Law Practice Management-- How To Identify Your Costs
Figuring out charges is a hard law practice management task for a lot of lawyers when believing through their law firm marketing strategies. In determining fees for certain services, attorneys often fall brief of what they must charge. Too lots of attorneys are afraid of even charging the competitive rate for their services when making their law company marketing strategies.
Before you sit down and start believing through your law practice management prices method you need some distinctions around pricing commonly utilized in law company marketing planning. Do know a law practice management law firm marketing plan is not effective if you just attract individuals who want to pay the least expensive cost for a service. Rather, you want to focus your law practice management and law company marketing plans on drawing in customers who will become long term properties to the company.
There are basically 4 ways of identifying just how much you need to be charging for your services. Lets move right into those now.
The Marketplace Approach In Law Practice Management Pricing
This is one good method of figuring out rates. Get your assistant to support you in this law practice management job and spend a long time discovering what the variety of prices is in the neighborhood. Have her do a " secret shopper" research study by calling around as if he/she were a potential customer and learn what your rivals say on the phone to her around pricing. She may require to call from her home phone to avoid caller ID. As another option you could have him/her call other assistants or paralegals at your rivals and offer to exchange your charges for their charges or you could do that with other attorneys yourself in your market. If you really wish to get into it and have maximum data you can write perhaps a couple of lots rivals in your market and say you are doing a cost study and if they would send you their cost list you will create a composite list that does not identify those reacting and send them a copy of the results. To keep it easy for them include a stamped, self-addressed envelope with a list of the most common services provided in your practice location. Now you will see what individuals are charging for services comparable to those you use. You should be able to come up with a series of costs. Use this variety to set rates for your own services. My suggestion in law practice marketing preparation is to charge at the 75% level of the list. You ought to be at or in the leading 25% of the fees.
Remember that in general it is not a great law practice management technique to compete on cost. The majority of prospective clients will see prices that is too low as a signal that there is something missing either from the service, the provider, or the company.
The Cost Technique in Law Practice Management Rates
This law practice management rates technique is very simple actually. One just identifies what the costs are to deliver product and services and includes on a affordable earnings, somewhere between fifteen percent at the least and maybe thirty three percent at the most. The most common mistake in law practice management using this method is to disregard to include some kind of your expenditure. Solo and small company lawyers tend to not include their own income!
OK, let me state it once again. In law practice management often you count yourself out of the expenses and you should include yourself in the expenditures. Why? Often you are doing at least a few of the technical work. Yes? Often you are doing at least a few of the management work. Yes? As the owner of the organisation you are due a sensible earnings. Yes? If you are all 3 of these in one, you must think about one salary as due you for your time and know-how as the technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner. So be sure to include a affordable cost for your managerial and technical work in the expenditures part of this formula.
Fixed Rate Technique in Law Practice Management Rates
This is the approach used by numerous auto mechanics (it is called "the flat rate book") and other service suppliers. This method is where you determine a fixed rate for different tasks and charge that rate no matter what. Another example utilizing this method is how managed health care has used this system with health centers and physicians .
The "Rule of Three" in Law Practice Management Prices
This " guideline of thumb" called the "rule of three" utilized in law practice management is not what your Certified Public Accountant may tell you and it does not fail you either. For the very first 3rd we will take the total amount of salaries/bonuses (not advantages just wages-- benefits go into the 2nd third coming next) for the earnings generators and/or timekeepers (this includes you if you are producing earnings) and call that our first 3rd. What you need to do is take the overall quantity (in this example $300,000) and now figure out how much you should charge per billable hour, per fixed rate or how many contingency charge cases won to be sure you hit the target we need to strike provided our very first third number times 3 (in next this example $300,000).
This method reveals you just how much per hour you need to charge. Because you understand the number of billable hours each profits generator can do per month, just divide that into your total of all thirds ($300,000) to see what you need to charge per billable hour to make your numbers come out properly. As long as you hit your targets you will be guaranteed of a 15% to 30% net make money from your operations. If you are the owner of the practice you are worthy of a reasonable earnings as well don't you agree? This technique is called the Guideline of Three. , if this approach is a bit too complicated do feel free to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to think through all of these prices methods in identifying your law practice management rates method prior to setting a cost and moving ahead with a law company marketing plan to guarantee you are completely checking out all choices. In another article I will inform you how to speak to potential clients so you never ever have a problem getting the charge you are worthy of.