Law Practice Management-- How To Identify Your Fees
When thinking through their law company marketing strategies, identifying costs is a tough law practice management job for many lawyers. In determining charges for certain services, attorneys typically disappoint what they need to charge. Too numerous lawyers are afraid of even charging the competitive price for their services when making their law practice marketing strategies. Further, they make the rates choices often with no information or conceptual structure. Additionally, instead of focusing their efforts on how they can justify getting top dollar for what they use, they charge a cost that is typically way too low and frequently in fact can scare off prospective customers who believe there is something missing from a service that is " inexpensive". In addition lots of lawyers do not understand that most purchasers in the marketplace by far are " worth buyers" and not trying to find " low-cost".
Prior to you sit down and start thinking through your law practice management pricing method you require some distinctions around pricing commonly utilized in law company marketing preparation. Do know a law practice management law company marketing strategy is not reliable if you only attract individuals who want to pay the least expensive fee for a service. Instead, you want to focus your law practice management and law firm marketing plans on drawing in customers who will become long term possessions to the firm.
There are generally four ways of determining 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 excellent method of determining prices. Get your assistant to support you in this law practice management job and invest some time discovering what the variety of rates remains in the community. Have her do a " secret buyer" research study by calling around as if he/she were a possible customer and discover out what your competitors state on the phone to her around prices. She may need to call from her house phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your competitors and offer to exchange your costs for their charges or you could do that with other legal representatives yourself in your market. If you actually want to enter it and have optimal data you can write perhaps a few dozen rivals in your marketplace and state you are doing a charge study and if they would send you their fee list you will develop a composite list that does not recognize those responding and send them a copy of the outcomes. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most common services used in your practice location. Now you will see what individuals are charging for services comparable to those you offer. You need to be able to create a range of costs. Utilize this variety to set costs for your own services. My suggestion in law office marketing planning is to charge at the 75% level of the list. You should be at or in the top 25% of the charges.
Bear in mind that in basic it is not a excellent law practice management strategy to contend on rate. The majority of potential clients will see rates that is too low as a signal that there is something missing either from the service, the service provider, or the firm. And individuals who are looking for a low price will follow that low rate anywhere they can discover it instead of becoming long-term customers. Be sure that your price covers your costs and a reasonable earnings margin.
The Cost Method in Law Practice Management Rates
This law practice management rates method is really simple actually. The most typical error in law practice management utilizing this approach is to neglect to include some kind of your cost.
In law practice management often you count yourself out of the costs and you ought 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 wage as due you for your time and know-how as the service technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the method used by many auto mechanics (it is called "the flat rate book") and other service companies. This approach is where you identify a fixed rate for various jobs and charge that rate no matter what. Another example utilizing this approach is how managed health care has utilized this system with doctors and medical facilities .
The " Guideline of 3" in Law Practice Management Pricing
This " general rule" called the "rule of three" utilized 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 begin we are going to be believing in thirds. For the very first 3rd we will take the overall amount of salaries/bonuses (not advantages just wages-- benefits go into the second 3rd why not try these out following) for the earnings generators and/or timekeepers (this includes you if you are generating revenue) and call that our first 3rd. So add up the incomes of the legal representatives, paralegals, and legal secretaries who generate profits or are timekeepers and call this your first 3rd (lets simply say 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" (thus that second 3rd is $100,000 and do not forget you if you are doing some managing partner type tasks since that part of your time goes here in overhead). 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 overall quantity (in this example $300,000) and now determine just how much you need to charge per billable hour, per repaired rate or how numerous contingency fee cases won to be sure you struck the target we need to hit provided our first 3rd number times 3 (in this example $300,000).
This method shows you how much per hour you need to charge. Since you know the number of billable hours each earnings generator can do each month, merely divide that into your overall of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out properly. As long as you strike your targets you will be ensured of a 15% to 30% net make money from your operations. After all if you are the owner of the practice you are worthy of a reasonable profit too do not you agree? This method is called the Guideline of Three. , if this method is a bit too complicated do feel totally free to call me and I will assist you arrange it out in a few minutes on the phone.
It is a excellent idea to analyze all of these rates methods in determining your law practice management prices method prior to setting a price and continuing with a law practice marketing strategy to ensure you are thoroughly exploring all choices. Keep in mind the propensity for most legal representatives is to price too low. Don't do that! In another article I will tell you how to talk to prospective customers so you never ever have a issue getting the cost you deserve.