Law Practice Management-- How To Identify Your Fees
Figuring out charges is a tough law practice management task for most lawyers when thinking through their law firm marketing strategies. In identifying costs for specific services, attorneys typically fall short of what they should charge. Too lots of attorneys are scared of even charging the competitive cost for their services when making their law company marketing plans.
Before you sit down and start believing through your law practice management pricing strategy you need some differences around prices typically utilized in law firm marketing preparation. Do know a law practice management law firm marketing plan is not effective if you just draw in individuals who desire to pay the most affordable cost for a service. Rather, you want to focus your law practice management and law company marketing plans on bring in clients who will end up being long term properties to the firm.
There are generally four ways of identifying how much you must be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Pricing
This is one good method of figuring out rates. Get your assistant to support you in this law practice management task and spend a long time finding what the range of pricing remains in the neighborhood. Have her do a "mystery shopper" research study by calling around as if he/she were a prospective client and learn what your rivals say on the phone to her around pricing. She might need to call from her home phone to prevent caller ID. As another option you might have him/her call other assistants or paralegals at your rivals and provide to exchange your fees for their costs or you could do that with other lawyers yourself in your market. If you actually wish to get into it and have maximum information you can write perhaps a couple of dozen competitors in your marketplace and state you are doing a charge survey and if they would send you their cost list you will produce a composite list that does not determine those responding 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 offered in your practice location. Now you will see what people are charging for services comparable to those you use. You must be able to develop a variety of costs. Utilize this range to set rates for your own services. My recommendation in law company 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 basic it is not a excellent law practice management strategy to contend on cost. Most prospective clients will see prices that is too low as a signal that there is something missing either from the service, the provider, or the company. And people who are searching for a low rate will follow that low cost any place they can discover it instead of becoming long-term clients. So make sure that your rate covers your expenses and a reasonable revenue margin.
The Cost Approach in Law Practice Management Rates
This law practice management prices approach is extremely simple actually. The most common error in law practice management using this method is to overlook to include some kind of your expense.
OK, let me state it again. In law practice management often you count yourself out of the costs and you should include yourself in the costs. Why? Frequently you are doing a minimum of some of the technical work. Yes? Frequently you are doing at least some of the management work. Yes? As the owner of the organisation you are due a reasonable revenue. Yes? If you are all three of these in one, you must think about one salary as due you for your time and proficiency as the professional and manager along with a profit of fifteen to thirty percent due you as the owner. So make sure to consist of a reasonable cost for your technical and supervisory work in the costs part of this formula.
Fixed Rate Technique in Law Practice Management Rates
This is the technique used by numerous car mechanics (it is called "the flat rate book") and other service providers. This technique is where you determine a fixed rate for various jobs and charge that rate no matter what. Another example utilizing this method is how handled health care has actually used this system with doctors and health centers .
The "Rule of Three" in Law Practice Management Rates
This "rule of thumb" called the "rule of 3" utilized in law practice management is not what your CPA might inform you and it weblink does not fail you either. Ask your Certified Public Accountant 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 quantity of salaries/bonuses (not advantages just salaries-- benefits go into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are producing earnings) and call that our first third. Include up the wages of the lawyers, paralegals, and legal secretaries who generate income or are timekeepers and call this your first third (lets just state that number was $100,000 to keep it simple). Whatever that number is take that number once again and it is your 2nd 3rd which we will call your "overhead" ( hence that 2nd 3rd is $100,000 and do not forget you if you are doing some managing partner type responsibilities since that part of your time goes here in overhead). Then take that exact same number and we will call that your last third, which we will call gross profits (another $100,000). What you require to do is take the total amount (in this example $300,000) and now find out just how much you should charge per billable hour, per fixed rate or the number of contingency fee cases won to be sure you struck the target we must strike given our first 3rd number times three (in this example $300,000).
This technique reveals you how much per hour you require to charge. Because you know the number of billable hours each income generator can do monthly, just 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 properly. As long as you hit your targets you will be guaranteed of a 15% to 30% net revenue from your operations. After all if you are the owner of the practice you should have a reasonable profit also do not you concur? This method is called the Guideline of Three. If this approach is a bit too confusing do do not hesitate to contact me and I will assist you sort it out in a couple of minutes on the phone.
It why not try this out is a great concept to think through all of these rates methods in identifying your law practice management rates strategy prior to setting a rate and moving ahead with a law firm marketing plan to ensure you are completely exploring all options. In another post I will tell you how to speak to prospective customers so you never have a problem getting the cost you deserve.