Law Practice Management-- How To Determine Your Charges
Figuring out fees is a difficult law practice management task for the majority of lawyers when thinking through their law practice marketing strategies. In identifying costs for particular services, lawyers typically disappoint what they need to charge. Too lots of attorneys are afraid of even charging the competitive price for their services when making their law company marketing plans. Even more, they make the pricing decisions frequently with no data or conceptual framework. Furthermore, instead of focusing their efforts on how they can validate getting top dollar for what they offer, they charge a cost that is often way too low and typically in fact can scare off prospective customers who believe there is something missing out on from a service that is "cheap". Additionally many attorneys do not understand that most purchasers in the market by far are "value buyers" and not trying to find "cheap".
Before you sit down and start thinking through your law practice management rates strategy you need some differences around prices frequently used in law company marketing planning. Do know a law practice management law company marketing strategy is not reliable if you just attract people who desire to pay the most affordable charge for a service. Rather, you desire to focus your law practice management and law firm marketing plans on drawing in customers who will end up being long term properties to the company.
There are generally four methods of determining how much you ought to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Prices
This is one great way of figuring out rates. Get your assistant to support you in this law practice management job and spend some time discovering what the variety of rates remains in the neighborhood. Have her do a "mystery consumer" study by calling around as if he/she were a prospective client and learn what your competitors state on the phone to her around rates. She might require to call from her house phone to avoid caller ID. As another choice you could have him/her call other assistants or paralegals at your competitors and offer to exchange your fees for their fees or you could do that with other lawyers yourself in your market. If you really desire to enter it and have optimal data you can write possibly a couple of lots competitors in your marketplace and state you are doing a charge survey and if they would send you their charge list you will produce a composite list that does not determine those responding and send them a copy of the outcomes. To keep it basic for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what people are charging for services comparable 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 recommendation in law firm marketing preparation is to charge at the 75% level of the list. So you need to be at or in the leading 25% of the fees.
Remember that in basic it is not a great law practice management technique to complete on price. A lot of prospective customers will see rates that is too low as a signal that there is something missing out on either from the service, the service provider, or the company.
The Cost Technique in Law Practice Management Prices
This law practice management rates approach is very simple really. One simply determines what the expenses are to provide product and services and adds on a affordable earnings, someplace between fifteen percent at the least and maybe thirty three percent at the most. The most common error in law practice management using this approach is to neglect to include some kind of your expenditure. Solo and little firm attorneys tend to not include their own salary!
In law practice management often you count yourself out of the expenses and you should include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you should think about one wage as due you for your time and competence as the professional and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the method utilized by lots of car mechanics (it is called "the flat rate book") and other company. This approach is where you identify a set rate for different jobs and charge that rate no matter what. If the mechanic invests less time than allotted for the task, he makes more. If he spends more time than allotted, he earns less. But in the end, everything levels (well, usually to the mechanics' favor if you ask me). Another example using this approach is how handled healthcare has actually used this system with medical professionals and medical facilities . If they want, YOURURL.com lawyers can utilize this system.
The "Rule of 3" in Law Practice Management Pricing
This "rule of thumb" called the " guideline of three" used in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. Ask your CPA what they think about it and they will like it. To begin we are going to be believing in thirds. For the very first third we will take the total amount of salaries/bonuses (not advantages simply wages-- advantages go into the second third coming next) for the profits generators and/or timekeepers (this includes you if you are producing profits) and call that our very first 3rd. So build up the wages of the attorneys, paralegals, and legal secretaries who produce 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 once again and it is your second 3rd which we will call your "overhead" ( therefore that 2nd 3rd is $100,000 and don't forget you if you are doing some managing partner type duties since that part of your time goes here in overhead). Then 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 overall amount (in this example $300,000) and now find out how much you need to charge per billable hour, per repaired rate or the number of contingency cost cases won to be sure you struck the target we should strike given our very first third number times 3 (in this example $300,000).
This technique reveals you how much per hour you require to charge. If you are the owner of the practice you should have a fair revenue as well don't you concur? If this approach is a bit too complicated do feel free to contact me and I will help you sort it out in a few minutes on the phone.
It is a great concept to analyze all of these rates approaches in determining your law practice management pricing strategy before setting a cost and continuing with a law office marketing strategy to guarantee you are completely checking out all alternatives. Keep in mind the propensity for most attorneys is to price too low. Don't do that! In another post I will inform you how to speak with possible customers so you never ever have a issue getting the cost you should have.