Law Practice Management-- How To Identify Your Fees
Identifying fees is a hard law practice management job for a lot of lawyers when believing through their law company marketing strategies. In identifying fees for specific services, attorneys frequently fall short of what they need to charge. Too lots of lawyers are scared of even charging the competitive cost for their services when making their law company marketing strategies.
Prior to you sit down and start thinking through your law practice management prices technique you require some differences around prices frequently used in law firm marketing planning. Do understand a law practice management law company marketing plan is not efficient if you just draw in people who desire to pay the least expensive fee for a service. Rather, you want to focus your law practice management and law company marketing strategies on attracting clients who will end up being long term assets to the firm.
There are basically 4 methods of figuring out how much you ought to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Pricing
Get your assistant to support you in this law practice management job and spend some time finding what the range of prices is in the neighborhood. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most typical services offered in your practice area. My suggestion in law firm marketing planning is to charge at the 75% level of the list.
Keep in mind that in general it is not a great law practice management method to contend on price. A lot of possible clients will see prices that is too low as a signal that there is something missing out on either from the service, the service provider, or the company.
The Cost Technique in Law Practice Management Prices
This law practice management prices method is really uncomplicated truly. The most common error in law practice management using this method is to neglect to include some form of your expenditure.
OK, let me state it again. In law practice management typically you count yourself out of the costs and you ought to include yourself in the expenses. Why? Typically you are doing at least some of the technical work. Yes? Often you are doing at least a few of the management work. Yes? As the owner of the company you are due a affordable profit. Yes? If you are all 3 of these in one, you need to consider one income as due you for your time and competence as the professional and manager along with a profit of fifteen to thirty percent due you as the owner. So make certain to include a sensible expense for your supervisory and technical work in the costs part of this formula.
Fixed Rate Method in Law Practice Management Rates
This is the method used by lots of car mechanics (it is called "the flat rate book") and other service providers. This approach is where you identify a set rate for various tasks and charge that rate no matter what. If the mechanic spends less time than allocated for the job, he makes more. He makes less if he invests more time than allotted. In the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example using this method is how managed health care has actually used this system with hospitals and physicians . If they desire, legal representatives can utilize this system.
The " Guideline of Three" in Law Practice Management Rates
This " guideline" called the " guideline of 3" used in law practice management is not what your CPA may tell you and it does not fail you either. Ask your CPA what they consider it and they will like it. To start we are going to be believing in thirds. For the first 3rd we will take the overall amount of salaries/bonuses (not advantages just incomes-- advantages go into the second third coming next) for the income generators and/or timekeepers (this includes you if you are creating profits) and call that our very first 3rd. So build up the salaries of the legal representatives, paralegals, and legal secretaries who generate profits 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 third which we will call your "overhead" ( therefore that 2nd third is $100,000 and do not forget you if you are doing some managing partner type duties because that part of your time goes here in overhead). Then take that same number and we will call that your last third, which we will call gross revenues (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 should charge per billable hour, per repaired rate or how lots of contingency cost cases won to be sure you hit the target we should hit given our first third number times learn the facts here now three (in this example $300,000).
This method reveals you how much per hour you need to charge. If you are the owner of the practice you should have a fair profit as well do not you agree? If this approach is a bit too complicated do feel free to call me and I will help you arrange it out in a few minutes on the phone.
It is a excellent concept to think through all of these prices approaches in identifying your law practice management pricing strategy before setting a cost and moving ahead with a law firm marketing plan to ensure you are completely exploring all options. In another short article I will inform you how to speak to prospective customers so you never have a problem getting the charge you deserve.