Law Practice Management-- How To Identify Your Charges
Determining fees is a hard law practice management job for a lot of attorneys when thinking through their law firm marketing strategies. In identifying fees for specific services, attorneys frequently fall short of what they must charge. Too many lawyers are afraid of even charging the competitive rate for their services when making their law company marketing strategies.
So before you sit down and start thinking through your law practice management pricing technique you need some differences around rates typically used in law office marketing preparation. Then add your pricing technique to your law office marketing plans. You require to be sure that you are charging a adequate cost on everything to guarantee you a excellent earnings not just a good living. If you only bring in individuals who want to pay the lowest charge for a service, do understand a law practice management law firm marketing strategy is not effective. These are not faithful customers. Rather, you wish to focus your law practice management and law practice marketing plans on drawing in clients who will become long term properties to the company. Low rate clients are not developing your base of long term clients I can guarantee you that.
There are essentially four ways of determining how much you should be charging for your services. Lets move right into those now.
The Market Method 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 job and invest some time discovering what the variety of prices remains in the neighborhood. Have her do a "mystery consumer" study by calling around as if he/she were a possible customer and discover what your rivals say on the phone to her around rates. She might need to call from her house phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their fees or you could do that with other legal representatives yourself in your market. If you actually wish to enter it and have maximum information you can write maybe a few lots rivals in your marketplace and state you are doing a charge survey and if they would send you their cost list you will produce 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 typical services used in your practice area. Now you will see what individuals are charging for services similar to those you use. You should be able to create a variety of costs. Utilize this variety 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 should be at or in the leading 25% of the fees.
Remember that in general it is not a excellent law practice management method to contend on price. The majority of possible clients will see pricing that is too low as a signal that there is something missing out on either from the service, the provider, or the firm.
The Expense Approach in Law Practice Management Prices
This law practice management pricing approach is really simple actually. The most typical mistake in law practice management utilizing this method is to overlook to consist of some type of your cost.
In law practice management often you count yourself out of the costs and you must include yourself in the expenses. Often you are doing at least some of the management important link work. If you are all 3 of these in one, you need to consider one wage as due you for your time and knowledge as the specialist and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the method utilized by numerous auto mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you identify a fixed rate for numerous jobs and charge that rate no matter what. Another example utilizing this technique is how handled health care has used this system with doctors and hospitals .
The "Rule of 3" in Law Practice Management Prices
This " guideline of thumb" called the "rule of three" utilized in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. For the very first third we will take the overall amount of salaries/bonuses (not advantages just incomes-- benefits go into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are generating revenue) and call that our very first third. What you need to do is take the overall amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how numerous contingency cost cases won to be sure you hit the target we should strike given our very first third number times 3 (in this example $300,000).
This method shows you just how much per hour you need to charge. Since you know the number of billable hours each income generator can do each month, just divide that into your total 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 guaranteed of a 15% to 30% net profit from your operations. After all if you are the owner of the practice you deserve a fair profit as well don't you agree? This method is understood as the Rule of 3. If this technique is a bit too confusing do feel free to call me and I will help you arrange it out in a few minutes on the phone.
It is a good concept to think through all of these rates methods in determining your law practice management prices strategy prior to setting a cost and moving ahead with a law firm marketing strategy to guarantee you are thoroughly exploring all alternatives. In another article I will tell you how to speak to prospective clients so you never ever have a problem getting the charge you should have.