Law Practice Management-- How To Determine Your Fees
Figuring out costs is a challenging law practice management job for most attorneys when thinking through their law firm marketing strategies. In figuring out charges for certain services, attorneys typically fall brief of what they ought to charge. Too many lawyers are scared of even charging the competitive price for their services when making their law firm marketing strategies.
Prior to you sit down and begin thinking through your law practice management prices method you need some differences around prices typically utilized in law company marketing planning. Do know a law practice management law firm marketing strategy is not effective if you only attract people who want to pay the least expensive fee for a service. Rather, you want to focus your law practice management and law firm marketing plans on bring in clients who will end up being long term possessions to the company.
There are generally four ways of figuring out just how much you need to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Rates
This is one great way of identifying pricing. Get your assistant to support you in this law practice management task and spend some time discovering what the variety of pricing remains in the community. Have her do a "mystery consumer" research study by calling around as if he/she were a possible client and learn what your competitors say on the phone to her around rates. She may require to call from her home phone to prevent caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their costs or you could do that with other attorneys yourself in your market. If you really wish to enter into it and have maximum information you can write possibly a couple of lots rivals in your marketplace and say you are doing a fee study and if they would send you their fee 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 area. Now you will see what individuals are charging for services similar to those you provide. You should have the ability to develop a series of prices. Utilize this range to set rates for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. So you ought to be at or in the top 25% of the costs.
Keep in mind that in basic it is not a excellent law practice management strategy to compete on cost. A lot of possible 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 company.
The Expense Technique in Law Practice Management Prices
This law practice management rates approach is really uncomplicated truly. One simply determines what the expenses are to deliver products or services and adds on a reasonable profit, somewhere between fifteen percent at the least and possibly thirty 3 percent at the most. The most typical mistake in law practice management using this method is to overlook to include some form of your expense. Solo and small company attorneys tend to not include their own wage!
OK, let me say it once again. In law practice management typically you count yourself out of the costs and you must include yourself in the expenses. Why? Frequently you are doing at least some of the technical work. Yes? Typically you are doing at least a few of the management work. Yes? As the owner of business you are due a reasonable profit. Yes? If you are all 3 of these in one, you need to consider one income as due you for your time and know-how as the specialist and supervisor in addition to a profit of fifteen to thirty percent due you as the owner. Be sure to include a affordable expense for your technical and supervisory work in the costs part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the approach utilized by many auto mechanics (it is called "the flat rate book") and other service suppliers. This technique reference is where you determine a fixed rate for different jobs and charge that rate no matter what. Another example utilizing this technique is how managed health care has used this system with medical professionals and healthcare facilities .
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 CPA what they think of 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 just salaries-- benefits go into the second 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are producing income) and call that our very first 3rd. Add up the wages of the legal representatives, paralegals, and legal secretaries who generate earnings or are timekeepers and call this your first 3rd (lets just state that number was $100,000 to keep it easy). 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 handling partner type responsibilities because that part of your time goes here in overhead). Then take that exact 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 total quantity (in this example $300,000) and now figure out just how much you must charge per billable hour, per fixed rate or the number of contingency charge cases won to be sure you struck the target we should strike given our first 3rd number times three (in this example $300,000).
This technique shows you how much per hour you need to charge. If you are the owner of the practice you should have a reasonable revenue as well don't you concur? If this technique is a bit too confusing do feel free to contact me and I will assist you sort it out in a few minutes on the phone.
It is a great idea to believe through all of these pricing approaches in identifying your law practice management pricing method before setting a rate and moving ahead with a law firm marketing strategy to ensure you are completely exploring all choices. In another post I will tell you how to speak to possible clients so you never have a problem getting the fee visit site you should have.