Law Practice Management-- How To Determine Your Fees
Determining costs is a challenging law practice management job for the majority of lawyers when believing through their law firm marketing strategies. In figuring out charges for particular services, attorneys often fall short of what they should charge. Too numerous lawyers are scared of even charging the competitive cost for their services when making their law company marketing strategies.
So prior to you take a seat and begin analyzing your law practice management rates technique you need some distinctions around prices frequently used in law office marketing planning. Add your rates technique to your law company marketing plans. You need to be sure that you are charging a enough cost on whatever to ensure you a good earnings not just a excellent living. Do know a law practice management law firm marketing plan is not reliable if you just attract individuals who want to pay the most affordable fee for a service. These are not loyal customers. Rather, you want to focus your law practice management and law practice marketing intend 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 clients I can assure you that.
There are generally four methods of determining how much you ought to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
This is one great way of figuring out rates. Get your assistant to support you in this law practice management task and spend some time finding what the series of rates remains in the community. Have her do a " secret buyer" study by calling around as if he/she were a prospective customer and learn what your rivals state on the phone to her around prices. She may require to call from her house 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 fees for their fees or you could do that with other attorneys yourself in your market. If you really want to get into it and have maximum data you can compose possibly a few dozen competitors in your marketplace and say you are doing a fee survey and if they would send you their charge list you will develop a composite list that does not recognize 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 typical services offered in your practice area. Now you will see what people are charging for services similar to those you use. You need to have the ability to develop a variety of prices. Use this range to set costs for your own services. My recommendation in law practice marketing preparation is to charge at the 75% level of the list. So you must be at or in the top 25% of the fees.
Keep in mind that in general it is not a good law practice management method to compete on price. Most prospective clients will see pricing that is too low as a signal that there is something missing either from the service, the provider, or the company.
The Cost Technique in Law Practice Management Prices
This law practice management rates approach is very uncomplicated actually. The most common mistake in law practice management using this approach is to overlook to consist of some kind of your cost.
OK, let me state it again. In law practice management often you count yourself out of the expenditures and you need to include yourself in the costs. Why? Often you are doing a minimum of some of the technical work. Yes? Often you are doing a minimum of a few of the management work. Yes? As the owner of business you are due a affordable revenue. Yes? If you are all 3 of these in one, you must think about one income as due you for your time and proficiency as the professional and manager as well as a revenue of fifteen to thirty percent due you as the owner. So make certain to include a sensible expense for your technical and managerial work in the expenditures part of this formula.
Fixed Rate Approach in Law Practice Management Rates
This is the method used by many auto mechanics (it is called "the flat rate book") and other service companies. This technique is where you figure out a fixed rate for various tasks and charge that rate no matter what. If the mechanic spends less time than allotted for the job, he makes more. He makes less if he spends more time than allotted. In the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example utilizing this approach is how handled health care has used this system with doctors and hospitals . If they desire, legal representatives can use this system.
The " Guideline of Three" in Law Practice Management Rates
This " general rule" called the "rule of 3" utilized in law practice management is not what your Certified Public Accountant may inform you and it does not fail More Help you either. Ask your CPA 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 overall quantity of salaries/bonuses (not advantages just wages-- benefits go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are producing earnings) and call that our first 3rd. So build up the wages of the lawyers, paralegals, and legal secretaries who generate profits or are timekeepers and call this your first third (lets just say that number was $100,000 to keep it simple). Whatever that number is take that number once again and it is your second third which we will call your "overhead" (thus that second 3rd is $100,000 and don't forget you if you are doing some managing partner type duties 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 revenues (another $100,000). What you need to do is take the overall amount (in this example $300,000) and now determine how much you should charge per billable hour, per fixed rate or the number of contingency cost cases won to be sure you struck the target we must hit provided our first third number times 3 (in this example $300,000).
This approach shows you how much per hour you require to charge. If you are the owner of the practice you deserve a reasonable revenue as well don't you concur? If this technique is a bit too confusing do feel totally free to contact me and I will help you sort it out in a couple of minutes on the phone.
It is a good idea to analyze all of these rates techniques in determining your law practice management prices method see it here before setting a rate and moving ahead with a law office marketing plan to ensure you are thoroughly checking out all choices. Remember the tendency for the majority of lawyers is to price too low. Do not do that! In another post I will inform you how to speak to possible customers so you never ever have a issue getting the charge you deserve.