach in Law Practice Management Pricing
This is the method utilized by lots of car mechanics (it is called "the flat rate book") and other service providers. This approach is where you figure out a fixed rate for various jobs and charge that rate no matter what. He makes more if the mechanic invests less time than allotted for the job. If he spends more time than designated, he earns less. But in the end, everything levels (well, generally to the mechanics' favor if you ask me). Another example using this technique is how managed health care has actually used this system with medical professionals and hospitals . Lawyers can utilize this system if they desire.
The "Rule of Three" in Law Practice Management Pricing
This " general rule" called the " guideline of 3" used in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. Ask your CPA what they consider 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 quantity of salaries/bonuses (not advantages simply wages-- advantages enter into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are producing earnings) and call that our very first 3rd. So include up the wages of the attorneys, paralegals, and legal secretaries who generate 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 once again and it is your second 3rd which we will call your "overhead" ( therefore that 2nd third is $100,000 and do not forget you if you are doing some handling partner type tasks this link 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 need to do is take the total quantity (in this example $300,000) and now determine just how much you need to charge per billable hour, per fixed rate or the number of contingency cost cases won to be sure you struck the target we should strike given our first third number times three (in this example $300,000).
This approach reveals you how much per hour you require to charge. If you are the owner of the practice you should have a reasonable profit as well do not you concur? If this approach is a bit too confusing do feel complimentary to call me and I will help you arrange it out in a few minutes on the phone.
It is a excellent concept to think through all of these rates techniques in identifying your law practice management rates check these guys out strategy prior to setting a price and moving ahead with a law firm marketing strategy to ensure you are completely checking out all options. In another post I will tell you how to speak to potential clients so you never have a problem getting the fee you should have.