Identifying fees is a difficult law practice management task for a lot of lawyers when thinking through their law firm marketing plans. In identifying charges for certain services, attorneys frequently fall brief of what they ought to charge. Too lots of attorneys are scared of even charging the competitive cost for their services when making their law firm marketing plans.
Prior to you sit down and begin believing through your law practice management prices method you require some distinctions around rates typically used in law firm marketing preparation. Then include your rates strategy to your law office marketing strategies. You require to be sure that you are charging a sufficient cost on everything to guarantee you a excellent earnings not simply a great living. Do know a law practice management law office marketing strategy is not reliable if you only bring in people who want to pay the most affordable fee for a service. These are not loyal clients. Instead, you wish to focus your law practice management and law company marketing strategies on bring in customers who will become long term possessions to the company. Low rate clients are not developing your base of long term customers I can assure you that.
There are generally 4 ways of figuring out just how much you must be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Rates
This is one good method of determining rates. Get your assistant to support you in this law practice management job and invest some time discovering what the variety of pricing is in the neighborhood. Have her do a " secret shopper" study by calling around as if he/she were a prospective client and learn what your rivals state on the phone to her around prices. She may require to call from her house phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and offer to exchange your charges for their charges or you could do that with other lawyers yourself in your market. If you actually desire to enter it and have maximum information you can compose maybe a couple of lots competitors in your marketplace and state you are doing a fee study and if they would send you their cost list you will produce a composite list that does not identify those responding and send them a copy of the outcomes. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what individuals are charging for services similar to those you provide. You should have the ability to develop a variety of prices. Utilize this variety to set prices for your own services. My suggestion in law firm marketing preparation is to charge at the 75% level of the list. So you need to be at or in the leading 25% of the costs.
Remember that in general it is not a excellent law practice management strategy to contend on rate. A lot of potential clients will see pricing that is too low as a signal that there is something missing either from the service, the supplier, or the company.
The Cost Technique in Law Practice Management Prices
This law practice management prices method is extremely uncomplicated truly. The most common mistake in law practice management using this technique is to disregard to include some form of your expense.
In law practice management typically you count yourself out of the expenses and you should include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all three of these in one, you must consider one salary as due you for your time and expertise as the service technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the method utilized by many auto mechanics (it is called "the flat rate book") and other service suppliers. This method is where you figure out a set rate for numerous tasks and charge that rate no matter what. If the mechanic invests less time than set aside for the task, he makes more. He makes less if he invests more time than allocated. However in the end, it all evens out (well, typically to the mechanics' favor if you ask me). Another example utilizing this technique is how handled healthcare has actually used this system with healthcare facilities and doctors . Lawyers can utilize this system if they prefer.
The "Rule of 3" in Law Practice Management Rates
This " guideline of thumb" called the "rule of three" used in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your Certified Public Accountant what they believe about it and they will like it. To start we are going to be believing in thirds. For the very first 3rd we will take the total quantity of salaries/bonuses (not benefits simply wages-- benefits enter into the second 3rd following) for the profits generators and/or timekeepers (this includes you if you are generating profits) and call that our first 3rd. So add up the incomes of the attorneys, paralegals, and legal secretaries who generate earnings or are timekeepers and call this your first 3rd (lets simply state that number was $100,000 to keep it basic). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" Read More Here (thus that second third is $100,000 and do not forget you if you are doing some managing partner type responsibilities 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 amount (in this example $300,000) and now determine just how much you must charge per billable hour, per repaired rate or how many contingency cost cases won to be sure you hit the target we must strike provided our very first third number times 3 (in this example $300,000).
This method shows you just how much per hour you need to charge. Because you know the number of billable hours each revenue generator can do monthly, simply divide that into your overall of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out correctly. As long as you strike your targets you will be guaranteed of a 15% to 30% net make money from your operations. If you are the owner of the practice you deserve a fair profit as well do not you concur? This method is called the Guideline of 3. , if this approach is a bit too complicated do feel free to call me and I will assist you sort it out in a couple of minutes on the phone.
It is a great idea to think through all of these prices techniques in determining your law practice management rates method before setting a price and continuing with a law practice marketing plan to guarantee you are completely checking out all choices. Keep in mind the tendency for most attorneys is to price too low. Do not do that! In another post I will inform you how to speak with potential clients so you never ever have a issue getting the charge you deserve.