Law Practice Management-- How To Identify Your Charges
Determining costs is a tough law practice management job for many lawyers when believing through their law firm marketing plans. In figuring out charges for specific services, lawyers typically fall brief of what they should charge. Too many attorneys are afraid of even charging the competitive rate for their services when making their law company marketing strategies.
So prior to you take a seat and begin analyzing your law practice management prices strategy you need some distinctions around rates commonly utilized in law office marketing planning. Include your prices strategy to your law company marketing plans. You require to be sure that you are charging a enough charge on whatever to ensure you a excellent revenue not simply a excellent living. If you only draw in people who want to pay the least expensive fee for a service, do know a law practice management law company marketing strategy is not effective. These are not faithful clients. Instead, you wish to focus your law practice management and law office marketing strategies on bring in clients who will become long term possessions to the firm. Low price clients are not constructing your base of long term customers I can assure you that.
There are essentially 4 methods of figuring out just how much you must be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
This is one great way of figuring out pricing. Get your assistant to support you in this law practice management task and invest a long time discovering what the series of rates is in the community. Have her do a " secret consumer" research study by calling around as if he/she were a prospective customer and discover out what your rivals state on the phone to her around rates. She may require to call from her house phone to avoid caller ID. As another alternative you might have him/her call other assistants or paralegals at your competitors and use to exchange your costs for their costs or you could do that with other legal representatives yourself in your market. If you really wish to enter into it and have maximum data you can write maybe a few dozen competitors in your market and state 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 responding and send them a copy of the results. To keep it easy for them consist of 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 offer. You should have the ability to create a series of prices. Utilize this variety to set prices for your own services. My suggestion in law practice marketing planning is to charge at the 75% level of the list. So you ought to be at or in the top 25% of the costs.
Keep in mind that in basic it is not a great law practice management strategy to contend on price. Most possible customers will see pricing that is too low as a signal that there is something missing either from the service, the company, or the company.
The Expense Method in Law Practice Management Pricing
This law practice management pricing approach is extremely uncomplicated actually. The most common error in law practice management using this approach is to neglect to include some type of your expense.
In law practice management frequently you count yourself out of the costs and you should include yourself in the costs. Typically you are doing at least some of the management work. If you are all 3 of these in one, read you must consider one income as due you for your time and competence as the technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Rates
This is the method used by numerous auto mechanics (it is called "the flat rate book") and other provider. This approach is where you determine a set rate for different tasks and charge that rate no matter what. He makes more if the mechanic invests less time than set aside for the job. If he spends more time than allocated, he earns less. But in the additional resources end, it all levels (well, generally to the mechanics' favor if you ask me). Another example using this technique is how managed healthcare has actually used this system with healthcare facilities and doctors . If they desire, lawyers can use this system.
The " Guideline of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of 3" used in law practice management is not what your CPA may 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 begin we are going to be believing in thirds. For the first third we will take the total quantity of salaries/bonuses (not advantages simply incomes-- benefits enter into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are generating income) and call that our very first 3rd. So add up the wages of the attorneys, paralegals, and legal secretaries who generate profits or are timekeepers and call this your very first third (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" ( hence that second third is $100,000 and don't forget you if you are doing some handling partner type duties because 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 revenues (another $100,000). What you require to do is take the total amount (in this example $300,000) and now figure out just how much you need to charge per billable hour, per fixed rate or how numerous contingency fee cases won to be sure you hit the target we should hit given our very first 3rd number times three (in this example $300,000).
This approach shows you how much per hour you need to charge. If you are the owner of the practice you are worthy of a reasonable earnings as well do not you agree? If this method is a bit too complicated do feel free to call me and I will content assist you sort it out in a few minutes on the phone.
It is a good idea to analyze all of these rates methods in identifying your law practice management prices method before setting a price and continuing with a law firm marketing plan to guarantee you are completely checking out all options. Keep in mind the tendency for a lot of attorneys is to price too low. Don't do that! In another short article I will tell you how to speak to possible clients so you never have a problem getting the cost you should have.