Determining fees is a difficult law practice management job for most lawyers when believing through their law firm marketing strategies. In identifying fees for specific services, lawyers often fall short of what they should charge. Too many lawyers are scared of even charging the competitive price for their services when making their law firm marketing strategies.
So prior to you sit down and begin believing through your law practice management pricing technique you need some distinctions around pricing commonly used in law office marketing planning. Add your rates technique to your law company marketing strategies. You need to be sure that you are charging a enough cost on whatever to ensure you a great profit not just a great living. Do understand a law practice management law office marketing plan is ineffective if you just attract people who wish to pay the most affordable charge for a service. These are not loyal customers. Rather, you want to focus your law practice management and law practice marketing plans on drawing in clients who will become long term assets to the company. Low rate clients are not developing your base of long term clients I can assure you that.
There are generally 4 methods of determining how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Rates
This is one excellent way of identifying pricing. Get your assistant to support you in this law practice management task and invest some time discovering what the variety of pricing is in the neighborhood. Have her do a " secret buyer" research study by calling around as if he/she were a possible customer and discover out what your competitors say on the phone to her around rates. She may need 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 competitors and provide to exchange your fees for their charges or you might do that with other lawyers yourself in your market. If you truly wish to enter it and have maximum data you can write maybe a few lots competitors in your market and state you are doing a fee survey and if they would send you their charge list you will develop a composite list that does not determine 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 used in your practice location. Now you will see what individuals are charging for services similar to those you provide. You should be able to create a series of costs. Utilize this variety to set rates for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. You ought to be at or in the top 25% of the fees.
Keep in mind that in general it is not a great law practice management technique to contend on rate. Most potential clients will see pricing that is too low as a signal that there is something missing either from the service, the service provider, or the company.
The Cost Technique in Law Practice Management Prices
This law practice management pricing approach is really uncomplicated truly. The most common error in law practice management using this technique is to disregard to consist of some kind of your expenditure.
In law practice management often you count yourself out of the costs and you should include yourself in the expenses. Often you are doing at least some of the management work. If you are all three of these in one, you need to consider one income as due you for your time and know-how as the specialist and supervisor as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the approach used by numerous automobile mechanics (it is called "the flat rate book") and other provider. This approach is where you determine a fixed rate for various tasks and charge that rate no matter what. If the mechanic invests less time than set aside for the task, he makes more. He makes less if he spends more time than allocated. But in the end, it all levels (well, typically to the mechanics' favor if you ask me). Another example utilizing this method is how managed health care has used this system with health centers and doctors . If they desire, legal representatives can utilize this system.
The "Rule of Three" in Law Practice Management Prices
This " guideline of thumb" called the "rule of 3" used in law practice management is not what your CPA may inform you and it does not see this fail you either. Ask your Certified Public Accountant what they consider it and they will like it. To begin we are going to be believing in thirds. For the very first third we will take the total amount of salaries/bonuses (not advantages simply incomes-- advantages go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are producing income) and call that our first third. So accumulate the incomes of the attorneys, paralegals, and legal secretaries who generate earnings or are timekeepers and call this your first 3rd (lets simply say that number was $100,000 to keep it basic). Whatever that number is take that number once again and it is your 2nd third which we will call your "overhead" (thus that second third is $100,000 and don't forget you if you are have a peek here doing some managing partner type responsibilities since that part of your time goes here in overhead). Take that very same number and we will call that your last 3rd, which we will call gross profits (another $100,000). What you need to do is take the total amount (in this example $300,000) and now figure out how much you must charge per billable hour, per fixed rate or the number of contingency charge cases won to be sure you hit the target we must strike provided our first third number times 3 (in this example $300,000).
This approach shows you how much per hour you need to charge. Since you understand how lots of billable hours each revenue generator can do per month, simply divide that into your overall of all thirds ($300,000) to see what you Read More Here need to charge per billable hour to make your numbers come out correctly. As long as you hit your targets you will be assured of a 15% to 30% net profit from your operations. After all if you are the owner of the practice you should have a reasonable profit too do not you agree? This technique is referred to as the Guideline of Three. If this method is a bit too complicated do feel free to call me and I will help you arrange it out in a few minutes on the phone.
It is a excellent idea to analyze all of these rates approaches in identifying your law practice management pricing technique prior to setting a price and moving ahead with a law company marketing strategy to ensure you are thoroughly exploring all alternatives. Keep in mind the propensity for the majority of lawyers is to price too low. Don't do that! In another post I will inform you how to talk to prospective clients so you never have a issue getting the cost you should have.