Law Practice Management-- How To Determine Your Fees
Identifying charges is a hard law practice management task for most attorneys when thinking through their law firm marketing plans. In figuring out costs for certain services, attorneys typically fall brief of what they should charge. Too many lawyers are scared of even charging the competitive rate for their services when making their law firm marketing strategies.
Prior to you sit down and start believing through your law practice management rates method you require some distinctions around pricing commonly used in law firm marketing preparation. Then include your prices strategy to your law office marketing plans. You need to be sure that you are charging a adequate fee on everything to guarantee you a good earnings not simply a great living. Do know a law practice management law office marketing strategy is not efficient if you only attract individuals who wish to pay the most affordable fee for a service. These are not loyal customers. Instead, you desire to focus your law practice management and law office marketing strategies on drawing in customers who will end up being long term properties to the company. Low price clients are not developing your base of long term customers I can promise you that.
There are basically four ways of identifying just how much you need to be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Pricing
This is one great way of determining pricing. Get your assistant to support you in this law practice management job and invest a long time finding what the series of pricing is in the community. Have her do a " secret shopper" 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 house phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your competitors and provide to exchange your charges for their charges or you could do that with other lawyers yourself in your market. If you actually wish to enter into it and have optimal data you can write perhaps a few lots rivals in your market 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 determine those reacting 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 provided in your practice area. Now you will see what people are charging for services similar to those you offer. You ought to have the ability to create a range of rates. Utilize this range to set rates for your own services. My recommendation in law practice marketing planning is to charge at the 75% level of the list. You must be at or in the top 25% of the fees.
Remember that in general it is not a great law practice management technique to complete on rate. 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 service provider, or the company.
The Expense Approach in Law Practice Management Pricing
This law practice management prices technique is extremely uncomplicated actually. One merely identifies moved here what the expenses are to provide product and services and adds on a sensible revenue, somewhere between fifteen percent at the least and perhaps thirty three percent at the most. The most common mistake in law practice management using this approach is to neglect to consist of some form of your expense. Solo and little company lawyers tend to not include their own salary!
In law practice management typically you count yourself out of the costs and you ought to include yourself in the expenditures. Typically you are doing at least some of the management work. If you are all three of these in one, you ought to think about one salary as due you for your time and proficiency as the professional and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the method utilized by many vehicle mechanics (it is called "the flat rate book") and other service companies. This approach is where you identify a set rate for various tasks and charge that rate these details no matter what. Another example using this method is how handled health care has utilized this system with medical facilities and medical professionals .
The "Rule of 3" in Law Practice Management Prices
This " general rule" called the "rule of three" 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 believing in thirds. For the first third we will take the overall quantity of salaries/bonuses (not advantages just incomes-- advantages enter into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are creating revenue) and call that our first third. So accumulate the salaries of the lawyers, paralegals, and legal secretaries who produce profits or are timekeepers and call this your very first 3rd (lets simply state that number was $100,000 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" ( therefore that 2nd third is $100,000 and don't 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 revenues (another $100,000). What you need to do is take the total quantity (in this example $300,000) and now find out just how much you should charge per billable hour, per fixed rate or how numerous contingency fee cases won to be sure you hit the target we need to strike given our first 3rd number times 3 (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 reasonable profit as well don't you agree? If this technique is a bit too complicated do feel free to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to believe through all of these prices techniques in determining your law practice management pricing strategy prior to setting a cost and moving ahead with a law firm marketing plan to ensure you are completely checking out all choices. In another article I will inform you how to speak to prospective clients so you never have a issue getting the charge you deserve.