Figuring out fees is a difficult law practice management job for the majority of attorneys when believing through their law firm marketing strategies. In figuring out fees for certain services, attorneys often fall short of what they ought to charge. Too many attorneys are afraid of even charging the competitive price for their services when making their law firm marketing strategies.
Prior to you sit down and start thinking through your law practice management pricing method you require some differences around pricing commonly used in law firm marketing preparation. Do know a law practice management law firm marketing plan is not reliable if you only attract individuals who want to pay the least expensive cost for a service. Rather, you desire to focus your law practice management and law company marketing strategies on bring in customers who will become long term possessions to the company.
There are essentially four ways of determining how much you should be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Pricing
This is one great way of determining rates. Get your assistant to support you in this law practice management job and spend some time discovering what the variety of pricing remains in the neighborhood. Have her do a " secret shopper" study by calling around as if he/she were a prospective customer and discover what your rivals state on the phone to her around prices. She might require to call from her house phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and use to exchange your charges for their charges or you might do that with other legal representatives yourself in your market. If you really want to get into it and have maximum data you can write maybe a couple of lots rivals in your market and say you are doing a charge survey and if they would send you their fee list you will create a composite list that does not determine those responding and send them a copy of the results. To keep it simple for them consist of 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 similar to those you offer. You should have the ability to develop a variety of costs. Use this variety to set costs for your own services. My suggestion in law company marketing preparation is to charge at the 75% level of the list. You ought to be at or in the top 25% of the costs.
Keep in mind that in general it is not a good law practice management technique to complete on cost. The majority of prospective clients will see rates that is too low as a signal that there is something missing out on either from the service, the supplier, or the company. And individuals who are trying to find a low rate will follow that low price wherever they can find it instead of becoming long-lasting clients. So make certain that your cost covers your costs and a affordable revenue margin.
The Expense Method in Law Practice Management Rates
This law practice management rates method is extremely simple actually. The most typical error in law practice management utilizing this method is to neglect to include some type of your cost.
OK, let me state it again. In law practice management often you count yourself out of the expenses and you must include yourself in the expenses. Why? Frequently you are doing at least some of the technical work. Yes? Typically you are doing a minimum of a few of the management work. Yes? As the owner of the business you are due a reasonable profit. Yes? If you are all 3 of these in one, you must think about one income as due you for your time and knowledge as the specialist and manager in addition to a profit of fifteen to thirty percent due you as the owner. So make certain to consist of a sensible cost for your managerial and technical work in the expenditures part of this formula.
Fixed Rate Technique in Law Practice Management Pricing
This is the technique used by lots of auto mechanics (it is called "the flat rate book") and other provider. This approach is where you figure out a fixed rate for various tasks and charge that rate no matter what. If the mechanic invests less time than allocated for the task, he makes more. He makes less if he spends more time than allocated. In the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example using this approach is how managed health care has used this system with healthcare facilities and medical professionals . Attorneys can utilize this system if they desire.
The "Rule of 3" in Law Practice Management Prices
This " guideline of thumb" called the "rule of three" utilized in law practice management is not what your CPA might tell you and it does not fail you either. For the very first third we will take the total quantity of salaries/bonuses (not benefits just wages-- benefits go into the 2nd 3rd coming next) for the income generators and/or timekeepers (this includes you if you are generating revenue) 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 must charge per billable hour, per repaired rate or how numerous contingency charge cases won to be sure you struck the target we need to strike given our first third number times 3 (in this example $300,000).
This approach shows you how much per hour you require to charge. If you are the owner of the practice you deserve a fair profit as well don't you agree? If this technique is a bit too confusing do feel complimentary to call these details me and I will assist you arrange it out in a couple of minutes on the phone.
It is a excellent concept to think through all of these rates approaches in identifying your law practice management prices method before setting a cost and moving ahead with a law company marketing strategy to ensure you are completely exploring all choices. In another post I will inform you how to speak to prospective clients so you never have a problem getting the charge you are worthy of.