Figuring out charges is a hard law practice management job for many attorneys when thinking through their law firm marketing plans. In identifying charges for certain services, lawyers often fall short of what they should charge. Too lots of lawyers are scared of even charging the competitive price for their services when making their law firm marketing strategies.
Before you sit down and start thinking through your law practice management pricing technique you need some distinctions around rates commonly used in law firm marketing planning. Then add your rates strategy to your law practice marketing plans. You require to be sure that you are charging a sufficient fee on everything to guarantee you a good revenue not simply a great living. Do know a law practice management law office marketing strategy is ineffective if you just attract people who desire to pay the most affordable cost for a service. These are not devoted customers. Rather, you wish to focus your law practice management and law office marketing intend on attracting clients who will end up being long term possessions to the firm. Low cost customers are not building your base of long term clients I can guarantee you that.
There are essentially 4 ways of determining how much you must be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Pricing
This is one excellent way of figuring out prices. Get your assistant to support you in this law practice management job and spend some time discovering what the variety of rates remains in the neighborhood. Have her do a "mystery buyer" research study by calling around as if he/she were a possible client and discover what your rivals state on the phone to her around pricing. She may require to call from her home 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 charges for their costs or you could do that with other legal representatives yourself in your market. If you actually wish to enter it and have optimal information you can write maybe a couple of dozen competitors in your market and state you are doing a cost survey and if they would send you their fee list you will produce a composite list that does not identify those reacting and send them a copy of the results. 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 people are charging for services similar to those you use. You need to have the ability to come up with a series of costs. Use this variety to set prices for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. So you must be at or in the top 25% of the fees.
Keep in mind that in basic it is not a great law practice management method to complete on rate. A lot of possible customers will see rates that is too low as a signal that there is something missing out on either from the service, the supplier, or the firm. And individuals who are trying to find a low rate will follow that low price wherever they can find it instead of ending up being long-lasting clients. Be sure that your price covers your costs and a affordable revenue margin.
The Expense Method in Law Practice Management Rates
This law practice management prices approach is very simple really. One merely determines what the costs are to provide services or products and adds on a sensible earnings, somewhere between fifteen percent at the least and maybe thirty three percent at the most. The most typical mistake in law practice management utilizing this method is to neglect to include some kind of your cost. Solo and little firm lawyers tend to not include their own salary!
In law practice management often you count yourself out of the expenses and you must include yourself in the expenses. Typically you are doing at least some of the management work. If you are all 3 of these in one, you must think about one wage as due you for your time and proficiency as the professional and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Prices
This is the technique used by many vehicle mechanics (it is called "the flat rate book") and other service companies. This method is where you identify a set rate for different jobs and charge that rate no matter what. Another example using this approach is how managed health care has actually used this system with doctors and hospitals .
The "Rule of 3" in Law Practice Management Rates
This " guideline of thumb" 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 Certified Public Accountant what they believe about it and they will like it. To begin we are going to be believing in thirds. For the very first 3rd we will take the total amount of salaries/bonuses (not advantages simply wages-- benefits go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are producing profits) and call that our very first 3rd. Include up the wages of the legal representatives, paralegals, and legal secretaries who generate income or are timekeepers and call this your 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" ( hence that second third is $100,000 and don't forget you if you are doing some managing partner type duties 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 revenues (another $100,000). What you require to do is take the overall quantity (in this example $300,000) and now figure out how much you should charge per billable hour, per repaired rate or find more information the number of contingency fee cases won to be sure you struck the target we must strike given our very first third number times 3 (in this example $300,000).
This technique shows you how much per hour you need to charge. Given that you understand how many billable hours each earnings generator can do per month, just divide that into your overall of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out correctly. As long as you strike your targets you will be ensured of a 15% to 30% net profit from your operations. If you are the owner of the practice you should have a fair earnings as well don't you concur? This method is called the Guideline of 3. , if this approach is a bit too complicated do feel free to call me and I will assist you sort 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 prices strategy prior to setting a rate and moving ahead with a law company marketing strategy to ensure you are thoroughly exploring all alternatives. In another article I will inform you how to speak to prospective customers so you never ever have a issue getting the fee you are worthy of.