Law Practice Management-- How To Determine Your Charges
Figuring out costs is a difficult law practice management job for most lawyers when believing through their law company marketing strategies. In determining charges for specific services, attorneys typically fall short of what they should charge. Too numerous lawyers are scared of even charging the competitive price for their services when making their law firm marketing strategies.
So before you sit down and begin analyzing your law practice management rates method you need some distinctions around prices frequently utilized in law office marketing preparation. Then add your prices technique to your law practice marketing strategies. You require to be sure that you are charging a adequate fee on whatever to ensure you a great profit not simply a excellent living. Do understand a law practice management law office marketing strategy is ineffective if you just attract individuals who desire to pay the lowest charge for a service. These are not devoted clients. Instead, you desire to focus your law practice management and law practice marketing plans on drawing in clients who will become long term assets to the firm. Low rate customers are not developing your base of long term clients I can assure you that.
There are essentially four ways of determining just how much you must be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Prices
This is one excellent way of identifying pricing. Get your assistant to support you in this law practice management job and spend a long time finding what the series of rates is in the neighborhood. Have her do a "mystery buyer" study by calling around as if he/she were a prospective customer and discover what your rivals say on the phone to her around rates. She might require to call from her home phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their costs or you might do that with other lawyers yourself in your market. If you actually desire to enter it and have optimal information you can compose maybe a couple of dozen competitors in your market and say you are doing a charge survey and if they would send you their charge list you will create a composite list that does not recognize those responding and send them a copy of the results. 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 people are charging for services similar to those you provide. You need to have the ability to develop a variety of prices. Utilize this range to set prices for your own services. My recommendation in law office 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 basic it is not a excellent law practice management strategy to contend on price. A lot of possible clients will see rates that is too low as a signal that there is something additional hints missing out on either from the service, the service provider, or the firm. And individuals who are looking for a low rate will follow that low cost anywhere they can discover it instead of becoming long-term customers. Be sure that your rate covers your expenses and a reasonable revenue margin.
The Cost Technique in Law Practice Management Rates
This law practice management prices technique is really straightforward actually. The most typical mistake in law practice management using this method is to neglect to include some type of your expenditure.
In law practice management typically you count yourself out of the costs and you should include yourself in the costs. Typically you are doing at least some of the management work. If you are all three of these in one, you should think about one income as due you you can find out more for your time and know-how as the professional and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Prices
This is the approach utilized by numerous auto mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you identify a fixed rate for different jobs and charge that rate no matter what. Another example using this method is how managed health care has utilized this system with doctors and hospitals .
The " Guideline of 3" in Law Practice Management Rates
This "rule of thumb" called the "rule of 3" used 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 consider it and they will like it. To start we are going to be thinking in thirds. For the first 3rd we will take the overall amount of salaries/bonuses (not benefits simply incomes-- advantages enter into the second third coming next) for the income generators and/or timekeepers (this includes you if you are creating revenue) and call that our first third. So add up the incomes of the legal representatives, paralegals, and legal secretaries who produce revenue or are timekeepers and call this your first third (lets just state that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your 2nd third which we will call your "overhead" ( hence that second 3rd is $100,000 and don't forget you if you are doing some handling partner type duties 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 require to do is take the total amount (in this example $300,000) and now find out how much you need to charge per billable hour, per fixed rate or the number of contingency fee cases won to be sure you struck the target we must strike given our first third number times 3 (in this example $300,000).
This technique shows you just how much per hour you need to charge. Given that you understand the number of billable hours each earnings generator can do monthly, just 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 correctly. As long as you hit 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 deserve a fair earnings too do not you agree? This approach is called the Guideline of Three. , if this method is a bit too confusing do feel complimentary to contact me and I will assist you sort it out in a couple of minutes on the phone.
It is a great concept to analyze all of these rates methods in identifying your law practice management rates strategy prior to setting a rate and visit this site continuing with a law firm marketing plan to guarantee you are thoroughly checking out all choices. Keep in mind the propensity for many lawyers is to price too low. Don't do that! In another short article I will tell you how to talk to possible clients so you never have a problem getting the fee you deserve.