Law Practice Management-- How To Identify Your Fees
When thinking through their law firm marketing strategies, figuring out fees is a difficult law practice management job for most lawyers. In identifying costs for specific services, attorneys typically disappoint what they ought to charge. When making their law company marketing strategies, too many attorneys are afraid of even charging the competitive rate for their services. Even more, they make the rates decisions frequently without any information or conceptual structure. Additionally, rather of focusing their efforts on how they can justify getting top dollar for what they provide, they charge a cost that is frequently way too low and frequently really can frighten prospective clients who believe there is something missing from a service that is "cheap". In addition many lawyers do not realize that many buyers in the market without a doubt are " worth buyers" and not searching for " inexpensive".
Before you sit down and begin believing through your law practice management rates technique you require some differences around prices commonly utilized in law firm marketing preparation. Do know a law practice management law firm marketing strategy is not efficient if you only attract people who desire to pay the least expensive fee for a service. Rather, you desire to focus your law practice management and law firm marketing plans on bring in clients who will end up being long term possessions to the firm.
There are generally four methods of identifying how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Pricing
This is one great way of figuring out prices. Get your assistant to support you in this law practice management job and invest a long time discovering what the variety of rates remains in the neighborhood. Have her do a " secret consumer" research study by calling around as if he/she were a possible customer and discover what your rivals state on the phone to her around prices. She might require to call from her home phone to prevent caller ID. As another alternative you might have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their charges or you could do that with other attorneys yourself in your market. If you actually wish to enter into it and have optimal information you can write maybe a few lots competitors in your market and state you are doing a charge survey and if they would send you their cost 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 common services provided in your practice area. Now you will see what individuals are charging for services similar to those you offer. You should be able to create a variety of prices. Use this variety to set costs for your own services. My recommendation in law practice marketing planning is to charge at the 75% level of the list. So you must be at or in the leading 25% of the fees.
Keep in mind that in basic it is not a great law practice management technique to compete on rate. Many possible 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. And people who are looking for a low price will follow that low rate any place they can find it instead of becoming long-lasting customers. Be sure that your cost covers your expenses and a sensible earnings margin.
The Cost Technique in Law Practice Management Rates
This law practice management pricing technique is really uncomplicated actually. One merely identifies what the expenses are to deliver services or items and includes on a reasonable profit, someplace in between fifteen percent at the least and possibly thirty 3 percent at the most. The most common mistake in law practice management utilizing this method is to disregard to consist of some kind of your expense. Solo and small company attorneys tend to not include their own income!
In law practice management often you count yourself out of the costs and you need to 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, you ought to think about one wage as due you for your time and know-how as the professional and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Pricing
This is the method utilized by lots of car mechanics (it is called "the flat rate book") and other service companies. This approach is where you determine a fixed rate for different tasks and charge that rate no matter what. Another example utilizing this method is how managed health care has utilized this system with physicians and hospitals .
The "Rule of 3" in Law Practice Management Rates
This "rule of thumb" called the "rule of three" used in law practice management is not what your CPA may inform you and it does not fail you either. Ask your Certified Public Accountant what they believe about it and they will like it. To start we are going to be believing in thirds. For the first third we will take the total amount of salaries/bonuses (not benefits simply salaries-- benefits go into the second third coming next) for the income generators and/or timekeepers (this includes you if you are creating profits) and call that our first 3rd. Include up the wages of the lawyers, paralegals, and legal secretaries who generate revenue or are timekeepers and call this your very first 3rd (lets just say that number was $100,000 to keep it simple). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" ( therefore that 2nd third is $100,000 and don't forget you find out this here if you are doing some handling partner type tasks since that part of your time goes here in overhead). Take that 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 how much you must charge per billable hour, per repaired rate or the number of contingency fee cases won to be sure you struck the target we need to strike offered our very first third 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 do not you agree? If this technique 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 good idea to believe through all of these prices techniques in determining your law practice management prices technique before setting a price and continuing with a law office marketing strategy to ensure you are thoroughly exploring all choices. Remember the tendency for most legal representatives is to price too low. Do not do that! In another post I will tell you how to speak to prospective clients so you never ever have a problem getting the cost you deserve.