Law Practice Management-- How To Identify Your Fees
When believing through their law company marketing strategies, identifying fees is a hard law practice management task for most lawyers. In identifying charges for certain services, lawyers often disappoint what they need to charge. Too numerous attorneys are scared of even charging the competitive cost for their services when making their law office marketing plans. Further, they make the rates decisions typically with no information or conceptual structure. Furthermore, rather of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a charge that is typically way too low and often actually can frighten potential customers who believe there is something missing out on from a service that is "cheap". Furthermore lots of attorneys do not recognize that a lot of purchasers in the market without a doubt are "value buyers" and not trying to find " low-cost".
Prior to you sit down and start thinking through your law practice management prices method you require some differences around pricing frequently utilized in law firm marketing preparation. Do know a law practice management law company marketing plan is not effective if you only bring in individuals who want to pay the least expensive charge 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 4 ways of determining just how much you should be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Pricing
This is one excellent way of determining prices. Get your assistant to support you in this law practice management task and spend a long time finding what the variety of prices remains in the neighborhood. Have her do a " secret consumer" research study by calling around as if he/she were a possible client and learn what your rivals state on the phone to her around prices. She may require to call from her house phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your rivals and use to exchange your fees for their costs or you might do that with other legal representatives yourself in your market. If you truly want to enter into it and have maximum information you can compose possibly a couple of lots competitors in your market and say you are doing a cost survey and if they would send you their cost list you will produce a composite list that does not determine those responding and send them a copy of the results. To keep it simple for them include a stamped, self-addressed envelope with a list of the most typical services used in your practice area. Now you will see what people are charging for services comparable to those you offer. You need to have the ability to create a variety of prices. Use this variety to set prices for your own services. My suggestion in law office marketing preparation is to charge at the 75% level of the list. You must be at or in the top 25% of the costs.
Remember that in basic it is not a excellent law practice management technique to complete on price. A lot of possible clients will see prices that is too low as a signal that there is something missing either from the service, the supplier, or the firm.
The Expense Approach in Law Practice Management Pricing
This law practice management pricing technique is very simple really. One simply identifies what the costs are to provide services or products and adds on a reasonable earnings, somewhere between fifteen percent at the least and possibly thirty three percent at the most. The most common mistake in law practice management utilizing this technique is to disregard to include some kind of your expense. Solo and little firm lawyers tend to not include their own wage!
In law practice management often you count yourself out of the expenses and you ought to include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you need to think about one wage as due you for your time and proficiency as the specialist and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the method utilized by numerous car mechanics (it is called "the flat rate book") and other service suppliers. This technique is where you determine a set rate for different tasks and charge that rate no matter what. Another example using this approach is how managed health care has utilized this system with healthcare facilities and physicians .
The " Guideline of 3" in Law Practice Management Rates
This "rule of thumb" called the "rule of three" used 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 overall amount of salaries/bonuses (not benefits simply salaries-- advantages enter into the second 3rd following) for the revenue generators and/or timekeepers (this includes you if you are producing earnings) and call that our first 3rd. Include up the salaries of the attorneys, paralegals, and legal secretaries who produce earnings or are timekeepers and call this your first 3rd (lets simply state that number was $100,000 to keep it easy). Whatever that number is take that number once again and it is your 2nd third which we will call your "overhead" ( therefore that second 3rd is $100,000 and do not forget you if you are doing some managing partner type tasks 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 earnings (another $100,000). What you require to do is take the overall quantity (in this example $300,000) and now determine 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 strike given our very first 3rd number times 3 (in this example $300,000).
This method reveals you how much per hour visit their website you require to charge. If you are the owner of the practice you deserve a reasonable profit as well do not you agree? If this method is a bit too confusing do feel complimentary to contact me and I will assist you sort it out in a couple of minutes on the phone.
It is a great concept to believe through all of these pricing techniques in identifying your law practice management prices strategy prior to setting a rate and moving ahead with a law firm marketing strategy to ensure you are thoroughly exploring all alternatives. In another article I will tell you how to speak to prospective customers so you never ever have a problem getting the fee you are worthy of.