Law Practice Management-- How To Determine Your Fees
Identifying fees is a difficult law practice management task for many lawyers when believing through their law practice marketing plans. In identifying costs for specific services, lawyers often disappoint what they should charge. When making their law company marketing strategies, too numerous lawyers are afraid of even charging the competitive price for their services. Further, they make the rates choices typically without any data or conceptual framework. Furthermore, instead of focusing their efforts on how they can validate getting top dollar for what they provide, they charge a charge that is typically way too low and typically actually can frighten possible customers who think there is something missing from a service that is " inexpensive". Additionally lots of attorneys don't realize that a lot of purchasers in the market by far are "value buyers" and not looking for "cheap".
Prior to you sit down and begin believing through your law practice management pricing technique you require some differences around pricing typically utilized in law company marketing planning. Do know a law practice management law firm marketing plan is not effective if you only draw in people who want to pay the lowest charge for a service. Instead, you want to focus your law practice management and law firm marketing strategies on attracting clients who will end up being long term assets to the company.
There are basically 4 methods of figuring out how much you should 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 identifying pricing. Get your assistant to support you in this law practice management task and spend a long time discovering what the range of rates is in the community. Have her do a " secret shopper" study by calling around as if he/she were a possible customer and learn what your rivals say on the phone to her around prices. She may require to call from her house phone to prevent caller ID. As another alternative you might have him/her call other assistants or paralegals at your rivals and offer to exchange your fees for their charges or you could do that with other lawyers yourself in your market. If you really desire to enter into it and have maximum information you can write possibly a few lots rivals in your marketplace and state you are doing a charge survey and if they would send you their cost list you will produce a composite list that does not identify those responding and send them a copy of the outcomes. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice location. Now you will see what people are charging for services comparable to those you offer. You should have the ability to develop a series of costs. Utilize this range to set costs for your own services. My suggestion in law firm marketing planning is to charge at the 75% level of the list. You should be at or in the leading 25% of the costs.
Keep in mind that in basic it is not a great law practice management method to complete on price. 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 company, or the firm.
The Cost Method in Law Practice Management Rates
This law practice management rates technique is very uncomplicated really. The most typical mistake in law practice management utilizing this method is to overlook to consist of some type of your expenditure.
In law practice management frequently you count yourself out of the costs and you must include yourself in the expenditures. Often you are doing at least some of the management work. If you are all 3 of these in one, you need to consider one income as due you for your time and expertise as the service technician and supervisor as well as a profit 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 automobile mechanics (it is called "the flat rate book") and other company. This method is where you determine a set rate for various jobs and charge that rate no matter what. He makes more if the mechanic spends less time than allotted for the task. He makes less if he invests more time than designated. In the end, it all evens out (well, typically to the mechanics' favor if you ask me). Another example utilizing this approach is how managed healthcare has actually used this system with healthcare facilities and doctors . Legal representatives can utilize this system if they desire.
The "Rule of Three" in Law Practice Management Rates
This " guideline of thumb" called the "rule of 3" utilized in law practice management is not what your Certified Public Accountant may inform you and it does not fail you either. For the first 3rd we will take the overall quantity of salaries/bonuses (not advantages simply incomes-- benefits go into the 2nd third coming next) for the revenue generators and/or timekeepers (this this link includes you if you are creating profits) and call that our first third. What you require to do is take the total amount (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 must strike given our very first 3rd number times three (in this example $300,000).
This approach reveals you how much per hour you require to charge. If you are the owner of the practice you deserve a reasonable earnings as well don't you agree? If this method is a bit too complicated do feel complimentary to call me and I will assist you arrange it out in a few minutes on the phone.
It is a great concept to analyze all of these rates methods in identifying your law practice management pricing technique before setting a rate and continuing with a law firm marketing plan to guarantee you are completely checking out all options. Keep in mind the propensity for a lot of lawyers is to price too low. Do not do that! In another post I will inform you how to talk to potential customers so you never ever have a problem getting the fee you are worthy of.