Law Practice Management-- How To Identify Your Costs
Figuring out costs is a hard law practice management job for the majority of lawyers when believing through their law company marketing plans. In identifying charges for particular services, lawyers often fall short of what they ought to charge. Too many attorneys are scared of even charging the competitive rate for their services when making their law company marketing plans.
Before you sit down and start believing through your law practice management pricing technique you require some distinctions around pricing typically utilized in law company marketing preparation. Do know a law practice management law firm marketing plan is not efficient if you just draw in people who want to pay the most affordable fee for a service. Instead, you want to focus your law practice management and law firm marketing plans on attracting customers who will end up being long term possessions to the firm.
There are essentially four methods of figuring out just how much you ought to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Pricing
This is one good way of figuring out rates. Get your assistant to support you in this law practice management task and invest some time finding what the series of rates is in the community. Have her do a " secret shopper" research study by calling around as if he/she were a possible client and discover what your competitors state on the phone to her around prices. She might need to call from her house phone to avoid caller ID. As another choice you might have him/her call other assistants or paralegals at your competitors and use to exchange your charges for their costs or you could do that with other lawyers yourself in your market. If you truly desire to get into it and have optimal information you can write perhaps a couple of dozen competitors in your marketplace and state you are doing a charge survey and if they would send you their fee list you will develop a composite list that does not identify 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 typical services provided in your practice area. Now you will see what people are charging for services similar to those you use. You should be able to develop a series of rates. Use this range to set rates for your own services. My recommendation in law firm marketing preparation is to charge at the 75% level of the list. So you must be at or in the leading 25% of the fees.
Remember that in basic it is not a good law practice management technique to contend on rate. Most prospective customers will see prices that is too low as a signal that there is something missing either from the service, the provider, or the company.
The Expense Technique in Law Practice Management Pricing
This law practice management pricing method is extremely uncomplicated actually. The most common error in law practice management utilizing this approach is to neglect to include some form of your cost.
In law practice management typically you count yourself out of the costs and you ought to include yourself in the expenses. Often 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 proficiency as the specialist and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the technique utilized by many automobile mechanics (it is called "the flat rate book") and other service providers. This method is where you figure out a set rate for various jobs and charge that rate no matter what. He makes more if the mechanic spends less time than set aside for the task. He makes less if he spends more time than allotted. In the end, it all evens out (well, normally to the mechanics' favor if you ask me). Another example using this approach is how handled healthcare has used this system with hospitals and medical professionals . Legal representatives can utilize this system if they desire.
The "Rule of 3" in Law Practice Management Prices
This " general rule" called the "rule 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 Certified Public Accountant what they think 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 overall amount of salaries/bonuses (not benefits simply wages-- advantages enter into the second third coming next) for the revenue generators and/or timekeepers (this includes you if you are creating revenue) and call that our very first third. Include up the incomes of the attorneys, paralegals, and legal secretaries who produce profits or are timekeepers and call this your very first third (lets just say that number was $100,000 find this to keep it basic). Whatever that number is take that number once again and it is your 2nd 3rd which we will call your "overhead" (thus that 2nd third is $100,000 and do not 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 3rd, which we will call gross earnings (another $100,000). What you require to do is take the overall quantity (in this example $300,000) and now find out how much you must charge per billable hour, per fixed rate or how numerous contingency fee cases won to be sure you struck the target we must strike given our first third number times 3 (in this example $300,000).
This technique reveals you how much per hour you need to charge. Considering that you know the number of billable hours each revenue generator can do monthly, merely divide that into your total of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out properly. As long as you strike your targets you will be ensured of a 15% to 30% net make money from your operations. If you are the owner of the practice you are worthy of a fair revenue as well don't you concur? get more This method is referred to as the Rule of 3. , if this technique is a bit too complicated do feel totally free to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a good concept to think through all of these rates techniques in identifying your law practice management prices technique prior to setting a cost and moving ahead with a law firm marketing strategy to guarantee you are completely checking out all choices. In another article I will tell you how to speak to potential clients so you never ever have a issue getting the charge you are worthy of.