Law Practice Management-- How To Identify Your Fees
Identifying costs is a tough law practice management job for most attorneys when thinking through their law company marketing strategies. In figuring out costs for certain services, lawyers typically fall brief of what they should charge. Too many attorneys are scared of even charging the competitive cost for their services when making their law firm marketing strategies.
Prior to you sit down and start thinking through your law practice management pricing technique you need some differences around pricing frequently utilized in law company marketing planning. Do understand a law practice management law firm marketing strategy is not efficient if you only bring in people who want to pay the lowest charge for a service. Instead, you want to focus your law practice management and law company marketing strategies on drawing in customers who will end up being long term possessions to the company.
There are basically four methods of determining just how much you ought to be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Rates
Get your assistant to support you in this law practice management job and invest some time discovering what the range of rates is in the neighborhood. To keep it simple for them include a stamped, self-addressed envelope with a list of the most common services used 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 excellent law practice management technique to compete on cost. Most possible customers will see pricing that is too low as a signal that there is something missing either from the service, the company, or the company. And individuals who are looking for a low rate will follow that low rate any place they can discover it rather than ending up being long-term customers. Be sure that your rate covers your costs and a sensible profit margin.
The Expense Method in Law Practice Management Rates
This law practice management prices method is really straightforward actually. The most common error in law practice management using this approach 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 ought to include yourself in the expenses. Why? Typically you are doing at least a few of the technical work. Yes? Often you are doing at least some of the management work. Yes? As the owner of the company you are due a sensible revenue. Yes? If you are all 3 of these in one, you ought to think about one wage as due you for your time and expertise as the professional and manager along with a earnings of fifteen to thirty percent due you as the owner. Be sure to include a affordable expense for your technical and supervisory work in the expenditures part of this formula.
Fixed Rate Method in Law Practice Management Prices
This is the approach utilized by numerous car mechanics (it is called "the flat rate book") and other service providers. This technique is where you identify a set rate for numerous tasks and charge that rate no matter what. Another example utilizing this method is how handled health care has utilized this system with medical professionals and medical facilities .
The "Rule of Three" in Law Practice Management Pricing
This " guideline" called the " guideline of three" utilized in law practice management is not what your CPA might tell you and it does not fail you either. Ask your CPA what they think about it and they will like it. To start we are going to be thinking in thirds. For the very first 3rd we will take the total amount of salaries/bonuses (not benefits just salaries-- advantages go into the 2nd 3rd coming next) my sources for the profits generators and/or timekeepers (this includes you if you are creating earnings) and call that our first 3rd. Include up the incomes of the attorneys, paralegals, and legal secretaries who create revenue or are timekeepers and call this your first 3rd (lets simply state that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your 2nd 3rd which we will call your "overhead" (thus that 2nd third is $100,000 and don't forget you if you are doing some handling partner type responsibilities because that part of your time goes here in overhead). Take that exact same number and we will call that your last 3rd, which we will call gross profits (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 must charge per billable hour, per repaired rate or the number of contingency cost cases won to be sure you hit the target we should strike provided our very first 3rd number times three (in this example $300,000).
This method shows you how much per hour you require to charge. Considering that you understand the number of billable hours each profits generator can do each month, just divide that into your total of all thirds ($300,000) to see what you require to charge per billable hour to make your numbers come out properly. As long as you strike your targets you will be guaranteed of a 15% to 30% net profit from your operations. If you are the owner of the practice you deserve a fair earnings as well don't you concur? This method is understood as the Guideline of Three. , if this technique is a bit too complicated do feel complimentary to contact me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent concept to believe through all of these rates methods in identifying your law practice management rates technique before setting a price and moving ahead with a law firm marketing strategy to ensure you are thoroughly exploring all alternatives. In another article I will inform you how to speak to possible customers so you never ever have a problem getting the fee you are worthy of.