Law Practice Management-- How To Determine Your Fees
Identifying costs is a difficult law practice management task for a lot of lawyers when believing through their law company marketing strategies. In figuring out costs for certain services, lawyers typically fall brief of what they should charge. Too many attorneys are afraid of even charging the competitive price for their services when making their law firm marketing strategies.
So before you sit down and begin believing through your law practice management rates method you require some distinctions around prices typically used in law firm marketing planning. Include your prices strategy to your law company marketing plans. You need to be sure that you are charging a enough charge on everything to ensure you a excellent profit not simply a great living. If you only draw in individuals who desire to pay the least expensive cost for a service, do know a law practice management law firm marketing strategy is not effective. These are not loyal clients. Instead, you wish to focus your law practice management and law firm marketing strategies on attracting customers who will end up being long term possessions to the company. Low rate customers are not building your base of long term clients I can assure you that.
There are generally four methods of figuring out how much you must be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Pricing
This is one great way of identifying prices. Get your assistant to support you in this law practice management job and invest some time discovering what the series of prices remains in the community. Have her do a " secret buyer" study by calling around as if he/she were a possible client and learn what your rivals say on the phone to her around prices. She might need to call from her house 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 charges for their fees or you could do that with other lawyers yourself in your market. If you truly wish to enter it and have optimal information you can compose possibly a few dozen competitors in your market and state you are doing a cost survey and if they would send you their charge list you will create a composite list that does not recognize those responding and send them a copy of the outcomes. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what individuals are charging for services similar to those you provide. You need to have the ability to come up with a variety of costs. Use this variety to set rates for your own services. My suggestion in law company marketing preparation is to charge at the 75% level of the list. You need to be at or in the leading 25% of the costs.
Bear in mind that in basic it is not a great law practice management method to complete on cost. Most possible customers will see pricing that is too low as a signal that there is something missing out on either from the service, the service provider, or the firm. And people who are looking for a low rate will follow that low rate anywhere they can find it rather than ending up being long-lasting clients. So be sure that your price covers your expenses and a sensible revenue margin.
The Cost Approach in Law Practice Management Prices
This law practice management pricing approach is extremely straightforward actually. One just identifies what the costs are to deliver product and services and includes on a reasonable earnings, somewhere in between fifteen percent at the least and maybe thirty three percent at the most. The most typical mistake in law practice management utilizing this method is to neglect to include some kind of your cost. Solo and little firm attorneys tend to not include their own salary!
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 expenses. Why? Typically you are doing at least some of the technical work. Yes? Frequently you are doing a minimum of a few of the management work. Yes? As the owner of the service you are due a sensible profit. Yes? If you are all 3 of these in one, you should think about one wage as due you for your time and knowledge as the professional and supervisor in addition to 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 managerial work in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Rates
This is the technique used by many car mechanics (it is called "the flat rate book") and other service companies. This technique is where you identify a set rate for different tasks and charge that rate no matter what. Another example using this method is how handled health care has actually utilized this system with health centers and physicians .
The " Guideline of Three" in Law Practice Management Rates
This " guideline" called the "rule of 3" used in law practice management is not what your CPA might tell you and it does not fail you either. Ask your Certified Public Accountant what they think of it and they will like it. To start we are going to be thinking in thirds. For the first 3rd we will take the total quantity of salaries/bonuses (not advantages just wages-- benefits enter into the second 3rd following) for the revenue generators and/or timekeepers (this includes you if you are generating revenue) and call that our first third. So include up the salaries of the attorneys, paralegals, and legal secretaries who create income or are timekeepers and call this your very first 3rd (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your second 3rd which we will call your "overhead" ( hence that 2nd third is $100,000 and don't forget you if you are doing some managing 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 third, which we will call gross profits (another $100,000). What you need to do is take the total quantity (in this example $300,000) and now find out just how much you need to charge per billable hour, per repaired rate or how many contingency fee cases won to be sure you hit the target we should hit provided our very first 3rd number times 3 (in this example $300,000).
This method reveals you how much per hour you need to charge. If you are the owner of the practice you deserve a reasonable revenue as well don't you agree? If this approach is a bit too complicated do feel totally free to call me and I will help you sort it out in a couple of minutes on the phone.
It is a great concept to think through all of these pricing techniques in determining your law practice management index rates strategy before setting a rate and continuing with a law company marketing strategy to ensure you are completely exploring all alternatives. Remember the propensity for most legal representatives is to price too low. Don't do that! In another post I will tell you how to talk to possible clients so you never ever have a problem getting the cost you deserve.