Law Practice Management-- How To Determine Your Fees
Determining charges is a tough law practice management job for many lawyers when believing through their law firm marketing plans. In identifying fees for specific services, lawyers typically fall brief of what they should charge. Too numerous lawyers are scared of even charging the competitive price for their services when making their law firm marketing plans.
Prior to you sit down and start thinking through your law practice management rates method you need some differences around prices typically used in law company marketing preparation. Do know a law practice management law company marketing plan is not effective if you just draw in individuals who want to pay the least expensive charge for a service. Instead, you want to focus your law practice management and law firm marketing plans on bring in clients who will become long term assets to the company.
There are basically four methods of identifying how much you must be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Prices
This is one good method of figuring out rates. Get your assistant to support you in this law practice management job and invest some time finding what the variety of prices remains in the community. Have her do a "mystery consumer" research study by calling around as if he/she were a possible client and learn what your competitors state on the phone to her around pricing. She may require to call from her house phone to avoid 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 attorneys yourself in your market. If you really want to get into it and have optimal information you can compose maybe a few dozen competitors in your marketplace and say you are doing a charge study and if they would send you their charge list you will produce a composite list that does not identify those reacting and send them a copy of the results. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most typical services used in your practice location. Now you will see what individuals are charging for services similar to those you offer. You ought to be able to develop a series of rates. Utilize this variety to set rates for your own services. My suggestion in law company marketing preparation is to charge at the 75% level of the list. So you should be at or in the top 25% of the charges.
Remember that in general it is not a good law practice management method to compete on cost. The majority of possible customers will see prices that is too low as a signal that there is something missing out on either from the service, the provider, or the company.
The Expense Technique in Law Practice Management Prices
This law practice management rates technique is very simple really. The most common error in law practice management using this approach is to neglect to include some type of your expenditure.
OK, let me say it once again. In law practice management typically you count yourself out of the expenses and you must include yourself in the expenses. Why? Often you are doing a minimum of a few of the technical work. Yes? Typically you are doing at least some 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 must consider one salary as due you for your time and knowledge as the technician and manager in addition to a earnings of fifteen to thirty percent due you as the owner. Be sure to include a sensible cost for your supervisory and technical work in the expenditures part of this formula.
Fixed Rate Technique in Law Practice Management Pricing
This is the method utilized by numerous automobile mechanics (it is called "the flat rate book") and other service providers. This approach is where you identify a fixed rate for various tasks and charge that rate no matter what. Another example utilizing this technique is how handled health care has utilized this system with hospitals and medical professionals .
The " Guideline of Three" in Law Practice Management Pricing
This " general rule" called the "rule of three" used 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 think of it and they will like it. To begin we are Resources going to be thinking in thirds. For the first third we will take the total quantity of salaries/bonuses (not advantages simply incomes-- advantages go into the 2nd 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are producing revenue) and call that our very first 3rd. Add up the wages of the attorneys, paralegals, and legal secretaries who create income or are timekeepers and call this your very first third (lets just say that number was $100,000 to keep it simple). Whatever that number is take that number once again and it is your second 3rd which we will call your "overhead" ( hence that 2nd 3rd is $100,000 and do not forget you if you are doing some managing 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 third, which we will call gross profits (another $100,000). What you require to do is take the total amount (in this example $300,000) and now figure out just how much you need to charge per billable hour, per fixed rate or the number of contingency fee cases won to Continue be sure you hit the target we need to hit given our very first 3rd number times 3 (in this example $300,000).
This method shows you just how much per hour you need to charge. Since you understand how numerous billable hours each earnings generator can do each 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 assured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you are worthy of a fair earnings as well do not you concur? official source This approach is called the Guideline of Three. If this technique is a bit too complicated do feel free to contact me and I will assist you arrange it out in a few minutes on the phone.
It is a good idea to think through all of these prices approaches in determining your law practice management pricing method prior to setting a price and moving ahead with a law firm marketing plan to ensure you are thoroughly exploring all choices. In another post I will inform you how to speak to potential clients so you never have a problem getting the charge you are worthy of.