When thinking through their law firm marketing strategies, identifying fees is a challenging law practice management task for the majority of lawyers. In determining fees for certain services, lawyers often fall short of what they must charge. When making their law company marketing plans, too lots of attorneys are afraid of even charging the competitive rate for their services. Even more, they make the pricing choices typically with no data or conceptual structure. Additionally, instead of focusing their efforts on how they can validate getting top dollar for what they provide, they charge a fee 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 " low-cost". Furthermore many lawyers do not understand that a lot of buyers in the marketplace by far are " worth buyers" and not trying to find "cheap".
Before you sit down and begin thinking through your law practice management rates strategy you require some distinctions around prices frequently used in law company marketing preparation. Do know a law practice management law firm marketing plan is not effective if you just attract individuals who want to pay the least expensive charge for a service. Instead, you want to focus your law practice management and law firm marketing strategies on drawing in clients who will become long term assets to the company.
There are generally four methods of identifying just how much you must be charging for your services. Lets move right into those now.
The Market Approach In Law Practice Management Prices
Get your assistant to support you in this law practice management job and invest some time finding what the range of rates is in the community. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most common services provided in your practice location. My recommendation in law company marketing preparation 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 complete on cost. The majority of possible customers will see rates that is too low as a signal that there is something missing out on either from the service, the service provider, or the firm. And people who are searching for a low cost will follow that low cost anywhere they can find it instead of becoming long-term clients. So be sure that your rate covers your expenses and a reasonable revenue margin.
The Cost Method in Law Practice Management Rates
This law practice management rates method is extremely straightforward actually. One just identifies what the costs are to deliver product and services and includes on a reasonable revenue, somewhere between fifteen percent at the least and possibly thirty 3 percent at the most. The most common error in law practice management utilizing this technique is to neglect to include some type of your expense. Solo and little firm attorneys tend to not include their own income!
In law practice management typically you count yourself out of the costs and you must 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 think about one salary as due you for your time and competence as the professional and manager as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Approach in Law Practice Management Prices
This is the method used by lots of vehicle mechanics (it is called "the flat rate book") and other service providers. This method is where you identify a set rate for various tasks and charge that rate no matter what. Another example utilizing this method is how managed health care has used this system with healthcare facilities and physicians .
The "Rule of 3" in Law Practice Management Prices
This " guideline" called the " guideline of three" 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 think of it and they will like it. To begin we are going websites to be believing in thirds. For the very first third we will take the total quantity of salaries/bonuses (not advantages just incomes-- advantages go into the 2nd third coming next) for the income generators and/or timekeepers (this includes you if you are generating revenue) and call that our very first third. Add up the wages of the lawyers, paralegals, and legal secretaries who produce revenue or are timekeepers and call this your very first third (lets just say that number was $100,000 to keep it simple). Whatever that number is take that number again and it is your second 3rd which we will call your "overhead" ( therefore that second 3rd is $100,000 and do not forget you if you are doing some handling partner type duties since that part of your time goes here in overhead). Then 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 overall quantity (in this example $300,000) and now find out how much you need to charge per billable hour, per repaired rate or how many contingency cost cases won to be sure you struck the target we need to strike provided our very first 3rd number times three (in this example $300,000).
This approach reveals you just how much per hour you require to charge. Since you know the number of billable hours each income generator can do per month, simply 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 correctly. As long as you strike your targets you will be assured of a 15% to 30% net make money from your operations. If you are the owner of the practice you are worthy of a fair earnings as well do not you concur? This approach is called the Guideline of 3. , if this technique is a bit too confusing do feel complimentary to call me and I will help you arrange it out in a couple of minutes on the phone.
It is a excellent idea to think through all of these pricing approaches in identifying your law practice management pricing method prior to setting a price and continuing with a law office marketing plan to guarantee you are completely checking out all options. Keep in mind the tendency for a lot of attorneys is to price too low. Don't do that! In another article I will inform you how to talk to prospective clients so you never have a problem getting the fee you are worthy of.