Law Practice Management-- How To Identify Your Fees
Identifying costs is a difficult law practice management task for most lawyers when believing through their law company marketing strategies. In identifying charges for particular services, lawyers frequently fall brief of what they should charge. Too many lawyers are scared of even charging the competitive cost for their services when making their law firm marketing plans.
So before you sit down and begin believing through your law practice management prices strategy you require some differences around pricing frequently utilized in law practice marketing planning. Add your pricing method to your law company marketing plans. You need to be sure that you are charging a enough cost on whatever to guarantee you a good earnings not simply a excellent living. If you only attract people who desire to pay the least expensive fee for a service, do understand a law practice management law firm marketing plan is not efficient. These are not loyal clients. Instead, you wish to focus your law practice management and law practice marketing strategies on bring in customers who will become long term assets to the company. Low cost clients are not building your base of long term clients I can guarantee you that.
There are basically 4 ways of determining how much you must 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 spend some time finding what the variety of prices is in the community. To keep it simple for them include a stamped, self-addressed envelope with a list of the most typical services provided in your practice location. My suggestion in law firm marketing planning is to charge at the 75% level of the list.
Remember that in general it is not a excellent law practice management technique to compete on rate. A lot of potential 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.
The Expense Technique in Law Practice Management Pricing
This law practice management rates approach is extremely simple really. One simply determines what the costs are to deliver services or items and includes on a sensible profit, somewhere between fifteen percent at the least and perhaps thirty three percent at the most. The most typical error in law practice management using this method is to disregard to include some form of your expense. Solo and small firm attorneys tend to not include their own wage!
In law practice management often you count yourself out of the costs and you must 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 need to consider one wage as due you for your time and competence as the specialist and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Prices
This is the technique utilized by lots of auto mechanics (it is called "the flat rate book") and other service suppliers. This method is where you identify a set rate for numerous tasks and charge that rate no matter what. If the mechanic spends less time than allotted top article for the task, he makes more. If he spends more time than designated, he earns less. However in the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example utilizing this approach is how managed healthcare has used this system with doctors and medical facilities . Lawyers can utilize this system if they desire.
The " Guideline of 3" in Law Practice Management Prices
This " general rule" called the " guideline of three" used in law practice management is not what your CPA might inform you and it does not fail you either. Ask your CPA what they believe about it and they will like it. To begin we are going to be thinking in thirds. For the first 3rd we will take the total quantity of salaries/bonuses (not advantages just wages-- benefits enter into the second 3rd coming next) for the revenue generators and/or timekeepers (this includes you if you are producing income) and call that our very first third. Include up the wages of the lawyers, paralegals, and legal secretaries who produce earnings or are timekeepers and call this your very first third (lets just state that number was $100,000 to keep it basic). Whatever that number is take that number once again and it is your second 3rd which we will call your "overhead" ( hence that second third is $100,000 and do not forget you if you are doing some handling partner type responsibilities since that part of your time goes here in overhead). Then take that exact same number and we will call that your last third, which we will call gross profits (another $100,000). What you require to do is take the overall quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, per repaired rate or how many contingency fee cases won to be sure you hit the target we must hit offered our very first third number times 3 (in this example $300,000).
This approach reveals you just how much per hour you require to charge. Because you know how many billable hours each income generator can do monthly, simply divide that into your total of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out properly. As long as you strike your targets you will be ensured 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 also do not you agree? This method is called the Guideline of Three. If this technique is a bit too confusing do do not hesitate to contact me and I will assist you arrange it out in a few minutes on the phone.
It is a excellent idea to think through all of these prices methods in identifying your law practice management rates strategy before setting a price and moving ahead with a law practice marketing strategy to guarantee you are completely checking out all options. Remember the propensity for many lawyers is to price too low. Do not do that! In another post I will inform you how to speak to prospective customers so you never have a problem getting the fee you deserve.