Determining charges is a challenging law practice management task for a lot of attorneys when believing through their law company marketing strategies. In identifying costs for particular services, attorneys often fall short of what they should charge. Too many attorneys are scared of even charging the competitive rate for their services when making their law company marketing strategies.
Before you sit down and start thinking through your law practice management rates strategy you need some differences around prices frequently used in law company marketing preparation. Do know a law practice management law company marketing strategy is not effective if you just draw in individuals who want to pay the most affordable fee for a service. Instead, you want to focus your law practice management and law company marketing strategies on attracting customers who will end up being long term assets to the firm.
There are essentially 4 methods of determining how much you need to be charging for your services. Lets move right into those now.
The Market Method In Law Practice Management Prices
Get your assistant to support you in this law practice management task and invest some time finding what the range of prices is in the community. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services provided in your practice area. My suggestion in law firm marketing preparation is to charge at the 75% level of the list.
Keep in mind that in basic it is not a great law practice management method to compete on rate. The majority of possible customers will see pricing 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 Prices
This law practice management pricing approach is extremely straightforward actually. The most common mistake in law practice management using this technique is to overlook to consist of some type of your cost.
In law practice management typically you count yourself out of the expenditures and you must include yourself in the expenses. Frequently you are doing at least some of the management work. If you are all three of these in one, you should think about one income as due you for your time and knowledge as the specialist and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the technique used by lots of auto mechanics (it is called "the flat rate book") and other service companies. This approach is where you determine a fixed rate for numerous tasks and charge that rate no matter what. Another example utilizing this approach is how handled health care has used this system with medical facilities and medical professionals .
The "Rule of Three" in Law Practice Management Rates
This " guideline" called the "rule of 3" used in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your CPA what they think of 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 total amount of salaries/bonuses (not benefits just salaries-- advantages go into the second 3rd following) for the income generators and/or timekeepers (this includes you if you are producing go to the website revenue) and call that our first third. Include up the wages of the legal representatives, paralegals, and legal secretaries who create earnings or are timekeepers and call this your very first 3rd (lets just state that number was $100,000 to keep it basic). Whatever that number is take that number again and it is your second third which we will call your "overhead" (thus that second 3rd is $100,000 and do not forget you if you are doing some handling partner type duties 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 need to do is take the total quantity (in this example $300,000) and now determine just how much you should charge per billable hour, per fixed rate or the number of contingency charge cases won to be sure you struck the target we need to strike given our first 3rd 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 are worthy of a reasonable profit as well don't you agree? If this method is a bit too confusing do feel totally free to call me and I will assist you arrange it out in a couple of minutes on the phone.
It is a good idea to analyze all of these pricing methods in identifying your law practice management prices technique prior to setting a cost and moving ahead with a law office marketing plan to guarantee you are completely checking out all alternatives. Remember the propensity for the majority of attorneys is to price too low. Do not do that! In another post I will inform you how to speak with possible customers so you never have a problem getting the charge you should have.