Identifying fees is a hard law practice management task for a lot of attorneys when believing through their law company marketing plans. In figuring out charges for particular services, attorneys frequently fall short of what they must charge. Too lots of lawyers are scared of even charging the competitive rate for their services when making their law company marketing plans.
Before you sit down and begin believing through your law practice management rates technique you require some distinctions around pricing frequently used in law firm marketing preparation. Do understand a law practice management law firm marketing strategy is not efficient if you just attract individuals who want to pay the lowest cost for a service. Rather, you want to focus your law practice management and law firm marketing plans on bring in clients who will end up being long term properties to the firm.
There are essentially 4 methods of identifying just how much you need to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Pricing
This is one excellent way of identifying prices. Get your assistant to support you in this law practice management job and spend some time finding what the range of prices is in the neighborhood. Have her do a "mystery shopper" study by calling around as if he/she were a possible customer and learn what your competitors state on the phone to her around pricing. She may require to call from her house phone to prevent caller ID. As another choice you might have him/her call other assistants or paralegals at your competitors and provide to exchange your costs for their costs or you could do that with other lawyers yourself in your market. If you truly wish to enter it and have maximum data you can write perhaps a couple of dozen competitors in your marketplace and state you are doing a cost survey and if they would send you their charge list you will develop a composite list that does not identify those reacting and send them a copy of the outcomes. To keep it simple 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 individuals are charging for services comparable to those you use. You must have the ability to create a series of rates. Utilize this variety 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 fees.
Remember that in general it is not a great law practice management strategy to compete on cost. Most possible customers will see rates that is too low as a signal that there is something missing out on either from the service, the supplier, or the firm.
The Expense Method in Law Practice Management Rates
This law practice management pricing method is very uncomplicated really. One just identifies what the expenses are to deliver services or items and adds on a reasonable earnings, someplace between fifteen percent at the least and maybe thirty three percent at the most. The most common error in law practice management using this technique is to disregard to consist of some kind of your expenditure. Solo and little firm attorneys tend to not include view it now their own salary!
OK, let me say it once again. In law practice management frequently you count yourself out of the expenses and you must include yourself in the costs. Why? Typically you are doing a minimum of a few of the technical work. Yes? Frequently you are doing a minimum of a few of the management work. Yes? As the owner of the organisation you are due a reasonable profit. Yes? If you are all three of these in one, you need to consider one salary as due you for your time and competence as the professional and manager as well as a profit of fifteen to thirty percent due you as the owner. So make certain to consist of a reasonable expense for your supervisory and technical operate in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Pricing
This is the technique used by many car mechanics (it is called "the flat rate book") and other service companies. This technique is where you identify a fixed rate for different jobs and charge that rate no matter what. If the mechanic invests less time than set aside for the job, he makes more. He makes less if he invests more time than designated. But in the end, it all evens out (well, usually to the mechanics' favor if you you can try this out ask me). Another example using this method is how handled healthcare has used this system with doctors and healthcare facilities . If they want, lawyers can use this system.
The " Guideline of Three" in Law Practice Management Rates
This " general rule" called the " guideline of three" utilized in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. Ask your CPA what they believe about it and they will like it. To begin we are going to be thinking in thirds. For the first 3rd we will take the overall amount of salaries/bonuses (not benefits simply incomes-- benefits enter into the 2nd third following) for the profits generators and/or timekeepers (this includes you if you are creating revenue) and call that our very first 3rd. Add up the wages of the attorneys, paralegals, and legal secretaries who create profits or are timekeepers and call this your first 3rd (lets simply state 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" ( therefore that 2nd 3rd is $100,000 and don't forget you if you are doing some handling partner type duties because that part of your time goes here in overhead). Then take that same number and we will call that your last 3rd, which we will call gross revenues (another $100,000). What you require to do is take the overall quantity (in this example $300,000) and now figure out just how much you need to charge per billable hour, per repaired rate or the number of contingency charge cases won to be sure you struck the target we need to strike offered our very first third number times three (in this example $300,000).
This method reveals you how much per hour you require to charge. If you are the owner of the practice you should have a fair revenue as well don't you agree? If this approach is a bit too complicated do feel totally free to call me and I will help you sort it out in a few minutes on the phone.
It is a good idea to think through my blog all of these pricing techniques in identifying your law practice management rates technique before setting a cost and moving ahead with a law company marketing strategy to ensure you are thoroughly exploring all alternatives. In another article I will tell you how to speak to potential clients so you never have a problem getting the fee you deserve.