Law Practice Management-- How To Identify Your Charges
Determining fees is a hard law practice management task for the majority of attorneys when thinking through their law firm marketing strategies. In identifying costs for certain services, lawyers frequently fall short of what they need to charge. Too many lawyers are afraid of even charging the competitive price for their services when making their law company marketing plans.
So before you take a seat and start believing through your law practice management rates technique you need some distinctions around pricing commonly used in law firm marketing planning. Then add your prices strategy to your law practice marketing plans. You need to be sure that you are charging a enough charge on everything to ensure you a good revenue not simply a excellent living. Do understand a law practice management law office marketing plan is ineffective if you just bring in people who desire to pay the lowest cost for a service. These are not faithful clients. Instead, you wish to focus your law practice management and law office marketing plans on bring in customers who will become long term assets to the firm. Low cost customers are not constructing your base of long term customers I can assure you that.
There are basically four methods of identifying just how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Prices
This is one great way of figuring out pricing. Get your assistant to support you in this law practice management job and invest a long time finding what the range of rates remains in the neighborhood. Have her do a "mystery shopper" research study by calling around as if he/she were a possible customer and learn what your competitors say on the phone to her around prices. She may require to call from her house phone to avoid caller ID. As another choice you could have him/her call other assistants or paralegals at your competitors and offer to exchange your costs for their fees or you might do that with other legal representatives yourself in your market. If you actually wish to get into it and have optimal information you can write possibly a couple of dozen competitors in your market and say you are doing a cost study and if they would send you their charge list you will produce a composite list that does not determine those reacting and send them a copy of the outcomes. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services offered in your practice area. Now you will see what individuals are charging for services similar to those you use. You must be able to come up with a series of costs. Utilize this variety to set prices for your own services. My suggestion in law office marketing preparation is to charge at the 75% level of the list. So you ought to be at or in the top 25% of the charges.
Remember that in general it is not a great law practice management technique to complete on rate. The majority of possible customers will see prices that is too low as a signal that there is something missing either from the these details service, the company, or the firm.
The Expense Approach in Law Practice Management Rates
This law practice management prices method is really simple actually. The most common error in law practice management using this approach is to overlook to include some type of your expense.
OK, let me state it again. In law practice management typically you count yourself out of the expenditures and you must include yourself in the expenses. Why? Frequently you are doing at least some of the technical work. Yes? Frequently you are doing a minimum of some of the management work. Yes? As the owner of the business you are due a sensible earnings. Yes? If you are all three of these in one, you must think about one income as due you for your time and competence as the specialist and supervisor along with a profit of fifteen to thirty percent due you as the owner. Be sure to include a sensible expense for your technical and supervisory work in the costs part of this formula.
Fixed Rate Approach in Law Practice Management Prices
This is the technique utilized by numerous automobile mechanics (it is called "the flat rate book") and other provider. This technique is where you identify a set rate for numerous tasks and charge that rate no matter what. He makes more if the mechanic spends less time than set aside for the job. If he invests more time than allotted, he earns less. In the end, it all evens out (well, typically to the mechanics' favor if you ask me). Another example utilizing this technique is how managed health care has used this system with health centers and physicians . If they want, attorneys can use this system.
The " Guideline of Three" in Law Practice Management Rates
This " guideline of thumb" called the "rule of 3" used in law practice management is not click to read what your CPA might tell you and it does not fail you either. For the very first 3rd we will take the total quantity of salaries/bonuses (not benefits just salaries-- benefits go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are producing revenue) and call that our first 3rd. What you require to do is take the overall quantity (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 charge cases won to be sure you hit the target we should strike offered our first 3rd number times 3 (in this example $300,000).
This technique shows you how much per hour you require to charge. If you are the owner of the practice you are worthy of a reasonable revenue as well don't you agree? 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 good idea to believe through all of these prices approaches in identifying your law practice management pricing method before setting a rate and moving ahead with a law firm marketing strategy to guarantee you are completely checking out all options. In another article I will inform you how to speak to prospective customers so you never ever have a problem getting the charge you deserve.