Law Practice Management-- How To Determine Your Fees
Determining fees is a hard law practice management task for the majority of attorneys when analyzing their law firm marketing strategies. In identifying charges for particular services, attorneys frequently disappoint what they must charge. A lot of lawyers are scared of even charging the competitive cost for their services when making their law practice marketing strategies. Even more, they make the prices decisions typically without any data or conceptual structure. Furthermore, rather of focusing their efforts on how they can validate getting top dollar for what they provide, they charge a cost that is often way too low and often in fact can scare off potential customers who believe there is something missing from a service that is "cheap". In addition lots of lawyers do not recognize that a lot of purchasers in the market by far are "value buyers" and not searching for "cheap".
Prior to you sit down and begin thinking through your law practice management pricing method you require some distinctions around rates commonly used in law firm marketing preparation. Include your prices technique to your law company marketing plans. You need to be sure that you are charging a enough charge on whatever to guarantee you a great earnings not just a great living. Do know a law practice management law company marketing strategy is not reliable if you just attract individuals who want to pay the most affordable fee for a service. These are not devoted customers. Rather, you wish to focus your law practice management and law company marketing intend on drawing in customers who will end up being long term assets to the firm. Low price clients are not building your base of long term customers I can promise you that.
There are generally 4 methods of figuring out just how much you should be charging for your services. Lets move right into those now.
The Market Technique In Law Practice Management Prices
This is one great way of figuring out rates. Get your assistant to support you in this law practice management job and invest a long time finding what the variety of prices is in the neighborhood. Have her do a " secret buyer" research study by calling around as if he/she were a possible customer and discover out what your rivals state on the phone to her around prices. She may need to call from her house phone to prevent caller ID. As another choice you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their fees or you might do that with other legal representatives yourself in your market. If you truly want to get into it and have maximum information you can compose maybe a couple of dozen competitors in your marketplace and state you are doing a charge survey and if they would send you their cost list you will develop a additional hints composite list that does not determine those reacting 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 provided in your practice location. Now you will see what people are charging for services comparable to those you provide. You need to be able to create a series of rates. Use this range to set rates for your own services. My recommendation in law practice marketing planning is to charge at the 75% level of the list. You need to be at or in the top 25% of the charges.
Remember that in general it is not a good law practice management method to complete on rate. Most potential customers 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.
The Expense Technique in Law Practice Management Prices
This law practice management rates method is very uncomplicated really. The most typical mistake in law practice management utilizing this technique is to neglect to consist of some form of your expenditure.
OK, let me state it again. In law practice management frequently you count yourself out of the expenses and you must include yourself in the expenses. Why? Frequently you are doing a minimum of some of the technical work. Yes? Typically you are doing at least some of the management work. Yes? As the owner of business you are due a sensible earnings. Yes? If you are all three of these in one, you must think about one salary as due you for your time and knowledge as the professional and manager as well as a profit of fifteen to thirty percent due you as the owner. Be sure to consist of a sensible expense for your managerial and technical work in the costs part of this formula.
Fixed Rate Technique in Law Practice Management Prices
This is the approach utilized by lots of vehicle mechanics (it is called "the flat rate book") and other company. This method is where you determine a fixed rate for various tasks and charge that rate no matter what. If the mechanic spends less time than allotted for the task, he makes more. He makes less if he invests more time than allocated. However in the end, everything evens out (well, typically to the mechanics' favor if you ask me). Another example using this approach is how handled health care has utilized this system with doctors and hospitals . If they desire, attorneys can use this system.
The "Rule of 3" in Law Practice Management Prices
This " guideline of thumb" called the " guideline of three" used in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. For the first third we will take the overall amount of salaries/bonuses (not benefits just wages-- advantages go into the second third coming next) for the earnings generators and/or timekeepers (this includes you if you are producing profits) and call that our first third. What you require to do is take the total quantity (in this example $300,000) and now figure out how much you need to charge per billable hour, Read Full Report per fixed rate or how many contingency cost cases won to be sure you struck the target we should strike provided our first 3rd number times three (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 technique 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 good idea to analyze all of these prices approaches in identifying your law practice management pricing strategy before setting a cost and continuing with a law office marketing strategy to guarantee you are completely checking out all alternatives. Keep in mind the propensity for most lawyers is to price too low. Don't do that! In another article I will tell you how to talk to potential clients so you never have a problem getting the fee you deserve.