Law Practice Management-- How To Identify Your Costs
Figuring out costs is a challenging law practice management task for a lot of lawyers when thinking through their law firm marketing strategies. In determining costs for certain services, lawyers typically fall short of what they need to charge. Too numerous lawyers are scared of even charging the competitive rate for their services when making their law company marketing strategies.
Before you sit down and begin believing through your law practice management rates strategy you need some differences around prices frequently used in law firm marketing preparation. Then add your pricing strategy to your law firm marketing plans. You require to be sure that you are charging a adequate fee on whatever to ensure you a good revenue not simply a good living. Do know a law practice management law practice marketing strategy is not efficient if you only draw in individuals who want to pay the lowest cost for a service. These are not faithful clients. Instead, you want to focus your law practice management and law firm marketing plans on attracting clients who will end up being long term possessions to the company. Low rate clients are not building your base of long term customers I can promise you that.
There are generally four methods 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 Prices
Get your assistant to support you in this law practice management task and spend some time discovering what the range of pricing is in the neighborhood. To keep it basic for them consist of a stamped, self-addressed envelope with a list of the most common services offered in your practice area. My suggestion in law firm marketing planning is to charge at the 75% level of the list.
Keep in mind that in basic it is not a good law practice management strategy to complete on cost. Many potential customers will see pricing that is too low as a signal that there is something missing out on either from the service, the company, or the firm.
The Expense Technique in Law Practice Management Pricing
This law practice management prices method is extremely straightforward actually. The most typical mistake in law practice management using this technique is to disregard to include some kind of your expense.
In law practice management typically you count yourself out of the expenditures and you must include yourself in the expenditures. Typically you are doing at least some of the management work. If you are all three of these in one, you must think about one income as due you for your time and know-how as the technician and supervisor as well as a profit of fifteen to thirty percent due you as the owner.
Fixed Rate Technique in Law Practice Management Prices
This is the technique used by many automobile mechanics (it is called "the flat rate book") and other company. This method is where you figure out a fixed rate for numerous jobs and charge that rate no matter what. If the mechanic invests less time than allotted for the task, he makes more. He makes less if he spends more time than allotted. However in the end, all of it levels (well, usually to the mechanics' favor if you ask me). Another example utilizing this technique is how handled healthcare has utilized this system with medical professionals and healthcare facilities . Attorneys can use this system if they prefer.
The " Guideline of 3" in Law Practice Management Pricing
This "rule of thumb" called the "rule of 3" used in law practice management is not what your CPA might tell you and it does not fail you either. Ask your Certified Public Accountant what they think about it and they will like it. To start we are going to be believing in thirds. For the very first third we will take the total amount of salaries/bonuses (not benefits simply salaries-- benefits go into the second 3rd following) for the revenue generators and/or timekeepers (this includes you if you are creating revenue) and call that our first third. Include up the wages of the lawyers, paralegals, and legal secretaries who produce profits or are timekeepers and call this your very first 3rd (lets just say that number was $100,000 to keep it easy). Whatever that number is take that number again and it is your second third which we will call your "overhead" (thus that second third is $100,000 and do not forget you if you are doing some handling like it partner type tasks 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 earnings (another $100,000). What you require 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 repaired rate or how many contingency fee cases won to be sure you struck the target we should strike provided our first 3rd number times three (in this example $300,000).
This technique shows you how much per hour you require to charge. If you are the owner of the practice you should have a fair revenue as well do not you agree? If this method is a bit too complicated do feel totally free to contact me and I will assist you sort it out in a couple of minutes on the phone.
It is a good concept to analyze all of these pricing techniques in identifying your law practice management rates strategy before setting a cost and continuing with a law practice marketing strategy to ensure you are thoroughly exploring all alternatives. Keep in mind the propensity for many attorneys is to price too low. Do not do that! In another post I will inform you how to speak with potential clients so you never have a problem getting the charge you are worthy of.