Law Practice Management-- How To Identify Your Fees
Figuring out fees is a difficult law practice management task for the majority of lawyers when thinking through their law firm marketing plans. In identifying costs for certain services, lawyers typically fall short of what they should charge. Too numerous attorneys are afraid of even charging the competitive cost for their services when making their law firm marketing strategies.
So prior to you take a seat and begin analyzing your law practice management prices method you require some distinctions around pricing commonly used in law practice marketing preparation. Then include your prices method to your law practice marketing strategies. You need to be sure that you are charging a enough fee on whatever to ensure you a good earnings not just a good living. If you just attract people who desire to pay the most affordable charge for a service, do understand a law practice management law firm marketing plan is not reliable. These are not devoted clients. Instead, you wish to focus your law practice management and law firm marketing intend on drawing in clients who will become long term assets to the firm. Low cost customers are not building your base of long term clients I can assure you that.
There are basically four methods of identifying just how much you should be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Pricing
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 variety of rates remains in the community. Have her do a " secret consumer" study by calling around as if he/she were a prospective client and learn what your rivals say on the phone to her around prices. She may require to call from her home phone to avoid caller ID. As another alternative you might have him/her call other assistants or paralegals at your rivals and offer to exchange your fees for their charges or you could do that with other attorneys yourself in your market. If you truly want to get into it and have maximum data you can compose maybe a couple of lots rivals in your marketplace and say you are doing a charge survey and if they would send you their charge list you will produce a composite list that does not identify those responding and send them a copy of the outcomes. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services provided in your practice area. Now you will see what people are charging for services similar to those you provide. You should have the ability to create a range of costs. Use 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. You need to be at or in the top 25% of the charges.
Remember that in general it is not a great law practice management strategy to compete on cost. The majority of potential customers will see rates that is too low as a signal that there is something missing out on either from the service, the provider, or the firm. And people who are looking for a low price will follow that low rate any place they can discover it instead of becoming long-term clients. Be sure that your rate covers your expenses and a reasonable earnings margin.
The Expense Approach in Law Practice Management Rates
This law practice management prices technique is extremely straightforward actually. One just identifies what the expenses are to deliver product and services and adds on a affordable earnings, somewhere between fifteen percent at the least and maybe thirty 3 percent at the most. The most common error in law practice management using this method is to disregard to include some form of your expenditure. Solo and small firm attorneys tend to not include their own salary!
In law practice management frequently you count yourself out of the costs and you ought 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 should consider one wage as due you for your time and knowledge as the service 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 Prices
This is the approach used by lots of vehicle mechanics (it is called "the flat rate book") and other service companies. This method is where you figure out a fixed rate for various tasks and charge that rate no matter what. Another example utilizing this technique is how managed health care has actually used this system with health centers and physicians .
The " Guideline of 3" in Law Practice Management Pricing
This " guideline" called the "rule of 3" 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 consider it and they will like it. To begin we are going to be believing in thirds. For the very first 3rd we read more will take the overall amount of salaries/bonuses (not benefits just wages-- advantages enter into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are creating income) and call that our very first third. So build up the incomes of the attorneys, paralegals, and legal secretaries who produce earnings or are timekeepers and call this your 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 second third which we will call your "overhead" ( therefore that second third is $100,000 and do not forget you if you are doing some managing 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 3rd, 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 figure out just how much you need to charge per billable hour, per fixed rate visit here or how lots of contingency cost cases won to be sure you struck the target we need to strike provided our first 3rd number times 3 (in this example $300,000).
This technique reveals 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 concur? If this method is a bit too confusing do feel complimentary to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent idea to think through all of these prices techniques in identifying your law practice management rates strategy before setting a rate and moving ahead with a law firm marketing strategy to ensure you are thoroughly checking out all options. 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.