Law Practice Management-- How To Determine Your Fees
Determining charges is a tough law practice management job for the majority of attorneys when thinking through their law firm marketing plans. In determining fees for certain services, attorneys often 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 strategies.
Before you sit down and begin believing through your law practice management prices technique you need some differences around prices typically used in law company marketing planning. Do know a law practice management law firm marketing strategy is not reliable if you only bring in people who want to pay the most affordable cost for a service. Instead, you desire to focus your law practice management and law company marketing strategies on attracting customers who will become long term properties to the firm.
There are essentially 4 methods of identifying just how much you ought to be charging for your services. Lets move right into those now.
The Marketplace Method In Law Practice Management Pricing
Get your assistant to support you in this law practice management task and spend some time discovering what the variety of pricing is in the community. To keep it basic for them include a stamped, self-addressed envelope with a list of the most common services used in your practice location. My suggestion in law company marketing planning is to charge at the 75% level of the list.
Keep in mind that in general it is not a excellent law practice management strategy to compete on rate. The majority of prospective customers will see prices that is too low as a signal that there is something missing out on either from the service, the company, or the firm.
The Expense Approach in Law Practice Management Prices
This law practice management rates method is very straightforward actually. The most typical error in law practice management using this method is to neglect to include some type of your cost.
OK, let me state it once again. In law practice management typically you count yourself out of the expenditures and you need to include yourself in the expenses. Why? Often you are doing at least a few of the technical work. Yes? Often you are doing a minimum of some of the management work. Yes? As the owner of the company you are due a sensible revenue. Yes? If you are all three of these in one, you should consider one salary as due you for your time and know-how as the technician and manager as well as a earnings of fifteen to thirty percent due you as the owner. So make certain to consist of a sensible cost for your technical and managerial operate in the expenditures part of this formula.
Fixed Rate Approach in Law Practice Management Prices
This is the technique used by many car mechanics (it is called "the flat rate book") and other company. This approach is where you identify a fixed rate for different tasks and charge that rate no matter what. If the mechanic spends less time than set aside for the job, he makes more. He makes less if he invests more time than designated. In the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example using this approach is how handled healthcare has actually utilized this system with hospitals and physicians . If they want, legal representatives can utilize this system.
The " Guideline of Three" in Law Practice Management Pricing
This " guideline" called the "rule of three" utilized in law practice management is not what your CPA may inform you and it does not fail you either. Ask your Certified Public Accountant what they consider it and they will like it. To begin we are going to be believing in thirds. For the first third we will take the total amount of salaries/bonuses (not advantages simply incomes-- advantages go into the 2nd third coming next) for the profits generators and/or timekeepers (this includes you if you are creating income) and call that our very first 3rd. So build up the incomes of the legal representatives, paralegals, and legal secretaries who produce earnings or are timekeepers and call this your first third (lets just say that number was $100,000 to keep it basic). Whatever that number is take that number once again and it is your 2nd third which we will call your "overhead" (thus that 2nd third is $100,000 and do not forget you if you are Full Report doing some managing partner type tasks because that part of your time goes here in overhead). Take that exact same number and we will call that your last third, which we will call gross revenues (another $100,000). What you need to do is take the total amount (in this example $300,000) and now figure out just how much you should charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you hit the target we must strike provided our first 3rd number times three (in this example $300,000).
This approach shows you just how much per hour you need to charge. Given that you know the number of billable hours each income generator can do each month, just divide that into your overall of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out correctly. As long as you strike your targets you will be ensured of a 15% to 30% net benefit from your operations. If you are the owner of the practice you deserve a fair earnings as well do not you agree? This technique is called the Guideline of 3. If this technique is a bit too confusing do do not hesitate to contact me and I will assist you sort it out in a few minutes on the phone.
It is a great idea to believe through all of these rates approaches in identifying your law practice management prices strategy prior to setting a rate and moving ahead with a law company marketing plan to guarantee you are completely exploring all options. In another post I will inform you how to speak to prospective clients so you never ever have a issue getting the charge you deserve.