Law Practice Management-- How To Identify Your Fees
Figuring out charges is a hard law practice management task for the majority of attorneys when thinking through their law firm marketing strategies. In identifying costs for certain services, attorneys often disappoint what they ought to charge. When making their law company marketing plans, too numerous attorneys are afraid of even charging the competitive cost for their services. Even more, they make the rates decisions frequently with no data or conceptual structure. Additionally, instead of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a fee that is often way too low and typically in fact can terrify off prospective clients who think there is something missing from a service that is " inexpensive". Furthermore many lawyers do not recognize that many purchasers in the market by far are "value purchasers" and not trying to find " inexpensive".
Prior to you sit down and start believing through your law practice management prices strategy you need some differences around rates commonly utilized in law firm marketing preparation. Do understand a law practice management law company marketing strategy is not efficient if you just attract people who want to pay the least expensive charge for a service. Rather, you want to focus your law practice management and law firm marketing strategies on bring in customers who will become long term possessions to the firm.
There are essentially 4 methods of figuring out just how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Prices
This is one excellent way of identifying pricing. Get your assistant to support you in this law practice management job and invest some time finding what the series of rates remains in the community. Have her do a " secret consumer" study by calling around as if he/she were a prospective customer and discover out what your competitors state on the phone to her around rates. She may require to call from her home phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your rivals and offer to exchange your fees for their charges or you might do that with other attorneys yourself in your market. If you really desire to get into it and have optimal information you can compose possibly a few dozen rivals in your marketplace and state you are doing a cost survey and if they would send you their fee list you will develop a composite list that does not identify those responding and send them a copy of the results. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services used in your practice location. Now you will see what individuals are charging for services similar to those you provide. You must have the ability to come up with a variety of rates. Use this variety to set prices for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. You must be at or in the top 25% of the charges.
Bear in mind that in general it is not a excellent law practice management strategy to contend on rate. Many 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 company. And people who are looking for a low cost will follow that low cost wherever they can discover it rather than ending up being long-lasting clients. So make certain that your price covers your costs and a sensible earnings margin.
The Expense Method in Law Practice Management Prices
This law practice management rates technique is very straightforward really. The most typical mistake in law read more practice management using this technique is to overlook to include some kind of your cost.
In law practice management typically you count yourself out of the expenditures and you must include yourself in the expenditures. Typically you are doing at least webpage some of the management work. If you are all 3 of these in one, you should think about one income as due you for your time and proficiency as the specialist and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Prices
This is the method utilized by many vehicle mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify a fixed rate for different jobs and charge that rate no matter what. Another example using this technique is how managed health care has utilized this system with hospitals and doctors .
The "Rule of Three" in Law Practice Management Prices
This "rule of thumb" called the " guideline of 3" used 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 think of it and they will like it. To begin we are going to be believing in thirds. For the very first 3rd we will take the overall quantity of salaries/bonuses (not advantages just incomes-- benefits go into the second 3rd coming next) for the income generators and/or timekeepers (this includes you if you are producing income) and call that our first third. Include up the salaries of the legal representatives, paralegals, and legal secretaries who create profits or are timekeepers and call this your 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 third which we will call your "overhead" (thus that 2nd third is $100,000 and do not forget you if you are doing some handling partner type duties because that part of your time goes here in overhead). 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 figure out how much you need to charge per billable hour, per fixed rate or the number of contingency cost cases won to be sure you hit the target we should hit given our very first third number times 3 (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 do not you concur? If this method is a bit too confusing do feel totally free to contact me and I will help you sort it out in a few minutes on the phone.
It is a good concept to believe through all of these prices methods in determining 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 options. In another post I will inform you how to speak to prospective customers so you never ever have a problem getting the cost you are worthy of.