Law Practice Management-- How To Determine Your Fees
When thinking through their law firm marketing plans, determining charges is a hard law practice management task for a lot of attorneys. In identifying costs for certain services, lawyers typically disappoint what they must charge. When making their law company marketing plans, too numerous lawyers are afraid of even charging the competitive price for their services. Further, they make the prices decisions typically without any information or conceptual framework. Additionally, instead of focusing their efforts on how they can justify getting top dollar for what they provide, they charge a charge that is typically way too low and typically really can frighten off possible customers who believe there is something missing out on from a service that is " inexpensive". In addition lots of lawyers don't recognize that a lot of purchasers in the marketplace by far are "value purchasers" and not searching for " inexpensive".
So before you sit down and begin analyzing your law practice management rates strategy you require some differences around pricing commonly used in law company marketing preparation. Include your rates strategy to your law firm marketing strategies. You require to be sure that you are charging a enough charge on everything to ensure you a great earnings not simply a great living. If you just bring in people who want to pay the most affordable cost for a service, do understand a law practice management law firm marketing strategy is not effective. These are not faithful clients. Rather, you wish to focus your law practice management and law practice marketing strategies on drawing in customers who will become long term properties to the firm. Low cost customers are not developing your base of long term customers I can guarantee you that.
There are basically 4 ways of figuring out how much you need to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Rates
Get your assistant to support you in this law practice management job and spend some time discovering what the range of rates is in the community. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services provided in your practice location. My recommendation in law firm marketing preparation is to charge at the 75% level of the list.
Keep in mind that in basic it is not a good law practice management technique to contend on price. Many possible customers will see pricing that is too low as a signal that there is something missing either from the service, the service provider, or the firm.
The Cost Approach in Law Practice Management Rates
This law practice management rates technique is really uncomplicated really. The most common mistake in law practice management using this approach is to overlook to include some form of your cost.
In law practice management often you count yourself out of the costs and you must include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all three of these in one, you need to consider one income as due you for your time and proficiency as the service technician and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the technique used by numerous vehicle mechanics (it is called "the flat rate book") and other company. This method is where you identify a fixed rate for different jobs and charge that rate no matter what. If the mechanic invests less time than allocated for the job, he makes more. He makes less if he spends more time than allotted. In the end, it all evens out (well, normally to the mechanics' favor if you ask me). Another example utilizing this method is how managed healthcare has actually utilized this system with hospitals and doctors . If they want, lawyers can use this system.
The "Rule of Three" in Law Practice Management Rates
This " guideline of thumb" called the "rule of 3" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. Ask your CPA what they think about it and they will like it. To start we are going to be thinking in thirds. For the first third we will take the overall amount of salaries/bonuses (not benefits simply incomes-- advantages go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are generating earnings) and call that our very first 3rd. Add up the wages of the lawyers, paralegals, and legal secretaries who produce income or are timekeepers and call this your very first third (lets just say that number was $100,000 to keep it basic). Whatever that number is take that number once again and it is your 2nd 3rd which we will call your "overhead" ( therefore that second third is $100,000 and do not forget you if you are doing some handling partner type responsibilities since that part of your time goes here in overhead). Take that same number and we will call that your last 3rd, which we will call gross earnings (another $100,000). What you require to do is take the total quantity (in this example $300,000) and now determine how much you need to charge per billable hour, per repaired rate or the number of contingency charge cases won index to be sure you struck the target we need to hit given our first 3rd number times 3 (in this example $300,000).
This approach shows you just how much per hour you require to charge. Considering that you know the number of billable hours each earnings generator can do monthly, merely 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 properly. As long as you strike your targets you will be assured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you deserve a reasonable earnings as well do not you agree? This method is referred to as the Rule of Three. , if this method is a bit too complicated do feel totally free to call me and I will assist you arrange it out in a couple of minutes on the phone.
It is a great idea to analyze all of these pricing techniques in identifying your law practice management pricing technique prior to setting a price and moving ahead with a law company marketing strategy to guarantee you are thoroughly exploring all choices. Keep in mind the propensity for most legal representatives is to price too low. Do not do that! In another article I will tell you how to talk to possible customers so you never ever have a issue getting the fee you deserve.