Law Practice Management-- How To Identify Your Fees
Figuring out fees is a challenging law practice management job for most lawyers when analyzing their law office marketing plans. In figuring out costs for certain services, lawyers typically disappoint what they must charge. A lot of lawyers are scared of even charging the competitive price for their services when making their law company marketing strategies. Further, they make the prices choices often without any data or conceptual framework. Furthermore, rather of focusing their efforts on how they can justify getting top dollar for what they use, they charge a charge that is often way too low and frequently actually can frighten off prospective clients who think there is something missing from a service that is "cheap". In addition lots of attorneys do not realize that the majority of buyers in the marketplace by far are " worth buyers" and not searching for "cheap".
Before you sit down and start thinking through your law practice management prices strategy you need some differences around rates commonly used in law firm marketing preparation. Do know a law practice management law company marketing plan is not effective if you only draw in people who want to pay the least expensive cost for a service. Instead, you want to focus your law practice management and law company marketing plans on drawing in customers who will become long term properties to the firm.
There are basically four ways of identifying how much you ought to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
This is one excellent way of figuring out prices. Get your assistant to support you in this law practice management task and spend a long time finding what the variety of pricing is in the community. Have her do a "mystery shopper" research study by calling around as if he/she were a possible customer and discover what your rivals say on the phone to her around prices. She might require to call from her home phone to prevent caller ID. As another alternative you might have him/her call other assistants or paralegals at your rivals and use to exchange your charges for their fees or you could do that with other legal representatives yourself in your market. If you really want to enter it and have optimal information you can write possibly a few lots competitors in your market and state you are doing a cost study and if they would send you their charge list you will produce a composite list that does not identify those reacting and send them a copy of the results. To keep it easy 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 people are charging for services comparable to those you provide. You need to be able to develop a variety of prices. Utilize this variety to set costs for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. You ought to be at or in the try this out leading 25% of the costs.
Remember that in general it is not a good law practice management strategy to compete on price. A lot of prospective clients will see pricing that is too low as a signal that there is something missing either from the service, the service provider, or the firm. And people who are looking for a low rate will follow that low rate any place they can discover it rather than becoming long-lasting clients. Be sure that your price covers your costs and a affordable profit margin.
The Cost Method in Law Practice Management Rates
This law practice management pricing approach is extremely simple really. The most common error in law practice management using this technique is to overlook to consist of some type of your expense.
In law practice management frequently you count yourself out of the expenses and you must include yourself in the expenses. Often you are doing at least some of the management work. If you are all three of these in one, you ought to consider one income as due you for your time and knowledge as the technician and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Prices
This is the technique utilized by lots of car mechanics (it is called "the flat rate book") and other service companies. This technique is where you identify a fixed rate for numerous tasks and charge that rate no matter what. Another example using this technique is how handled health care has utilized this system with healthcare facilities and doctors .
The " Guideline of 3" in Law Practice Management Prices
This " guideline" called the " guideline of three" utilized in law practice management is not what your CPA may inform you and it does not fail you either. Ask your CPA what they consider it and they will like it. To begin we are going to be believing in thirds. For the first 3rd we will take the overall amount of salaries/bonuses (not advantages just wages-- advantages enter into the second third coming next) for the profits generators and/or timekeepers (this includes you if you are creating revenue) see it here and call that our first 3rd. Add up the incomes of the legal representatives, paralegals, and legal secretaries who generate revenue or are timekeepers and call this your first third (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number once again and it is your second third which we will call your "overhead" (thus that second third is $100,000 and do not forget you if you are doing some managing partner type tasks because that part of your time goes here in overhead). Take that very same number and we will call that your last 3rd, which we will call gross revenues (another $100,000). What you need to do is take the overall quantity (in this example $300,000) and now find out how much you should charge per billable hour, per fixed rate or the number of contingency charge cases won to be sure you struck the target we need to strike given our first 3rd number times 3 (in this example $300,000).
This method reveals you just how much per hour you require to charge. Given that you know the number of billable hours each earnings generator can do per month, 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 assured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you deserve a reasonable revenue as well don't you concur? This technique is referred to as the Guideline of 3. If this approach is a bit too confusing do do not hesitate to contact me and I will assist you arrange it out in a couple of minutes on the phone.
It is a good concept to think through all of these prices methods in determining your law practice management prices strategy prior to setting a more tips here price and moving ahead with a law firm marketing plan to ensure you are thoroughly exploring all choices. In another post I will tell you how to speak to potential clients so you never have a issue getting the charge you should have.