Figuring out fees is a difficult law practice management job for a lot of lawyers when thinking through their law firm marketing strategies. In determining charges for particular services, attorneys typically fall short of what they ought to charge. Too lots of attorneys are afraid of even charging the competitive price for their services when making their law company marketing plans.
Before you sit down and begin thinking through your law practice management rates strategy you need some distinctions around prices frequently used in law firm marketing planning. Do know a law practice management law firm marketing plan is not reliable if you just bring in individuals who desire to pay the least expensive cost for a service. Rather, you desire to focus your law practice management and law company marketing plans on drawing in customers who will become long term possessions to the company.
There are basically four methods of identifying just how much you should be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
Get your assistant to support you in this law practice management job and invest some time finding what the range of rates is in the neighborhood. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services used in your practice location. My suggestion in law firm marketing preparation is to charge at the 75% level of the list.
Keep in mind that in general it is not a great law practice management strategy to compete on rate. Many prospective 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 searching for a low rate will follow that low cost anywhere they can find it instead of becoming long-lasting clients. So be sure that your cost covers your expenses and a affordable profit margin.
The Cost Method in Law Practice Management Rates
This law practice management prices method is really simple actually. The most typical mistake in law practice management utilizing this method is to overlook to include some type of your cost.
OK, let me state it again. In law practice management typically you count yourself out of the costs and you should include yourself in the expenditures. Why? Often you are doing a minimum of some of the technical work. Yes? Frequently you are doing a minimum of some of the management work. Yes? As the owner of the organisation you are due a reasonable earnings. Yes? If you are all 3 of these in one, you ought to think about one salary as due you for your time and expertise as the technician and manager in addition to a revenue of fifteen to thirty percent due you as the owner. Be sure to include a sensible expense for your technical and managerial work in the expenses part of this formula.
Fixed Rate Approach in Law Practice Management Prices
This is the approach utilized by many vehicle mechanics (it is called "the flat rate book") and other service companies. This technique is where you identify a set rate for various jobs and charge that rate no matter what. Another example using this approach is how handled health care has used this system with medical facilities and physicians .
The "Rule of Three" in Law Practice Management Pricing
This "rule of thumb" called the " guideline of 3" utilized in law practice management is not what your CPA 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 begin we are going to be thinking in thirds. For the first third we will take the total amount of salaries/bonuses (not benefits just incomes-- benefits enter into the 2nd 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are creating revenue) and call that our first 3rd. So include up the incomes of the lawyers, paralegals, and legal secretaries who generate profits or are timekeepers and call this your first 3rd (lets just state that number was $100,000 to keep it basic). Whatever that number is take that number again and it is your second third which we will call your "overhead" ( therefore that 2nd third 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 same number and we will call that your last 3rd, which we will call gross profits (another $100,000). What you need to do is take the total quantity (in this example $300,000) and now find out just how much you must charge per billable hour, per repaired rate or the number of contingency fee cases won to be sure you hit the target we should strike provided our 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 should have a fair profit as well don't you agree? If this method is a bit too confusing do feel free to contact me and I will help you arrange it out in a few minutes on the phone.
It is a great concept to think through all of these pricing approaches in identifying your law practice management rates technique prior to setting a rate and moving ahead with a law firm marketing plan to ensure you are completely checking out all alternatives. In another post I web will inform you how to speak to potential customers so you never ever have a problem getting the cost you should have.