Law Practice Management-- How To Identify Your Fees
Determining costs is a difficult law practice management job for the majority of lawyers when believing through their law firm marketing strategies. In determining fees for specific services, attorneys typically fall brief of what they need to charge. Too many lawyers are scared of even charging the competitive rate for their services when making their law company marketing plans.
So before you take a seat and begin thinking through your law practice management pricing method you need some differences around rates commonly utilized in law office marketing planning. Then add your rates technique to your law office marketing strategies. You need to be sure that you are charging a enough cost on whatever to ensure you a excellent revenue not just a good living. Do know a law practice management law company marketing strategy is ineffective if you just bring in people who wish to pay the most affordable charge for a service. These are not loyal clients. Rather, you wish to focus your law practice management and law company marketing strategies on bring in customers who will end up being long term properties to the company. Low price customers are not building your base of long term customers I can promise you that.
There are essentially four methods of figuring out how much you need to be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Prices
This is one excellent way of figuring out rates. Get your assistant to support you in this law practice management task and invest a long time discovering what the series of rates is in the neighborhood. Have her do a " secret consumer" study by calling around as if he/she were a potential customer and learn what your rivals say on the phone to her around prices. She may require to call from her home phone to prevent caller ID. As another choice you might have him/her call other assistants or paralegals at your rivals and offer to exchange your fees for their fees or you could do that with other lawyers yourself in your market. If you really wish to get into it and have optimal data you can write possibly a couple of dozen competitors in your marketplace and state you are doing a charge survey and if they would send you their cost list you will develop a composite list that does not determine 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 used in your practice location. Now you will see what people are charging for services comparable to those you use. You need to have the ability to develop a variety of rates. Use this range to set rates for your own services. My suggestion in law practice marketing planning is to charge at the 75% level of the list. So you need to be at or in the top 25% of the costs.
Keep in mind that in basic it is not a excellent law practice management strategy to compete on cost. A lot of possible customers will see rates that is too low as a signal that there is something missing either from the service, the service provider, or the see this site firm.
The Cost Technique in Law Practice Management Rates
This law practice management rates technique is very straightforward actually. The most common mistake in law practice management using this approach is to disregard to include some form of your expense.
In law practice management typically you count yourself out of the expenses and you must include yourself in the expenditures. Often you are doing at least some of the management work. If you are all 3 of these in one, you should consider one income as due you for your time and expertise as the professional and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Pricing
This is the method used by numerous automobile mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you identify a fixed rate for numerous tasks and charge that rate no matter what. Another example using this technique is how managed health care has utilized this system with doctors and health centers .
The "Rule of Three" in Law Practice Management Pricing
This official statement " guideline of thumb" called the "rule of three" used in law practice management is not what your CPA may inform you and it does not fail you either. For the very first 3rd we will take the overall quantity of salaries/bonuses (not advantages simply incomes-- advantages go into the second 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are producing revenue) and call that our very first third. What you need to do is take the overall amount (in this example $300,000) and now figure out how much you should charge per billable hour, per fixed rate or how lots of contingency cost cases won to be sure you this link hit the target we need to strike given our very first third number times 3 (in this example $300,000).
This approach shows you just how much per hour you need to charge. Since you understand how many billable hours each earnings generator can do per month, just divide that into your total of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out properly. As long as you hit your targets you will be ensured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you should have a fair revenue as well do not you agree? This technique is understood as the Rule of 3. , if this method is a bit too confusing do feel complimentary to call me and I will help you sort it out in a few minutes on the phone.
It is a excellent concept to believe through all of these prices approaches in determining your law practice management pricing technique before setting a rate and moving ahead with a law firm marketing plan to guarantee you are thoroughly exploring all choices. In another post I will inform you how to speak to potential clients so you never have a issue getting the fee you should have.