Figuring out fees is a challenging law practice management job for the majority of lawyers when believing through their law company marketing strategies. In determining costs for certain services, attorneys frequently fall brief of what they ought to charge. Too numerous attorneys are afraid of even charging the competitive rate for their services when making their law company marketing plans.
Prior to you sit down and begin believing through your law practice management prices technique you need some differences around rates typically utilized in law firm marketing planning. Do know a law practice management law company marketing strategy is not efficient if you only attract individuals who want to pay the least expensive fee for a service. Rather, you want to focus your law practice management and law company marketing plans on drawing in customers who will become long term properties to the firm.
There are essentially 4 methods of identifying just how much you need to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Rates
This is one excellent way of determining pricing. Get your assistant to support you in this law practice management job and invest a long time discovering what the series of rates remains in the neighborhood. Have her do a "mystery buyer" research study by calling around as if he/she were a potential customer and discover what your rivals say on the phone to her around prices. She might require to call from her home phone to prevent caller ID. As another alternative you could have him/her call other assistants or paralegals at your rivals and use to exchange your charges for their charges or you could do that with other attorneys yourself in your market. If you actually wish to get into it and have maximum data you can write perhaps a couple of dozen rivals in your marketplace and say you are doing a cost study and if they would send you their fee list you will develop a composite list that does not identify those responding and send them a copy of the results. To keep it basic for them consist of a stamped, self-addressed envelope with a list of the most common services provided in your practice area. Now you will see what people are charging for services similar to those you use. You should have the ability to develop a variety of rates. Use this variety to set rates for your own services. My recommendation in law practice marketing preparation is to charge at the 75% level of the list. You should be at or in the top 25% of the fees.
Keep in mind that in basic it is not a good law practice management technique to complete on price. Many potential customers 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 firm. And people who are trying to find a low cost will follow that low rate wherever they can find it instead of becoming long-lasting clients. Be sure that your price covers your expenses and a reasonable profit margin.
The Cost Method in Law Practice Management Rates
This law practice management rates approach is very straightforward actually. The most common mistake in law practice management utilizing this technique is to disregard to consist of some type of your cost.
In law practice management typically you count yourself out of the costs and you must include yourself in the costs. Typically you are doing at least some of the management work. If you are all 3 of these in one, you must consider one wage as due you for your time and expertise as the professional and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the method utilized by lots of car mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify a fixed rate for different tasks and charge that rate no matter what. He makes more if the mechanic invests less time than set aside for the task. He makes less if he spends more time than allotted. However in the end, everything levels (well, generally to the mechanics' favor if you ask me). Another example using this approach is how handled health care has actually used this system with healthcare facilities and physicians . If they desire, attorneys can utilize this system.
The " Guideline of Three" in Law Practice Management Pricing
This "rule of thumb" called the "rule of three" used in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. Ask your Certified Public Accountant what they consider it and they will like it. To start we are going to be believing in thirds. For the very first 3rd we will take the overall quantity of salaries/bonuses (not advantages simply wages-- advantages enter into the 2nd 3rd following) for the earnings generators and/or timekeepers (this includes you if you are creating revenue) and call that our very first third. So accumulate the incomes of the legal representatives, paralegals, and legal secretaries who create income or are timekeepers and call this your first third (lets just say that number was $100,000 to keep it simple). 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 doing some managing partner type duties because that part of your time goes here in overhead). Then take that very same number and we will call that your last 3rd, which we will call gross revenues (another $100,000). What you need to do is take the total amount (in this example $300,000) and now figure out just how much you should charge per billable hour, per fixed rate or how numerous 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. Given that you know the number of billable hours each income generator can do each month, simply 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 properly. As see long as you strike your targets you will be guaranteed of a 15% to 30% net benefit from your operations. After all if you are the owner of the practice you are worthy of a fair profit as well don't you concur? This method is called the Guideline of 3. If this approach is a bit too confusing do feel free to contact me and I will help you sort it out in a couple of minutes on the phone.
It is a great idea to believe through all of these rates approaches in determining your law practice management rates strategy prior to setting a cost and moving ahead with a law firm marketing strategy to ensure you are thoroughly exploring all options. In another post I will tell you how to speak to prospective customers so you never have a issue getting the charge you should have.