Law Practice Management-- How To Identify Your Fees
Determining costs is a hard law practice management job for the majority of attorneys when believing through their law office marketing strategies. In identifying fees for particular services, lawyers frequently fall short of what they need to charge. When making their law firm marketing strategies, too many attorneys are scared of even charging the competitive price for their services. Further, they make the pricing decisions often without any data or conceptual framework. Furthermore, instead of focusing their efforts on how they can justify getting top dollar for what they provide, they charge a fee that is often way too low and often actually can frighten possible clients who believe there is something missing out on from a service that is " low-cost". Additionally numerous lawyers don't realize that most buyers in the marketplace by far are " worth purchasers" and not looking for "cheap".
Prior to you sit down and begin thinking through your law practice management prices strategy you need some differences around prices commonly used in law company marketing planning. Do know a law practice management law company marketing plan is not reliable if you only attract people who desire to pay the lowest charge for a service. Instead, you want to focus your law practice management and law firm marketing strategies on attracting clients who will become long term possessions to the company.
There are essentially 4 methods of determining how much you need to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Prices
This is one excellent method of identifying pricing. Get your assistant to support you in this law practice management task and spend a long time discovering what the variety of prices is in the community. Have her do a " secret shopper" study by calling around as if he/she were a possible client and discover what your rivals say on the phone to her around prices. She may 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 charges for their fees or you might do that with other attorneys yourself in your market. If you really want to get into it and have optimal data you can compose perhaps a few lots competitors in your marketplace and state you are doing a cost study and if they would send you their cost list you will develop a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services used in your practice area. Now you will see what individuals are charging for services comparable to those you offer. You should have the ability to develop a variety of prices. Use this range to set rates for your own services. My suggestion in law office 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 good law practice management strategy to complete on rate. Many possible clients will see rates that is too low as a signal that there is something missing out on either from the service, the supplier, web link or the company. And people who are searching for a low cost will follow that low rate anywhere they can find it rather than becoming long-term clients. So make sure that your rate covers your costs and a affordable revenue margin.
The Expense Method in Law Practice Management Prices
This law practice management rates technique is really uncomplicated really. The most common mistake in law practice management using this technique is to overlook to consist of some kind of your expense.
In law practice management frequently you count yourself out of the costs and you must include yourself in the costs. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you need to consider one income as due you for your time and expertise as the technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the method used by lots of automobile mechanics (it is called "the flat rate book") and other company. This method is where you identify a set rate for different jobs and charge that rate no matter what. If the mechanic spends less time than allotted for the job, he makes more. He makes less if he spends more time than allotted. But in the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example utilizing this method is how managed health care has used this system with physicians and hospitals . Attorneys can utilize this system if they want.
The "Rule of Three" in Law Practice Management Rates
This " guideline" called the "rule of 3" utilized in law practice management is not what your Certified Public Accountant may inform you and it 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 believing in thirds. For the very first 3rd we will take the total quantity of salaries/bonuses (not benefits simply salaries-- advantages enter into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are generating income) and call that our first 3rd. So accumulate the salaries of the legal representatives, paralegals, and legal secretaries who create income 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" ( therefore that second 3rd is $100,000 and do not forget you if you are doing some handling 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 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 how much you should charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you hit the target we need to strike given our 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 are worthy of a reasonable revenue as well don't you concur? 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 few minutes on the phone.
It is a great concept to believe through all of these prices techniques in identifying your law practice management prices technique before setting a cost and moving ahead with a law firm marketing plan to ensure you are completely checking out all alternatives. Keep in mind the propensity for a lot of legal representatives is to price too low. Don't do that! In another short article I will inform you how to talk to possible customers so you never ever have a issue getting the charge you are worthy of.