Law Practice Management-- How To Determine Your Charges
Identifying costs is a tough law practice management job for many attorneys when believing through their law firm marketing strategies. In figuring out charges for particular services, attorneys often fall brief of what they need to charge. Too lots of attorneys are scared of even charging the competitive price for their services when making their law firm marketing plans.
Prior to you sit down and begin thinking through your law practice management rates technique you require some distinctions around pricing commonly utilized in law company marketing planning. Do understand a law practice management law company marketing plan is not effective if you only attract individuals who want to pay the lowest charge for a service. Instead, you want to focus your law practice management and law company marketing plans on attracting clients who will become long term assets to the firm.
There are basically 4 ways of figuring out how much you should be charging for your services. Lets move right into those now.
The Marketplace Technique In Law Practice Management Pricing
Get your assistant to support you in this law practice management job and invest some time discovering what the variety of prices is in the community. To keep it simple for them consist of a stamped, self-addressed envelope with a list of the most typical services provided in your practice area. My recommendation in law company marketing preparation is to charge at the 75% level of the list.
Remember that in general it is not a good law practice management technique to complete on cost. Most possible customers will see pricing that is too low as a signal that there is something missing either from the service, the company, or the company.
The Expense Technique in Law Practice Management Prices
This law practice management pricing approach is very straightforward actually. One simply determines what the expenses are to deliver services or items and includes on a reasonable profit, someplace between fifteen percent at the least and possibly thirty three percent at the most. The most common mistake in law practice management utilizing this technique is to overlook to include some form of your cost. Solo and little firm lawyers tend to not include their own salary!
In law practice management frequently you count yourself out of the expenses and you ought to include yourself in the expenditures. Frequently you go now are doing at least some of the management work. If you are all 3 of these in one, you should consider one salary as due you for your time and know-how 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 Pricing
This is the method used by many car mechanics (it is called "the flat rate book") and other service companies. This technique is where you identify a fixed rate for various tasks and charge that rate no matter what. Another example utilizing this approach is how handled health care has actually utilized this system with healthcare facilities and physicians .
The " Guideline of 3" in Law Practice Management Pricing
This " general rule" called the " guideline of three" used in law practice management is not what your Certified Public Accountant might inform 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 to be believing in thirds. For the first third we will take the overall amount of salaries/bonuses (not benefits simply incomes-- advantages go into the 2nd 3rd coming next) for the earnings generators and/or timekeepers (this includes you if you are producing earnings) and call that our first 3rd. So add up the incomes of the attorneys, paralegals, and legal secretaries who produce profits or are timekeepers and call this your first third (lets just 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 reference that second 3rd is $100,000 and don't forget you if you are doing some handling partner type duties because that part of your time goes here in overhead). Then take that same number and we will call that your last third, which we will call gross profits (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 need to charge per billable hour, per fixed rate or the number of contingency cost cases won to be sure you struck the target we must strike provided our first third number times three (in this example $300,000).
This approach reveals 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 agree? If this method 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 pricing approaches in identifying your law practice management prices technique prior to setting a cost and continuing with a law company marketing strategy to ensure you are thoroughly exploring all options. Remember the tendency for many attorneys is to price too low. Don't do that! In another article I will tell you how to speak with prospective clients so you never ever have a problem getting the charge you deserve.