Law Practice Management-- How To Determine Your Charges



Determining charges is a difficult law practice management job for many lawyers when thinking through their law firm marketing strategies. In determining costs for particular services, attorneys frequently fall short of what they must charge. When making their law firm marketing strategies, too lots of attorneys are scared of even charging the competitive cost for their services. Further, they make the prices decisions often with no data or conceptual structure. Additionally, rather of focusing their efforts on how they can validate getting leading dollar for what they offer, they charge a fee that is often way too low and often really can scare off prospective clients who think there is something missing out on from a service that is "cheap". In addition numerous lawyers don't understand that most buyers in the market by far are " worth buyers" and not looking for "cheap".

So before you sit down and start analyzing your law practice management pricing technique you require some distinctions around rates commonly used in law office marketing preparation. Add your pricing method to your law firm marketing strategies. You need to be sure that you are charging a adequate cost on everything to ensure you a excellent profit not just a great living. If you just bring in people who want to pay the least expensive fee for a service, do know a law practice management law firm marketing strategy is not efficient. These are not devoted clients. Instead, you wish to focus your law practice management and law office marketing plans on bring in clients who will become long term possessions to the firm. Low rate customers are not developing your base of long term clients I can guarantee you that.

There are basically 4 ways of determining just how much you should be charging for your services. Lets move right into those now.

The Marketplace Method In Law Practice Management Rates

This is one excellent way of figuring out rates. Get your assistant to support you in this law practice management job and invest a long time finding what the variety of rates remains in the neighborhood. Have her do a "mystery consumer" research study by calling around as if he/she were a prospective customer and discover out what your rivals say on the phone to her around prices. She might require to call from her home phone to avoid caller ID. As another choice you might have him/her call other assistants or paralegals at your rivals and provide to exchange your charges for their costs or you might do that with other attorneys yourself in your market. If you actually wish to get into it and have maximum information you can write perhaps a few dozen rivals in your market and say you are doing a fee survey and if they would send you their charge list you will create a composite list that does not recognize those responding and send them a copy of the outcomes. 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. Now you will see what individuals are charging for services similar to those you use. You must be able to create a series of prices. Utilize this range to set costs for your own services. My recommendation in law office marketing planning is to charge at the 75% level of the list. You need to be at or in the top 25% of the costs.

Bear in mind that in general it is not a great law practice management method to compete on rate. The majority of potential customers will see rates that is too low as a signal that there is something missing either from the service, the supplier, or the firm. And individuals who are searching for a low cost will follow that low price anywhere they can discover it instead of ending up being long-term clients. So make sure that your cost covers your expenses and a affordable earnings margin.

The Cost Method in Law Practice Management Prices

This law practice management prices method is extremely straightforward truly. One simply determines what the expenses are to provide service or products and adds on a sensible profit, somewhere in 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 kind of your cost. Solo and small company attorneys tend to not include their own wage!

In law practice management often you count yourself out of the costs and you must include yourself in the expenditures. Often you are doing at least some of the management work. If you are all three of these in one, you need to think about one salary as due you for your time and knowledge as the professional and manager as well as a revenue of fifteen to thirty percent due you as the owner.

Fixed Rate Technique in Law Practice Management Prices

This is the technique utilized by many car mechanics (it is called "the flat rate book") and other service suppliers. This approach is where you figure out a fixed rate for various tasks and charge that rate no matter what. Another example utilizing this approach is how managed health care has actually used this system with doctors and medical facilities .

The "Rule of Three" in Law Practice Management Rates

This "rule of thumb" called the " guideline of 3" 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 consider it and they will like it. To begin we are going view it to be thinking in thirds. For the very first third we will take the total quantity of salaries/bonuses (not benefits just incomes-- advantages enter into the 2nd third following) for the profits generators and/or timekeepers (this includes you if you are producing income) and call that our first 3rd. So accumulate the incomes of the lawyers, paralegals, and legal secretaries who produce income or are timekeepers and call this your first 3rd (lets simply say that number was $100,000 to keep it easy). Whatever that number is take that number once again and it is your 2nd 3rd which we will call your "overhead" ( therefore that 2nd 3rd is $100,000 and do not forget you if you are doing some managing partner type responsibilities because 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 revenues (another $100,000). What you need to do is take the total amount (in this example $300,000) and now determine just how much you should charge per billable hour, per fixed rate or how many contingency cost cases won to be sure you struck the target we must hit provided our very first third number times 3 (in this example $300,000).

This approach shows you how much per hour you require to charge. If you are the owner of the practice you deserve a reasonable profit as well don't you concur? If this method 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 great concept to believe through all of these rates approaches in determining your law practice management pricing technique before setting a cost and moving ahead with a law company marketing strategy to guarantee you are completely exploring all options. In another article I will tell you how to speak to potential clients so you never have a issue getting the fee you are worthy of.

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