Law Practice Management-- How To Determine Your Fees
Figuring out fees is a difficult law practice management task for the majority of attorneys when analyzing their law practice marketing plans. In figuring out costs for certain services, attorneys frequently disappoint what they must charge. When making their law company marketing plans, too numerous attorneys are scared of even charging the competitive cost for their services. Even more, they make the pricing choices often without any data or conceptual structure. In addition, instead of focusing their efforts on how they can validate getting top dollar for what they offer, they charge a charge that is frequently way too low and frequently in fact can frighten possible clients who think there is something missing from a service that is " inexpensive". Additionally many lawyers don't realize that many purchasers in the marketplace by far are "value purchasers" and not looking for "cheap".
So before you take a seat and begin thinking through your law practice management rates strategy you require some differences around rates frequently used in law practice marketing preparation. Then include your rates strategy to your law company marketing plans. You need to be sure that you are charging a adequate cost on whatever to guarantee you a good revenue not simply a good living. Do understand a law practice management law office marketing plan is ineffective if you only attract individuals who wish to pay the most affordable fee for a service. These are not faithful customers. Instead, you wish to focus your law practice management and law office marketing intend on bring in customers who will become long term possessions to the firm. Low rate customers are not building your base of long term clients I can promise you that.
There are essentially four methods of determining how much you should be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
This is one good method of figuring out prices. Get your assistant to support you in this law practice management task and invest a long time finding what the range of rates is in the neighborhood. Have her do a " secret consumer" study by calling around as if he/she were a potential client and find out what your competitors state on the phone to her around prices. She may need to call from her house phone to avoid caller ID. As another option you might have him/her call other assistants or paralegals at your competitors and use to exchange your fees for their fees or you could do that with other legal representatives yourself in your market. If you truly wish to enter into it and have maximum data you can write maybe a couple of lots rivals in your marketplace and say you are doing a cost study and if they would send you their cost list you will create a composite list that does not identify those responding 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 common services offered in your practice location. Now you will see what individuals are charging for services similar to those you offer. You must have the ability to develop a series of costs. Use this variety to set costs for your own services. My recommendation in law office marketing preparation is to charge at the 75% level of the go right here list. So you should be at or in the leading 25% of the fees.
Keep in mind that in general it is not a excellent law practice management method to complete on price. The majority of prospective clients will see prices that is too low as a signal that there is something missing either from the service, the provider, or the company. And people who are searching for a low cost will follow that low cost anywhere they can find it instead of becoming long-term customers. So make sure that your cost covers your costs and a affordable revenue margin.
The Cost Technique in Law Practice Management Prices
This law practice management prices technique is extremely simple actually. The most typical error in law practice management utilizing this technique is to neglect to include some kind of your expenditure.
In law practice management frequently 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 three of these in one, you ought to think about one wage as due you for your time and know-how as the professional and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Prices
This is the technique used by lots of automobile mechanics (it is called "the flat rate book") and other service companies. This method is where you determine a set rate for different jobs and charge that rate no matter what. Another example utilizing this technique is how managed health care has actually utilized this system with medical facilities and doctors .
The "Rule of 3" in Law Practice Management Pricing
This " general rule" called the " guideline of three" utilized in law practice management is not what your CPA 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 start we are going to be thinking in thirds. For the very first 3rd we will take the total quantity of salaries/bonuses (not benefits just salaries-- benefits enter into the second 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are producing revenue) and call that our very first 3rd. Include up the incomes of the legal representatives, paralegals, and legal secretaries who produce revenue or are timekeepers and call this your first 3rd (lets just state that number was $100,000 to keep it basic). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" ( therefore that 2nd 3rd is $100,000 and do not forget you if you are doing some managing partner type duties since that part of your time goes here in overhead). Take that same number and we will call that your last third, which we will call gross profits (another $100,000). What you need to do is take the total quantity (in this example $300,000) and now find out just how much you need to charge per billable hour, per repaired rate or the number of contingency fee cases won to be sure you hit the target we must hit given our first 3rd number times three (in this example $300,000).
This technique shows you how much per hour you need to charge. If you are the owner of the practice you should have a fair revenue as well do not you agree? If this technique is a bit too complicated do feel free to call me and I will assist you arrange it out in a couple of minutes on the phone.
It is a great concept to analyze all of these prices methods in identifying your law practice management rates method before setting a cost and moving ahead with a law practice marketing strategy to guarantee you are completely checking out all alternatives. Keep in mind the tendency for a lot of attorneys is to price too low. Do not do that! In another post I will tell you how to speak with possible clients so you never have a issue getting the fee you are worthy of.