Law Practice Management-- How To Identify Your Charges
Identifying costs is a difficult law practice management task for many attorneys when thinking through their law firm marketing strategies. In identifying charges for specific services, attorneys often fall short of what they ought to charge. Too lots of lawyers are scared of even charging the competitive rate for their services when making their law firm marketing strategies.
Prior to you sit down and begin believing through your law practice management rates technique you need some distinctions around rates commonly used in law firm marketing planning. Then add your pricing technique to your law practice marketing plans. You need to be sure that you are charging a enough cost on whatever to ensure you a great revenue not just a great living. If you just draw in individuals who want to pay the least expensive cost for a service, do know a law practice management law firm marketing plan is not effective. These are not loyal clients. Instead, you wish to focus your law practice management and law practice marketing intend on drawing in clients who will end up being long term assets to the firm. Low price customers are not developing your base of long term clients I can guarantee you that.
There are basically 4 methods of determining how much you should 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 neighborhood. To keep it easy for them consist of a stamped, self-addressed envelope with a list of the most common services used in your practice area. My recommendation in law company marketing preparation is to charge at the 75% level of the list.
Keep in mind that in basic it is not a good law practice management technique to complete on price. Most prospective customers will see pricing that is too low as a signal that there is something missing either from the service, the provider, or the firm. And individuals who are looking for a low cost will follow that low cost any place they can find it rather than ending up being long-term clients. So make sure that your cost covers your expenses and a reasonable revenue margin.
The Cost Method in Law Practice Management Pricing
This law practice management prices method is really uncomplicated actually. One just determines what the costs are to provide products or services and includes on a reasonable earnings, someplace between fifteen percent at the least and possibly thirty three percent at the most. The most typical error in law practice management using this approach is to overlook to include some kind of your cost. Solo and little company attorneys tend to not include their own wage!
In law practice management typically you count yourself out of the expenditures and you must include yourself in the costs. Frequently you are doing at least some of the management work. If you are all 3 of these in one, you must consider one wage as due you for your time and proficiency as the technician and supervisor as well as a revenue of fifteen to thirty percent due you as the owner.
Fixed Rate Method in Law Practice Management Rates
This is the technique used by numerous car mechanics (it is called "the flat rate book") and other company. This approach is where you identify a set rate for various jobs and charge that rate no matter what. He makes more if the mechanic spends less time than set aside for the job. He makes less if he spends more time than allotted. In the end, it all evens out (well, generally to the mechanics' favor if you ask me). Another example utilizing this method is how managed health care has actually used this system with physicians and medical facilities . Lawyers can use this system if they want.
The "Rule of Three" in Law Practice Management Pricing
This " guideline" called the " guideline of 3" used in law practice management is not what your CPA may tell you and it does not fail you either. Ask your Certified Public Accountant what they think of it and they will like it. To start we are going to be believing in thirds. For the first 3rd we will take the total quantity of salaries/bonuses (not advantages just wages-- benefits go into the second 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are generating earnings) and call that our first 3rd. So build up the salaries of the lawyers, paralegals, and legal secretaries who produce income or are timekeepers and 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 once again and it is your second 3rd which we will call your "overhead" (thus that second third is $100,000 and don't forget you if you are doing some managing partner type tasks 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 overall quantity (in this example $300,000) and now find out just how much you need to charge per billable hour, per repaired rate or how numerous contingency charge cases won to be sure you hit the target we must hit given our first 3rd number times 3 (in this example $300,000).
This technique reveals you how much per hour you require to charge. If you are the owner of the practice you deserve a reasonable revenue as well don't you agree? If this method is a bit too confusing do feel free to call me and I will assist you sort it out in a few minutes on the phone.
It is a good concept to analyze all of these rates techniques in determining your law practice see page management rates method prior to setting a cost and continuing with a law firm marketing plan to guarantee you are thoroughly checking out all alternatives. Remember the propensity for the majority of attorneys is to price too low. Do not do that! In another post I will tell you how to speak to potential customers so you never have a issue getting the charge you are worthy of.