Law Practice Management-- How To Determine Your Charges
When thinking through their law company marketing strategies, figuring out costs is a difficult law practice management task for a lot of lawyers. In identifying costs for specific services, attorneys typically fall brief of what they need to charge. When making their law firm marketing strategies, too numerous attorneys are afraid of even charging the competitive rate for their services. Even more, they make the rates choices often with no information or conceptual framework. In addition, instead of focusing their efforts on how they can justify getting top dollar for what they offer, they charge a charge that is typically way too low and frequently in fact can frighten potential clients who believe there is something missing from a service that is " inexpensive". In addition lots of attorneys don't understand that most buyers in the market without a doubt are " worth buyers" and not looking for " inexpensive".
Before you sit down and begin thinking through your law practice management prices strategy you need some distinctions around prices frequently used in law company marketing preparation. Do know a law practice management law firm marketing strategy is not reliable if you just attract people who want to pay the least expensive charge 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 possessions to the firm.
There are basically 4 methods of identifying just how much you need 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 spend some time finding what the range of prices is in the community. To keep it basic for them include a stamped, self-addressed envelope with a list of the most typical services provided in your practice area. My recommendation in law company marketing planning is to charge at the 75% level of the list.
Remember that in general it is not a excellent law practice management strategy to compete on price. Most prospective clients will see prices that is too low as a signal that there is something missing out on either from the service, the provider, or the firm.
The Expense Technique in Law Practice Management Rates
This law practice management pricing method is very simple truly. One simply identifies what the costs are to provide services or items and includes on a affordable revenue, somewhere between fifteen percent at the least and perhaps thirty three percent at the most. The most common error in law practice management using this technique is to neglect to consist of some form of your expense. Solo and little firm lawyers tend to not include their own wage!
In law practice management typically you count yourself out of the costs and you need to include yourself in the expenditures. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you must consider one salary as due you for your time and know-how as the specialist and manager as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Pricing
This is the approach used by many automobile mechanics (it is called "the flat rate book") and other service suppliers. This technique is where you identify a fixed rate for various jobs and charge that rate no matter what. Another example utilizing this technique is how managed health care has utilized this system with medical professionals and medical facilities .
The "Rule of 3" in Law Practice Management Rates
This " guideline" called the "rule of three" used in law practice management is not what your Certified Public Accountant might tell you and it does not fail you either. Ask your CPA what they think of it and they will like it. To start we are going to be thinking in thirds. For the first 3rd we will take the overall quantity of salaries/bonuses (not benefits simply salaries-- benefits go into the second third coming next) for the profits generators and/or timekeepers (this includes you if you are producing profits) and call that our first 3rd. Add up the incomes of the attorneys, paralegals, and legal secretaries who produce earnings or are timekeepers and Homepage call this your very first third (lets simply state that number was $100,000 to keep it simple). Whatever that number is take that number again and it is your 2nd third which we will call your "overhead" (thus that second 3rd is $100,000 and don't forget you if you are doing some handling partner type responsibilities since that part of your time goes here in overhead). Take that 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 must charge per billable hour, per fixed rate or how lots of contingency fee cases won to be sure you struck the target we should hit given our first third number times 3 (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 reasonable revenue as well don't you concur? If this technique is a bit too confusing do feel complimentary to call me and I will help you sort it out in a couple of minutes on the phone.
It is a good idea to think through all of these pricing methods in identifying your law practice management pricing strategy prior to setting a rate and moving ahead with a law firm marketing strategy to ensure you are thoroughly exploring all options. In another post I will tell you how to speak to potential clients so you never ever have a issue getting the cost you should have.