Law Practice Management-- How To Identify Your Fees
Figuring out charges is a challenging law practice management task for a lot of attorneys when thinking through their law firm marketing plans. In identifying fees for specific services, lawyers often fall short of what they need to charge. Too many lawyers are scared of even charging the competitive price for their services when making their law company marketing plans.
Prior to you sit down and begin believing through your law practice management rates strategy you need some differences around pricing commonly used in law company marketing preparation. Do understand a law practice management law company marketing strategy is not reliable if you only attract individuals who desire to pay the least expensive charge 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 ways of determining just how much you should be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
This is one excellent method of figuring out prices. Get your assistant to support you in this law practice management task and spend some time finding what the variety of rates is in the neighborhood. Have her do a " secret consumer" study by calling around as if he/she were a possible customer and find out what your rivals state on the phone to her around prices. She may require to call from her home phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and provide to exchange your charges for their fees or you could do that with other attorneys yourself in your market. If you truly wish to get into it and have optimal information you can compose maybe a few dozen rivals in your marketplace and state you are doing a fee study and if they would send you their charge list you will develop a composite list that does not determine those responding and send them a copy of the results. To keep it easy for them include a stamped, self-addressed envelope with a list of the most typical services offered in your practice location. Now you will see what people are charging for services similar to those you use. You must have the ability to develop a series of rates. Use this variety to set prices for your own services. My recommendation in law practice marketing planning is to charge at the 75% level of the list. You need to be at or in the top 25% of the fees.
Remember that in basic it is not a excellent law practice management strategy to contend on cost. Most prospective customers will see rates that is too low as a signal that there is something missing out on either from the service, the company, or the firm. And people who are looking for a low cost will follow that low rate any place they can find it instead of becoming long-term customers. So make certain that your price covers your costs and a reasonable revenue margin.
The Cost Method in Law Practice Management Prices
This law practice management rates technique is very straightforward truly. The most common error in law practice management utilizing this technique is to overlook to include some kind of your expenditure.
In law practice management typically you count yourself out of the expenses and you need to include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all three of these in one, you must consider one wage as due you for your time and competence as the technician and manager as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Prices
This is the approach utilized by numerous car mechanics (it is called "the flat rate book") and other service companies. This method is where you determine a fixed rate for numerous tasks and charge that rate no matter what. Another example using this technique is how managed health care has used this system with hospitals and doctors .
The " Guideline of 3" in Law Practice Management Rates
This " general rule" 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 CPA what they think about it and they will like it. To start we are going to be believing in thirds. For the first 3rd we will take the total quantity of salaries/bonuses (not benefits simply salaries-- benefits enter into the second 3rd following) for the profits generators and/or timekeepers (this includes you if you are producing income) his explanation and call that our first 3rd. So include up the incomes of the lawyers, paralegals, and legal secretaries who generate earnings or are timekeepers and call this your very first 3rd (lets simply say that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your second 3rd which we will call your "overhead" ( hence that 2nd third is $100,000 and do not forget you if you are doing some managing partner type responsibilities since that part of your company website time goes here in overhead). Take that very same number and we will call that your last 3rd, which we will call gross profits (another $100,000). What you require to do is take the overall amount (in this example $300,000) and now determine just 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 hit given our very first 3rd number times three (in this example $300,000).
This technique shows you how much per hour you require to charge. If you are the owner of the practice you deserve a fair earnings as well don't you concur? If this approach is a bit too confusing do feel complimentary to call me and I will assist you sort it out in a couple of minutes on the phone.
It is a great idea to analyze all of these rates methods in determining your law practice management prices strategy prior to setting a rate and moving ahead with a law company marketing plan to guarantee you are thoroughly checking out all choices. Remember the propensity for many attorneys is to price too low. Don't do that! In another post I will tell you how to speak with prospective clients so you never ever have a problem getting the fee you are worthy of.