Law Practice Management-- How To Determine Your Fees
Determining charges is a challenging law practice management task for many attorneys when believing through their law company marketing plans. In determining fees for specific services, attorneys often fall short of what they must charge. Too numerous lawyers are scared of even charging the competitive rate for their services when making their law firm marketing plans.
Prior to you sit down and begin believing through your law practice management prices strategy you need some distinctions around rates frequently utilized in law company marketing planning. Do know a law practice management law company marketing strategy is not efficient if you only draw in individuals who desire to pay the most affordable fee for a service. Rather, you want to focus your law practice management and law company marketing strategies on attracting customers who will end up being long term possessions to the company.
There are essentially four methods of identifying just how much you ought to be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Rates
This is one excellent way of identifying prices. Get your assistant to support you in this law practice management job and invest some time finding what the variety of pricing is in the neighborhood. Have her do a " secret shopper" study by calling around as if he/she were a prospective client and discover what your rivals state on the phone to her around rates. She might require to call from her house phone to prevent caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and provide to exchange your charges for their costs or you might do that with other lawyers yourself in your market. If you truly want to enter into it and have optimal data you can write perhaps a few dozen competitors in your marketplace and say you are doing a fee survey and if they would send you their charge list you will create a composite list that does not identify those responding and send them a copy of the results. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services used in your practice location. Now you will see what people are charging for services comparable to those you use. You need to have the ability to develop a range of costs. Use this variety to set rates for your own services. My suggestion in law firm marketing planning is to charge at the 75% level of the list. So you should be at or in the leading 25% of the fees.
Remember that in general it is not a great law practice management method to compete on cost. Most potential clients will see pricing that is too low as Check This Out a signal that there is something missing either from the service, the provider, or the firm.
The Cost Technique in Law Practice Management Prices
This law practice management prices method is really straightforward really. The most typical error in law practice management using this technique is to disregard to include some form of your cost.
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 should consider one wage as due you for your time and knowledge as the professional and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the approach used by many car mechanics (it is called "the flat rate book") and other service companies. This technique is where you determine a fixed rate for different jobs and charge that rate no matter what. He makes more if the mechanic spends less time than set aside for the job. He makes less if he invests more time than allotted. However in the end, it all levels (well, normally to the mechanics' favor if you ask me). Another example using this method is how managed health care has utilized this system with doctors and health centers . Lawyers can utilize this system if they want.
The " Guideline of 3" in Law Practice Management Prices
This "rule of thumb" called the " guideline of three" used in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. For the first 3rd we will take the overall amount of salaries/bonuses (not benefits simply wages-- advantages go into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are producing profits) and call that our first 3rd. What you need to do is take the overall amount (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 cost cases won to be sure you hit the target we should strike find given our first 3rd number times three (in this example $300,000).
This approach shows you just how much per hour you require to charge. Given that you know the number of billable hours each income generator can do each month, just divide that into your overall of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out i thought about this properly. As long as you strike your targets you will be assured of a 15% to 30% net revenue from your operations. After all if you are the owner of the practice you deserve a reasonable profit also do not you agree? This method is known as the Rule of Three. , if this method is a bit too confusing do feel free to contact me and I will assist you arrange it out in a few minutes on the phone.
It is a good idea to analyze all of these pricing techniques in determining your law practice management prices technique before setting a rate and continuing with a law office marketing plan to ensure you are completely exploring all alternatives. Remember the propensity for many lawyers is to price too low. Don't do that! In another post I will tell you how to speak with potential customers so you never ever have a problem getting the charge you should have.