Law Practice Management-- How To Identify Your Fees
Identifying fees is a difficult law practice management job for most lawyers when believing through their law firm marketing plans. In determining fees for certain services, attorneys typically fall short of what they should charge. Too lots of attorneys are afraid of even charging the competitive rate for their services when making their law firm marketing strategies.
Prior to you sit down and start thinking through your law practice management pricing strategy you need some distinctions around rates typically utilized in law company marketing preparation. Do know a law practice management law company marketing plan is not effective if you just draw in individuals who desire to pay the lowest fee for a service. Instead, you want to focus your law practice management and law firm marketing plans on drawing in clients who will become long term possessions to the company.
There are essentially 4 methods of identifying just how much you need to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Rates
This is one good way of determining prices. Get your assistant to support you in this law practice management task and spend some time finding what the variety of rates remains in the community. Have her do a "mystery shopper" research study by calling around as if he/she were a potential client and discover what your competitors say on the phone to her around pricing. She might require to call from her home phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their costs or you might do that with other attorneys yourself in your market. If you truly desire to get into it and have optimal information you can compose possibly a few dozen competitors in your market and state you are doing a cost survey and if they would send you their fee list you will produce a composite list that does not recognize those reacting 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 offered in your practice area. Now you will see what individuals are charging for services comparable to those you provide. You must be able to create a series of prices. Use this variety to set costs for your own services. My suggestion in law office marketing preparation is to charge at the 75% level of the list. You need to be at or in the leading 25% of the fees.
Remember that in general it is not a excellent law practice management method to contend on price. The majority of possible customers will see pricing that is too low as a signal that there is something missing either from the service, the provider, or the company.
The Expense Approach in Law Practice Management Prices
This law practice management rates technique is very straightforward really. One just determines what the costs are to deliver service or products and adds on a reasonable profit, someplace between fifteen percent at the least and maybe thirty 3 percent at the most. The most typical mistake in law practice management utilizing this technique is to disregard to consist of some type of your expenditure. Solo and small firm attorneys tend to not include their own income!
In law practice management often you count yourself out of the expenses and you should 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 must think about one wage as due you for your time and knowledge 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 Rates
This is the technique used by lots of auto mechanics (it is called "the flat rate book") and other service providers. This technique is where you determine a set rate for numerous jobs and charge that rate no matter what. Another example using this approach is how handled health care has actually used this system with physicians and medical facilities .
The "Rule of Three" in Law Practice Management Rates
This " guideline" called the " guideline of 3" utilized in law practice management is not what your CPA might 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 thinking in thirds. For the very first third we will take the total amount of salaries/bonuses (not benefits simply salaries-- advantages enter into the 2nd 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are producing profits) and call that our very first third. Add up the wages of the attorneys, paralegals, and legal secretaries who create revenue or are timekeepers and call this your very first 3rd (lets simply state that number was $100,000 to keep it simple). Whatever that number is take that number once again and it image source is your 2nd third which we will call your "overhead" (thus that second 3rd is $100,000 and do not forget you if you are doing some managing partner type responsibilities 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 amount (in this example $300,000) and now find out just how much you need to charge per billable hour, per fixed rate or how lots of contingency cost cases won to be sure you struck the target we should strike offered our first third number times three (in this example $300,000).
This approach reveals you how much per hour you need to charge. If you are the owner of the practice you should have a fair earnings as well don't you concur? If this technique is a bit too complicated do feel totally free to call me and I will help you arrange it out in a few minutes on the phone.
It is a good concept to believe through all of these pricing techniques in identifying your law practice management prices method prior to setting a price and moving ahead with a law firm marketing plan to ensure you are completely exploring all options. In another article I will tell you how to speak to possible customers so you never have a problem getting the charge you should have.