Law Practice Management-- How To Determine Your Fees
Figuring out charges is a difficult law practice management task for most attorneys when thinking through their law firm marketing plans. In identifying costs for particular services, attorneys typically fall short of what they must charge. Too numerous attorneys are afraid of even charging the competitive price for their services when making their law firm marketing plans.
Before you sit down and start thinking through your law practice management pricing strategy you require some distinctions around prices frequently used in law company marketing planning. Do know a law practice management law firm marketing strategy is not effective if you only attract individuals who desire to pay the lowest charge for a service. Rather, you desire to focus your law practice management and law company marketing strategies on drawing in clients who will end up being long term properties to the firm.
There are generally 4 methods of determining how much you ought to be charging for your services. Lets move right into those now.
The Market Technique 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 task and invest a long time discovering what the variety of prices remains in the community. Have her do a " secret shopper" study by calling around as if he/she were a possible customer and learn what your competitors state on the phone to her around pricing. She might need to call from her house phone to avoid caller ID. As another choice you might have him/her call other assistants or paralegals at your rivals and offer to exchange your fees for their charges or you could do that with other lawyers yourself in your market. If you truly wish to enter it and have maximum data you can compose possibly a couple of dozen rivals in your marketplace and state you are doing a fee study and if they would send you their fee list you will produce a composite list that does not determine those reacting and send them a copy of the outcomes. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most typical services used in your practice area. Now you will see what individuals are charging for services comparable to those you use. You must be able to develop a variety of rates. Use this range to set costs for your own services. My recommendation in law practice marketing preparation is to charge at the 75% level of the list. You need to be at or in the leading 25% of the costs.
Remember that in general it is not a great law practice management method to contend on cost. A lot of possible clients will see prices that is too low as a signal that there is something missing out on either from the service, the service provider, or the company.
The Cost Approach in Law Practice Management Rates
This law practice management pricing approach is really uncomplicated actually. One simply identifies what the expenses are to provide service or products and adds on a affordable profit, somewhere between fifteen percent at the least and maybe thirty 3 percent at the most. The most common error in law practice management using this method is to disregard to consist of some form of your expense. Solo and little firm lawyers tend to not include their own salary!
OK, let me say it once again. In law practice management frequently you count yourself out of the expenditures and you ought to include yourself in the expenditures. Why? Typically you are doing at least some of the technical work. Yes? Typically you are doing at least a few of the management work. Yes? As the owner of business you are due a sensible profit. Yes? If you are all 3 of these in one, you ought to think about one wage as due you for your time and competence as the specialist and manager along with a earnings of fifteen to thirty percent due you as the owner. Be sure to consist of a reasonable cost for your managerial and technical work in the expenditures part of this formula.
Fixed Rate Method in Law Practice Management Pricing
This is the approach used by many automobile mechanics (it is called "the flat rate book") and other company. This technique is where you figure out a set rate for various tasks and charge that rate no matter what. He makes more click this if the mechanic spends less time than allotted for the job. If he spends more time than allocated, he makes less. However in the end, all of it levels (well, typically to the mechanics' favor if you ask me). Another example using this technique is how managed healthcare has utilized this system with physicians and healthcare facilities . If they prefer, lawyers can use this system.
The "Rule of Three" in Law Practice Management Prices
This "rule of thumb" called the "rule of 3" utilized in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. For the first third we will take the total amount of salaries/bonuses (not advantages just wages-- advantages go into the second third coming next) for the income generators and/or timekeepers (this includes you if you are creating profits) and call that our very first 3rd. What you require to do is take the total amount (in this example $300,000) and now figure out how much you should charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you struck the target we should hit offered our first third number times three (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 concur? If this method is a bit too confusing do feel free to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a good idea to believe through all of these rates techniques in identifying your law practice management pricing method before setting a price and moving ahead with a law practice marketing plan to ensure you are completely checking out all options. Keep in mind the propensity for most attorneys is to price too low. Do not do that! In another article I will inform you how to talk to possible customers so you never ever have a problem getting the charge you should have.