Law Practice Management-- How To Determine Your Fees
Figuring out costs is a tough law practice management task for most lawyers when thinking through their law firm marketing plans. In figuring out fees for particular services, attorneys typically fall short of what they need to charge. Too numerous attorneys are scared of even charging the competitive rate for their services when making their law firm marketing plans.
Before you sit down and start thinking through your law practice management pricing strategy you require some distinctions around prices frequently used in law company marketing preparation. Do know a law practice management law company marketing plan is not reliable if you only draw in people who want to pay the least expensive cost for a service. Instead, you desire to focus your law practice management and law firm marketing plans on drawing in clients who will become long term properties to the firm.
There are essentially 4 ways of identifying just how much you should be charging for your services. Lets move right into those now.
The Marketplace Method 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 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 recommendation in law firm marketing preparation is to charge at the 75% level of the list.
Bear in mind that in general it is not a great law practice management technique to complete on rate. Most prospective clients will see rates 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 searching for a low price will follow that low price wherever they can discover it rather than ending up being long-lasting customers. Be sure that your cost covers your costs and a reasonable profit margin.
The Cost Technique in Law Practice Management Prices
This law practice management prices technique is very straightforward actually. One just identifies what the costs are to provide services or products and includes on a reasonable revenue, someplace between fifteen percent at the least and possibly thirty three percent at the most. The most common error in law practice management utilizing this technique is to overlook to include some type of your expenditure. Solo and small firm lawyers tend to not include their own wage!
In law practice management often you count yourself out of the costs and you need to include yourself in the expenses. Typically you are doing at least some of the management work. If you are all three of these in one, you should consider one wage as due you for your time and expertise as the professional and manager as well as a earnings of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Rates
This is the technique used by lots of vehicle mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you figure out a fixed rate for various jobs and charge that rate no matter what. Another example utilizing this technique is how managed health care has used this system with healthcare facilities and medical professionals .
The "Rule of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of 3" utilized in law practice management is not what your CPA may tell you and it does not fail you either. For the very first 3rd we will take the total amount of salaries/bonuses my latest blog post (not advantages just wages-- advantages go into the second 3rd coming next) for the profits generators and/or timekeepers (this includes you if you are generating earnings) and call that our first 3rd. What you need to do is take the total quantity (in this example $300,000) and now figure out how much you must charge per billable hour, per repaired rate or how numerous contingency cost cases won to be sure you struck the target see we should hit given our very first 3rd number times 3 (in this example $300,000).
This method shows you how much per hour you require to charge. If you are the owner of the practice you should have a reasonable profit as well don't you concur? If this approach is a bit too confusing do feel free to call me and I will help you sort it out in a couple of minutes on the phone.
It is a great idea to analyze all of these prices methods in identifying your law practice management rates technique prior to setting a cost and moving ahead with a law firm marketing strategy to ensure you are completely exploring all alternatives. Remember the propensity for many lawyers is to price too low. Do not do that! In another article I will tell you how to speak with prospective customers so you never have a problem getting the cost you deserve.