Determining fees is a challenging law practice management task for many attorneys when thinking through their law firm marketing plans. In determining costs for certain services, attorneys typically fall brief of what they should charge. Too lots of attorneys are afraid of even charging the competitive rate for their services when making their law company marketing strategies.
Prior to you sit down and start thinking through your law practice management prices technique you require some distinctions around rates commonly utilized in law company marketing planning. Do know a law practice management law company marketing strategy is not reliable if you just attract people who want to pay the lowest fee for a service. Instead, you want to focus your law practice management and law firm marketing plans on attracting customers who will end up being long term possessions to the firm.
There are generally 4 ways of identifying how much you must be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Rates
This is one great way of determining prices. Get your assistant to support you in this law practice management job and spend 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 prospective client and learn what your rivals state on the phone to her around pricing. She may need to call from her home phone to prevent caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and offer to exchange your costs for their fees or you could do that with other lawyers yourself in your market. If you actually desire to enter into it and have optimal data you can compose perhaps a few dozen rivals in your market and say you are doing a cost study and if they would send you their charge list you will produce 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 location. Now you will see what people are charging for services comparable to those you provide. You must have the ability to create a variety of rates. Use this range to set costs for your own services. My suggestion in law firm marketing preparation is to charge at the 75% level of the list. So you ought to be at or in the leading 25% of the costs.
Bear in mind that in general it is not a excellent law practice management method to contend on cost. The majority of possible clients will see pricing that is too low as a signal that there is something missing either from the service, the company, or the company. And individuals who are trying to find a low price will follow that low rate wherever they can discover it instead of becoming long-lasting customers. Be sure that your price covers your expenses and a reasonable revenue margin.
The Cost Approach in Law Practice Management Pricing
This law practice management pricing technique is extremely uncomplicated actually. One merely determines what the expenses are to provide product and services and includes on a affordable profit, someplace in between fifteen percent at the least and maybe thirty 3 percent at the most. The most common error in law practice management utilizing this method is to disregard to include some form of your expense. Solo and little firm attorneys tend to not include their own wage!
OK, let me state it once again. In law practice management frequently you count yourself out of the expenditures and you need to include yourself in the expenditures. Why? Typically you are doing a minimum of a few of the technical work. Yes? Frequently you are doing a minimum of some 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 income as due you for your time and know-how as the technician and supervisor in addition to a revenue of fifteen to thirty percent due you as the owner. So be sure to include a affordable expense for your supervisory and technical operate in the costs part of this formula.
Fixed Rate Technique in Law Practice Management Prices
This is the technique used by numerous car mechanics (it is called "the flat rate book") and other provider. This method is where you identify a set 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 allocated. However in the end, all of it evens out (well, typically to the mechanics' favor if you ask me). Another example utilizing this technique is how managed healthcare has utilized this system with health centers visit our website and doctors . Attorneys can utilize this system if they want.
The "Rule of Three" in Law Practice Management Rates
This " guideline of thumb" called the " guideline of 3" used in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. For the very first third we will take the overall quantity of salaries/bonuses (not advantages simply salaries-- advantages go into the 2nd third coming next) for the revenue generators and/or timekeepers (this includes you if you are creating earnings) and call that our very first 3rd. What you require to do is take the overall quantity (in this example $300,000) and now figure out how much you should charge per billable hour, per repaired rate or how numerous contingency fee cases won to be sure you struck the target we should hit offered our first third number times 3 (in this example $300,000).
This technique reveals you how much per hour you need to charge. If you are the owner of the practice you deserve a reasonable profit as well do not you agree? If this approach is a bit too complicated 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 excellent concept to believe through all of these rates methods in identifying your law practice management rates strategy before setting a price and moving ahead with a law office marketing plan to ensure you are completely exploring all options. Keep in mind the tendency for most attorneys is to price too low. Don't do that! In another post I will tell you how to talk to potential clients so you never ever have a issue getting the fee you should have.