Law Practice Management-- How To Identify Your Costs
Determining fees is a difficult law practice management task for most lawyers when thinking through their law company marketing plans. In figuring out fees for specific services, attorneys frequently fall short of what they must charge. Too many attorneys are afraid of even charging the competitive rate for their services when making their law company marketing plans.
So before you take a seat and begin analyzing your law practice management pricing strategy you need some distinctions around prices frequently utilized in law firm marketing preparation. Then add your rates strategy to your law company marketing strategies. You require to be sure that you are charging a enough cost on whatever to ensure you a good profit not just a great living. Do know a law practice management law company marketing plan is not effective if you only draw in individuals who wish to pay the most affordable fee for a service. These are not devoted customers. Instead, you want to focus your law practice management and law firm marketing plans on drawing in customers who will become long term properties to the company. Low rate customers are not constructing your base of long term clients I can guarantee you that.
There are essentially four ways of identifying how much you need to be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Prices
This is one excellent method of determining prices. Get your assistant to support you in this law practice management job and spend a long time finding what the variety of pricing remains in the community. Have her do a " secret consumer" research study by calling around as if he/she were a prospective client and learn what your competitors say on the phone to her around pricing. She might need to call from her house phone to avoid caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and provide to exchange your costs for their costs or you could do that with other lawyers yourself in your market. If you really want to enter it and have maximum information you can write possibly a few lots competitors in your marketplace and say you are doing a cost survey and if they would send you their fee list you will create a composite list that does not recognize those responding 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 offered in your practice area. Now you will see what people are charging for services similar to those you provide. You should be able to create a variety of costs. Utilize this range to set rates for your own services. My suggestion in law practice 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 basic it is not a excellent law practice management technique to complete on price. The majority of potential clients will see prices 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 Method in Law Practice Management Rates
This law practice management prices approach is extremely simple truly. One merely identifies what the expenses are to deliver service or products and includes on a reasonable profit, somewhere in between fifteen percent at the least and possibly thirty 3 percent at the most. The most typical mistake in law practice management utilizing this method is to disregard to consist of some type of your expenditure. Solo and small firm lawyers tend to not include their own wage!
OK, let me state it once again. In law practice management typically you count yourself out of the expenditures and you need to include yourself in the costs. Why? Frequently you are doing a minimum of some of the technical work. Yes? Often you are doing at least a few of the management work. Yes? As the owner of business you are due a reasonable revenue. Yes? If you are all three of these in one, you must think about one income as due you for your time and know-how as the specialist and supervisor as well as a profit of fifteen to thirty percent due you as the owner. So make certain to include a reasonable cost for your technical and managerial work in the expenses part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the method utilized by many car mechanics (it is called "the flat rate book") and other service providers. This technique is where you determine a set rate for various jobs and my website charge that rate no matter what. Another example using this technique is how managed health care has actually used this system with health centers and doctors .
The "Rule of Three" in Law Practice Management Pricing
This " guideline" called the "rule of three" used in law practice management is not what your Certified Public Accountant 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 third we will take the total amount of salaries/bonuses (not advantages just wages-- advantages enter into the 2nd 3rd following) for the profits generators and/or timekeepers (this includes you if you are creating income) and call that our first third. So add up the incomes of the attorneys, paralegals, and legal secretaries who generate revenue or are timekeepers and call this your very first third (lets simply say that number was $100,000 to keep it easy). Whatever that number is take that number once again and it is your 2nd 3rd which we will call your "overhead" ( hence that 2nd third is $100,000 and don't forget you if you are doing some managing partner type responsibilities because that part of your time goes here in overhead). Then take that very 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 must charge per billable hour, per repaired rate or the number of contingency fee cases won to be sure you struck the target we need to hit provided our first 3rd 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 find practice you are worthy of a reasonable profit as well don't you concur? If this technique is a bit too confusing do feel complimentary to contact me and I will assist you sort it out in a few minutes on the phone.
It is a good idea to believe through all of these pricing approaches in determining your law practice management pricing method before setting a cost and moving ahead with a law firm marketing strategy to ensure you are completely checking out all choices. In another post I will inform you how to speak to prospective customers so you never have a problem getting the cost you deserve.