Law Practice Management-- How To Determine Your Charges
Figuring out fees is a hard law practice management job for the majority of attorneys when thinking through their law firm marketing plans. In figuring out charges for certain services, lawyers frequently fall short of what they need to charge. Too many lawyers are scared of even charging the competitive rate for their services when making their law firm marketing plans.
Before you sit down and start thinking through your law practice management prices strategy you need some distinctions around rates commonly used in law firm marketing planning. Do understand a law practice management law firm marketing plan is not reliable if you only draw in people who desire to pay the lowest cost for a service. Rather, you want to focus your law practice management and law company marketing plans on bring in customers who will end up being long term assets to the firm.
There are essentially 4 methods of determining how much you should be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Prices
This is one excellent way of identifying rates. Get your assistant to support you in this law practice management task and spend some time discovering what the series of pricing is in the neighborhood. Have her do a " secret buyer" study by calling around as if he/she were a prospective client and discover what your rivals say on the phone to her around pricing. She may require to call from her house phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your competitors and offer to exchange your fees for their costs or you might do that with other legal representatives yourself in your market. If you truly desire to enter it and have optimal data you can compose perhaps a few lots competitors in your market and say you are doing a cost survey and if they would send you their fee list you will develop a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it basic for them include a stamped, self-addressed envelope with a list of the most common services offered in your practice area. Now you will see what individuals are charging for services comparable to those you offer. You need to have the ability to come up with a variety of costs. Use this range to set prices for your own services. My recommendation in law office marketing preparation is to charge at the 75% level of the list. You need to be at or in the leading 25% of the charges.
Remember that in general it is not a excellent law practice management technique to complete on price. A lot of potential clients will see prices that is too low as a signal that there is something missing out on either from the service, the company, or the firm.
The Expense Method in Law Practice Management Prices
This law practice management rates technique is extremely uncomplicated truly. The most typical error in law practice management utilizing this technique is to disregard to consist of some type of your expenditure.
OK, let me say it again. In law practice management often you count yourself out of the costs and you need to include yourself in the expenses. Why? Typically you are doing a minimum of a few of the technical work. Yes? Often you are doing at least some of the management work. Yes? As the owner of the business you are due a reasonable earnings. Yes? If you are all three of these in one, you must think about one income as due you for your time and proficiency as the specialist and manager as well as a profit of fifteen to thirty percent due you as the owner. Be sure to include a affordable cost for your technical and supervisory work in the expenses part of this formula.
Fixed Rate Technique in Law Practice Management Pricing
This is the approach used by many car mechanics (it is called "the flat rate book") and other provider. This method is where you figure out a fixed rate for numerous jobs and charge that rate no matter what. If the mechanic spends less time than set aside helpful resources for the job, he makes more. He makes less if he spends more time than allocated. But in the end, it all evens out (well, usually to the mechanics' favor if you ask me). Another example utilizing this technique is how handled healthcare has actually used this system with medical facilities and physicians . If they desire, attorneys can utilize this system.
The "Rule of Three" in Law Practice Management Rates
This "rule of thumb" called the " guideline of three" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. For the very first 3rd we will take the overall amount of salaries/bonuses (not advantages just salaries-- advantages go into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are generating earnings) and call that our first 3rd. 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 how many contingency cost cases won to be sure you hit the target we need to hit provided our very first third number times 3 (in this example $300,000).
This method shows you how much per hour you need to charge. If you are the owner of the practice you deserve a fair earnings as well do not you concur? If this approach is a bit too confusing do feel free to contact me and I will help you sort it out in a few minutes on the phone.
It is a good idea to think through all of these pricing approaches in identifying your law practice management prices strategy before setting a rate and moving ahead with a law company marketing plan to guarantee you are completely exploring all options. In another post I will inform you how to speak to prospective clients so you never ever have a problem getting the fee you should have.