Law Practice Management-- How To Determine Your Charges
Determining fees is a difficult law practice management job for most lawyers when thinking through their law firm marketing plans. In identifying costs for particular services, attorneys often fall short of what they need to charge. Too numerous attorneys are scared of even charging the competitive cost for their services when making their law firm marketing strategies.
Prior to you sit down and begin believing through your law practice management prices strategy you need some differences around rates frequently utilized in law firm marketing preparation. Add your rates technique to your law company marketing strategies. You require to be sure that you are charging a adequate cost on whatever to ensure you a good profit not simply a good living. If you only bring in individuals who desire to pay the lowest charge for a service, do know a law practice management law company marketing strategy is not reliable. These are not loyal clients. Instead, you desire to focus your law practice management and law practice marketing plans on bring in clients who will become long term assets to the company. Low cost clients are not constructing your base of long term customers I can promise you that.
There are generally 4 ways of determining how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Rates
This is one excellent way of figuring out rates. Get your assistant to support you in this law practice management job and invest a long time finding what the range of rates is in the neighborhood. Have her do a " secret buyer" study by calling around as if he/she were a possible customer and discover what your competitors say on the phone to her around rates. She may need to call from her home phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your competitors and use to exchange your costs for their charges or you could do that with other legal representatives yourself in your market. If you really want to enter into it and have maximum information you can compose possibly a couple of dozen rivals in your market and state you are doing a cost study and if they would send you their charge list you will create a composite list that does not recognize those reacting and send them a copy of the outcomes. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services provided in your practice area. Now you will see what individuals are charging for services comparable to those you provide. You need to have the ability to develop a series of rates. Use 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 need to be at or in the leading 25% of the costs.
Remember that in general it is not a excellent law practice management method to contend on cost. Most prospective clients 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 firm.
The Expense Approach in Law Practice Management Rates
This law practice management prices technique is extremely uncomplicated actually. The most typical error in law practice management using this technique is to overlook to include some form of your expense.
In law practice management typically more tips here you count yourself out of the costs and you need to include yourself in the expenses. 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 wage as due you for your time and know-how as the service technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Rates
This is the technique used by lots of vehicle mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify a set rate for numerous jobs and charge that rate no matter what. Another example using this method is how managed health care has used this system with hospitals and medical professionals Full Report .
The "Rule of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of 3" utilized in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. For the very first 3rd we will take the total amount of salaries/bonuses (not advantages simply salaries-- advantages go into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are creating earnings) and call that our first 3rd. What you need to do is take the total amount (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how lots of contingency cost cases won to be sure you struck the target we should hit provided our very first third number times 3 (in this example $300,000).
This approach reveals you just how much per hour you need to charge. Because you understand how many billable hours each income generator can do per month, 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 hit your targets you will be guaranteed of a 15% to 30% net make money from your operations. After all if you are the owner of the practice you deserve a reasonable earnings also do not you agree? This approach is called the Guideline of 3. , if this approach is a bit too confusing do feel free to contact me and I will help you sort it out in a couple of minutes on the phone.
It is a good idea to analyze all of these rates approaches in identifying your law practice management rates strategy before setting a price and moving ahead with a law practice marketing strategy to guarantee you are completely exploring all options. Remember the tendency for a lot of legal representatives is to price too low. Do not do that! In another post I will inform you how to speak with potential clients so you never have a problem getting the fee you deserve.