Law Practice Management-- How To Determine Your Fees
Identifying fees is a difficult law practice management task for most attorneys when thinking through their law firm marketing plans. In determining fees for particular services, attorneys frequently fall brief of what they need to charge. Too numerous lawyers are afraid of even charging the competitive rate for their services when making their law company marketing plans.
Prior to you sit down and begin thinking through your law practice management prices technique you need some distinctions around rates frequently used in law firm marketing planning. Add your prices technique to your law firm marketing strategies. You need to be sure that you are charging a adequate charge on whatever to ensure you a good earnings not just a excellent living. Do know a law practice management law office marketing plan is ineffective if you only attract people who wish to pay the most affordable fee for a service. These are not faithful customers. Rather, you desire to focus your law practice management and law practice marketing intend on attracting customers who will end up being long term assets to the company. Low rate customers are not constructing your base of long term customers I can promise you that.
There are generally 4 methods of determining how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Prices
This is one great way of determining rates. Get your assistant to support you in this law practice management job and invest some time discovering what the variety of prices remains in the neighborhood. Have her do a "mystery consumer" study by calling around as if he/she were a prospective client and learn what your competitors state on the phone to her around pricing. She might 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 competitors and use to exchange your fees for their costs or you might do that with other legal representatives yourself in your market. If you truly want to enter into it and have maximum information you can compose perhaps a couple of dozen competitors in your marketplace and state you are doing a charge study and if they would send you their fee list you will develop a composite list that does not determine those reacting and send them a copy of the results. 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 individuals are charging for services comparable to those you provide. You should be able to come up with 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 ought to be at or in the leading 25% of the charges.
Remember that in basic it is not a excellent law practice management strategy to contend on cost. Many prospective clients will see prices 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 Approach in Law Practice Management Prices
This law practice management rates method is very uncomplicated actually. One merely determines what the costs are to provide services or products and adds on a affordable profit, somewhere 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 technique is to disregard to consist of some type of your expenditure. Solo and little company lawyers tend to not include their own salary!
In law practice management frequently you count yourself out of the expenses and you need to include yourself in the costs. Typically you are doing at least some of the management work. If you are all three of these in one, you need to consider one wage as due you for your time and knowledge as the technician and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the technique used by lots of automobile mechanics (it is called "the flat rate book") and other service providers. This approach is where you identify a fixed rate for numerous jobs and charge that rate no matter what. Another example using this method is how handled health care has utilized this system with medical professionals Web Site and healthcare facilities .
The "Rule of 3" in Law Practice Management Rates
This "rule of thumb" called the " guideline of three" utilized in law practice management is not what your CPA might inform you and it does not fail you either. Ask your CPA what they consider it and they will like it. To start we are going to be thinking in thirds. For the first 3rd we will take the overall amount of salaries/bonuses (not benefits just wages-- advantages go into the second third coming next) for the earnings generators and/or timekeepers (this includes you if you are generating profits) and call that our very first 3rd. Include up the salaries of the lawyers, paralegals, and legal secretaries who produce profits or are timekeepers and call this your very first third (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 3rd which we will call your "overhead" ( hence that 2nd 3rd is $100,000 and do not forget you if you are doing some handling partner type tasks 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 need to do is take the total amount (in this example $300,000) and now figure out just how much you should charge per billable hour, per repaired rate or the number of contingency charge cases won to be sure you hit the target we need to hit offered our first 3rd number times 3 (in this example $300,000).
This technique reveals you just how much per hour you need to charge. Given that you understand how many billable hours each profits generator can do each month, simply divide that into your total of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out correctly. As long as you hit your targets you will be guaranteed of a 15% to 30% net make money from your operations. If you are the owner of the practice you deserve a fair revenue as well don't you agree? This technique is referred to as the Guideline of 3. 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 great concept to believe through all of these pricing techniques in identifying your law practice management rates strategy before setting a cost and moving ahead with a law company marketing strategy to guarantee you are completely exploring all options. In another article I will tell you how to speak to prospective customers so you never ever have a issue getting the cost you should have.