Determining fees is a challenging law practice management task for most lawyers when thinking through their law company marketing strategies. In identifying costs for particular services, attorneys often fall brief of what they should charge. Too many attorneys are scared of even charging the competitive cost for their services when making their law firm marketing plans.
Prior to you sit down and begin thinking through your law practice management pricing strategy you need some differences around rates frequently used in law company marketing preparation. Do understand a law practice management law company marketing plan is not efficient if you just draw in people who desire to pay the least expensive fee for a service. Rather, you want to focus your law practice management and law firm marketing strategies on drawing in customers who will end up being long term assets to the company.
There are essentially 4 ways of figuring out how much you need to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Prices
This is one great way of determining rates. Get your assistant to support you in this law practice management task and spend some time finding what the variety of pricing remains in the neighborhood. Have her do a " secret consumer" research study by calling around as if he/she were a prospective client and learn what your competitors state on the phone to her around pricing. She might require to call from her house phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your competitors and offer to exchange your charges for their charges or you might do that with other legal representatives yourself in your market. If you actually wish to get into it and have optimal data you can write possibly a couple of lots competitors in your marketplace and say you are doing a cost survey and if they would send you their cost list you will create a composite list that does not recognize those responding 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 provided in your practice area. Now you will see what individuals are charging for services similar to those you offer. You need to have the ability to come up with a variety of rates. Utilize this range to set costs for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. You ought to be at or in the top 25% of the fees.
Keep in mind that in general it is not a great law practice management technique to complete on cost. Most potential customers will see rates that is too low as a signal that there is something missing out on either from the service, the service provider, or the company. And people site here who are trying to find a low price will follow that low rate wherever they can find it rather than becoming long-term clients. Be sure that your price covers your costs and a reasonable profit margin.
The Cost Approach in Law Practice Management Prices
This law practice management rates technique is very simple truly. The most typical error in law practice management using this method is to neglect to include some kind of your cost.
In law practice management frequently you count yourself out of the expenditures and you need to include yourself in the expenditures. Typically you are doing at least some of the management work. If you are all three of these in one, you ought to think about one income as due you for your time and knowledge as the service technician and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the method utilized by numerous vehicle mechanics (it is called "the flat rate book") and other company. This technique is where you identify a set rate for numerous jobs and charge that rate no matter what. If the mechanic spends less time than allocated for the job, he makes more. He makes less if he invests more time than designated. However in the end, everything levels (well, typically to the mechanics' favor if you ask me). Another example using this method is how managed health care has actually utilized this system with health centers and doctors . Lawyers can use this system if they want.
The " Guideline of Three" in Law Practice Management Prices
This " guideline" called the " guideline of 3" utilized in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. Ask your Certified Public Accountant what they think of it and they will like it. To start we are going to be believing in thirds. For the first 3rd we will take the overall amount of salaries/bonuses (not advantages simply incomes-- advantages enter into the 2nd 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are generating revenue) and call that our very first 3rd. So accumulate the wages of the lawyers, paralegals, and legal secretaries who produce income or are timekeepers and call this your first third (lets just state that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your second 3rd which we will call your "overhead" (thus that 2nd 3rd is $100,000 and don't forget you if you are doing some managing partner type responsibilities since that part of your time goes here in overhead). Take that very same number and we will call that your last third, which we will call gross earnings (another $100,000). What you require to do is take the overall quantity (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 hit the target we should strike provided our first third number times three (in this example $300,000).
This technique shows you how much per hour you need to charge. If you are the owner of the practice you should have a reasonable profit as well do not you concur? If this method is a bit too confusing do feel totally free to contact me and I will assist 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 determining your law practice management pricing technique prior to setting a rate and continuing with a law company marketing plan to ensure you are thoroughly exploring all choices. Remember the tendency for most legal representatives is to price too low. Do not do that! In another article I will tell you how to talk to potential customers so you never ever have a problem getting the charge you deserve.