Law Practice Management-- How To Determine Your Charges
Identifying costs is a challenging law practice management job for a lot of lawyers when thinking through their law firm marketing strategies. In identifying fees for specific services, attorneys frequently fall short of what they must charge. Too numerous attorneys are scared of even charging the competitive price for their services when making their law firm marketing strategies.
Prior to you sit down and begin thinking through your law practice management prices method you need some distinctions around prices frequently used in law firm marketing preparation. Do understand a law practice management law firm marketing strategy is not reliable if you just attract people who want to pay the least expensive fee for a service. Instead, you want to focus your law practice management and law company marketing strategies on attracting clients who will become long term possessions to the company.
There are basically four ways of figuring out just how much you need to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Prices
This is one great way of figuring out pricing. Get your assistant to support you in this law practice management job and invest a long time discovering what the variety of rates is in the neighborhood. Have her do a "mystery shopper" study by calling around as if he/she were a prospective client and discover what your competitors say on the phone to her around rates. She might require to call from her home phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and use to exchange your costs for their costs or you could do that with other lawyers yourself in your market. If you really want to get into it and have optimal information you can compose perhaps a few lots rivals in your marketplace and state you are doing a cost survey 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 common services offered in your practice area. Now you will see what individuals are charging for services similar to those you use. You should be able to develop a range of rates. Use this range to set costs for your own services. My suggestion in law company marketing planning is to charge at the 75% level of the list. You need to be at or in the top 25% of the costs.
Bear in mind that in basic it is not a good law practice management technique to compete on cost. A lot of potential clients will see rates that is too low as a signal that there is something missing either from the service, the provider, or the company. And individuals who are searching for a low rate will follow that low price any place they can find it rather than becoming long-term clients. So make certain that your price covers your costs and a affordable earnings margin.
The Cost Approach in Law Practice Management Rates
This law practice management pricing approach is extremely uncomplicated truly. The most typical mistake in law practice management utilizing this method is to disregard to consist of some form of your expenditure.
OK, let me say it once again. In law practice management often you count yourself out of the expenditures and you must include yourself in the expenses. Why? Frequently you are doing a minimum of some of the technical work. Yes? Often you are doing a minimum of a few of the management work. Yes? As the owner of the business you are due a reasonable profit. Yes? If you are all three of these in one, you need to think about one wage as due you for your time and proficiency as the professional and manager along with a earnings of fifteen to thirty percent due you as the owner. So make certain to include a reasonable cost for your technical and supervisory operate in the expenditures part of this formula.
Fixed Rate Method in Law Practice Management Rates
This is the method utilized by many car mechanics (it is called "the flat rate book") and other service suppliers. This method is where you determine a set rate for numerous jobs and charge that rate no matter what. Another example utilizing this approach is how managed health care has used this system with physicians and health centers .
The " Guideline of 3" in Law Practice Management Pricing
This "rule of thumb" website link called the " guideline of 3" used in law practice management is not what your Certified Public Accountant might inform you and it does not fail you either. For the first 3rd we will take the total quantity of salaries/bonuses (not benefits simply incomes-- benefits go into the second 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are producing earnings) and call that our very first 3rd. What you require to do is take the overall quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per fixed rate or how many contingency charge cases won to be sure you hit the target we must hit given our first third 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 practice you deserve a fair earnings as well do not you agree? If this method is a bit too complicated do feel totally free to contact me and I will help you sort it out in a few minutes on the phone.
It is a great concept to think through all of these pricing approaches in identifying your law practice management rates method prior to setting a rate and moving ahead with a law company marketing strategy to ensure you are thoroughly exploring all options. Remember the propensity for most lawyers is to price too low. Don't do that! In another article I will inform you how to speak with possible customers so you never have a problem getting the cost you deserve.