Law Practice Management-- How To Identify Your Charges
Figuring out fees is a tough law practice management job for many lawyers when believing through their law company marketing plans. In determining costs for certain services, lawyers typically fall short of what they need to charge. Too many attorneys are scared of even charging the competitive cost for their services when making their law company marketing plans.
Before you sit down and start thinking through your law practice management pricing strategy you need some distinctions around rates frequently used in law firm marketing planning. Do know a law practice management law firm marketing strategy is not reliable if you just bring in people who desire to pay the least expensive cost for a service. Rather, you desire to focus your law practice management and law company marketing strategies on attracting customers who will end up being long term properties to the firm.
There are essentially 4 ways of identifying how much you must be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
This is one excellent way 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 is in the community. Have her do a " secret shopper" study by calling around as if he/she were a potential customer and discover what your rivals 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 offer to exchange your costs for their fees or you could do that with other legal representatives yourself in your market. If you truly wish to enter into it and have optimal data you can compose maybe a few lots rivals in your market and say you are doing a charge study and if they would send you their cost list you will develop a composite list that does not recognize those reacting and send them a copy of the results. To keep it simple for them include a stamped, self-addressed envelope with a list of the most typical services used in your practice area. Now you will see what people are charging for services similar to those you provide. You must have the ability to come up with a series of rates. Utilize this variety to set rates for your own services. My recommendation in law firm marketing preparation is to charge at the 75% level of the list. So you ought to be at or in the top 25% of the charges.
Remember that in basic it is not a good law practice management technique to compete on rate. A lot of potential customers will see rates that is too low as a signal that there is something missing out on either from the service, the supplier, or the firm.
The Cost Approach in Law Practice Management Prices
This law practice management pricing approach is very straightforward really. One just identifies what the costs are to provide services or products and includes on a sensible profit, someplace between fifteen percent at the least and maybe thirty three percent at the most. The most typical error in law practice management using this approach is to neglect to consist of some type of your expenditure. Solo and little firm lawyers tend to not include their own salary!
In law practice management typically you count yourself out of the expenditures and you should include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all three of these in one, you must think Full Report about one salary as due you for your time and know-how as the service technician and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Pricing
This is the method used by lots of auto mechanics (it is called "the flat rate book") and other service companies. This technique is where you figure out a set rate for different jobs and charge that rate no matter what. Another example utilizing this method is how handled health care has utilized this system with physicians and medical facilities .
The "Rule of Three" in Law Practice Management Rates
This " guideline of thumb" called the " guideline of 3" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. Ask your CPA what they consider it and they will like it. To start we are going to be believing in thirds. For the very first third we will take the total quantity of salaries/bonuses (not benefits simply wages-- advantages go into the 2nd third following) for the profits generators and/or timekeepers (this includes you if you are creating profits) and call that our first 3rd. So include up the salaries of the legal representatives, paralegals, and legal secretaries who generate profits 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 again and it is your second third which we will call your "overhead" (thus that second third is $100,000 and don't forget you if you are doing some managing partner type responsibilities because that part of your time goes here in overhead). Then take that very 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 amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or the number of contingency charge cases won to be sure you struck the target we use this link must strike offered our very first 3rd number times three (in this example $300,000).
This method reveals you how much per hour you need to charge. If you are the owner of the practice you deserve a fair earnings as well don't you concur? If this method is a bit too confusing do feel totally free to additional reading call me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to think through all of these prices approaches in identifying your law practice management pricing technique prior to setting a rate and moving ahead with a law firm marketing plan to ensure you are thoroughly checking out all alternatives. In another article I will inform you how to speak to potential clients so you never ever have a issue getting the charge you are worthy of.