Law Practice Management-- How To Determine Your Charges
When thinking through their law company marketing strategies, identifying fees is a tough law practice management job for a lot of attorneys. In determining fees for certain services, lawyers typically disappoint what they must charge. Too lots of lawyers are scared of even charging the competitive rate for their services when making their law practice marketing strategies. Even more, they make the rates decisions typically with no information or conceptual framework. Furthermore, instead of focusing their efforts on how they can validate getting leading dollar for what they use, they charge a fee that is frequently way too low and typically in fact can frighten possible clients who believe there is something missing out on from a service that is " inexpensive". Additionally lots of lawyers don't recognize that the majority of purchasers in the marketplace by far are " worth buyers" and not looking for "cheap".
Prior to you sit down and start believing through your law practice management prices method you need some distinctions around pricing frequently utilized in law company marketing preparation. Do understand a law practice management law company marketing plan is not reliable if you just attract individuals who want to pay the most affordable charge for a service. Rather, you desire to focus your law practice management and law firm marketing plans on attracting customers who will become long term properties to the firm.
There are generally 4 ways of identifying how much you need to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
This is one good way of determining prices. Get your assistant to support you in this law practice management job and spend a long time discovering what the series of prices remains in the community. Have her do a "mystery shopper" study by calling around as if he/she were a prospective customer and learn what your competitors say on the phone to her around rates. She may need 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 competitors and use to exchange your charges for their costs or you could do that with other attorneys yourself in your market. If you truly wish to enter it and have maximum information you can compose perhaps a couple of lots competitors in your marketplace and say you are doing a charge survey and if they would send you their fee list you will create a composite list that does not identify those reacting and send them a copy of the results. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services provided in your practice location. Now you will see what individuals are charging for services comparable to those you use. You need to have the ability to come up with a variety of costs. Use this range to set rates for your own services. My suggestion in law office marketing planning is to charge at the 75% level of the list. So you ought to be at or in the leading 25% of the fees.
Keep in mind that in general it is not a excellent law practice management strategy to complete on price. The majority of possible customers will see rates that is too low as a signal that there is something missing either from the service, the company, or the firm.
The Expense Technique in Law Practice Management Prices
This law practice management prices technique is extremely uncomplicated actually. The most typical mistake in law practice management using this method is to neglect to include some kind of your cost.
In law practice management typically you count yourself out of the costs and you need to include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you ought to think about one income as due you for your time and knowledge as the specialist and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the method used by lots of car mechanics (it is called "the flat rate book") and other service companies. This approach is where you determine a fixed rate for different tasks and charge that rate no matter what. Another example using this method is how managed health care has used this system with physicians and health centers .
The " Guideline of Three" in Law Practice Management Pricing
This " guideline of thumb" called the " guideline of three" utilized in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your CPA what they consider it and they will like it. To begin we are going to be believing in thirds. For the very first third we will take the total quantity of salaries/bonuses (not advantages simply wages-- benefits go into the second third following) for the earnings generators and/or timekeepers (this includes you if you are producing revenue) and call that our very first 3rd. So accumulate the incomes of the attorneys, paralegals, and legal secretaries who produce profits or are timekeepers and call this your first 3rd (lets simply say that number was $100,000 to keep it simple). Whatever that number is take that number once again and it is your second third which we will call your "overhead" (thus that second 3rd is $100,000 and don't forget you if you are doing some managing partner type tasks because that part of your time goes here in overhead). Take that same number and we will call that your last third, which we will call gross earnings (another $100,000). What you need to do is take the overall amount (in this example $300,000) and now figure out how much you must charge per billable hour, per repaired rate or the number of contingency charge cases won to be sure you struck the target we must strike provided our first third number times 3 (in this example $300,000).
This method reveals you how much per hour you need to charge. Since you know the number of billable hours each income generator can do per month, merely divide that into your total of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out properly. As long as you hit your targets you will be guaranteed of a 15% to 30% net benefit from your operations. After all if you are the owner of the practice you deserve a reasonable earnings as well do not you concur? This method is referred click for info to as the Guideline of 3. If this approach is a bit too complicated 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 analyze all of these prices approaches in determining your law practice management rates method before setting a price and continuing with a law company marketing plan to guarantee you are completely checking out all choices. Remember the tendency for the majority of attorneys is to price too low. Do not do that! In another post I will tell you how to speak to possible clients so you never have a issue getting the cost you should have.