Law Practice Management-- How To Determine Your Fees
Determining fees is a difficult law practice management task for a lot of attorneys when thinking through their law company marketing plans. In determining costs for specific services, lawyers frequently fall short of what they should charge. Too many attorneys are afraid of even charging the competitive cost for their services when making their law company marketing plans.
Before you sit down and begin believing through your law practice management prices method you need some distinctions around prices commonly utilized in law company marketing planning. Do understand a law practice management law company marketing strategy is not reliable if you only attract people who want to pay the most affordable charge for a service. Rather, you desire to focus your law practice management and law company marketing strategies on drawing in customers who will end up being long term possessions to the company.
There are essentially four methods of figuring out just how much you should be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
This is one excellent way of identifying prices. Get your assistant to support you in this law practice management task and invest some time finding what the series of rates remains in the neighborhood. Have her do a "mystery shopper" research study by calling around as if he/she were a potential customer and find out what your competitors state on the phone to her around rates. She may need to call from her home phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and use to exchange your charges for their charges or you could do that with other lawyers yourself in your market. If you truly wish to enter into it and have maximum information you can write perhaps a few 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 results. To keep it basic 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 must have the ability to develop a series of prices. Use this range to set prices for your own services. My suggestion in law office marketing preparation is to charge at the 75% level of the list. You must be at or in the leading 25% of the fees.
Keep in mind that in basic it is not a great law practice management method to contend on cost. Most potential customers will see prices that is too low as a signal that there is something missing either from the service, the company, or the company.
The Expense Method in Law Practice Management Pricing
This law practice management pricing method is really uncomplicated really. The most typical error in law practice management utilizing this method is to disregard to consist sites of some form of your expenditure.
OK, let me state it once again. In law practice management frequently you count yourself out of the expenditures and you need to include yourself in the expenditures. Why? Frequently you are doing at least 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 reasonable earnings. Yes? If you are all three of these in one, you should consider one salary as due you for your time and knowledge as the technician and manager in addition to a revenue of fifteen to thirty percent due you as the owner. So make certain to include a sensible cost for your technical and managerial operate in the expenses part of this formula.
Fixed Rate Technique in Law Practice Management Prices
This is the method used by numerous auto mechanics (it is called "the flat rate book") and other service suppliers. This method is where you determine a set rate for various tasks and charge that rate no matter what. Another example utilizing this method is how managed health care has used this system with health centers and medical professionals .
The " Guideline of Three" in Law Practice Management Prices
This " general rule" called the "rule of three" used in law practice management is not what your CPA may 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 begin we are going to be believing in thirds. For the first 3rd we will take the overall quantity of salaries/bonuses (not advantages simply incomes-- advantages enter into the 2nd 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are creating revenue) and call that our very first third. Add up the salaries of the attorneys, paralegals, and legal secretaries who produce income or are timekeepers and call this your first 3rd (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" ( therefore 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). Then take that same number and we will call that your last third, which we will call gross profits (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 should charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you struck the target we need to hit given our very first third number times 3 (in this example $300,000).
This approach reveals you how much per hour you require to charge. If you are the owner of the practice you should have a reasonable profit as well don't you agree? If this approach is a bit too complicated do feel complimentary to Our site call me and I will assist you arrange 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 prices strategy prior to setting a rate and moving ahead with a law firm marketing strategy to ensure you are completely exploring all choices. In another post I will inform you how to speak to potential customers so you never have a issue getting the cost you deserve.