Your law firm is broke. Fix this & double your profit
Are you charging enough for your legal services?
Most law firm owners undercharge… and it is killing their profitability.
The truth is, that small price increases can exponentially impact your bottom line without affecting conversion rates.
In this episode, we reveal the Zero and Five Rule, a simple pricing strategy that helped take a Phoenix-based law firm from $0 to $3.5M and allowed the owner to take a month-long vacation for the first time.
What You’ll Learn:
- The biggest mistake law firm owners make when setting their fees
- How to strategically increase prices without losing clients
- The Zero and Five Rule: The simple method to maximize profit without scaring off prospects
- How one attorney doubled his profit in six months - and ultimately retired early
If your firm is making six or seven figures in revenue but your profit margins are thin, this episode will change how you think about pricing forever.
And if you want help applying this to your firm? Visit LawFirmSecret.com for a free strategy session.
Transcript
YPM EP096 - Your law firm is broke? Fix this & double your profit
: [:riverside_richard_james_raw-audio_your_practice maste_0389: A hundred percent growth in your profit.
riverside_richard_james_raw-audio_your_practice maste_0389: and you're gonna be able to do that by using one simple strategy.
riverside_richard_james_raw-audio_your_practice maste_0389: When I was in the law firm in Phoenix and I grew it from $0 USD to three and a half million USD in just a couple of years, the owner of that firm got to take a month long vacation for the first time in his career.
riverside_richard_james_raw-audio_your_practice maste_0389: We were profitable.
riverside_richard_james_raw-audio_your_practice maste_0389: How did we do that?
riverside_richard_james_raw-audio_your_practice maste_0389: We paid attention to one fact.
riverside_richard_james_raw-audio_your_practice maste_0389: Let's break it down.
riverside_richard_james_raw-audio_your_practice maste_0389: The first thing that we did, was we increased prices.
riverside_richard_james_raw-audio_your_practice maste_0389: It's that simple?
riverside_richard_james_raw-audio_your_practice maste_0389: Yeah!
riverside_richard_james_raw-audio_your_practice maste_0389: As a law firm owner, you are likely not charging enough.
riverside_richard_james_raw-audio_your_practice maste_0389: I know that you're likely not because I talk to 150 of you every single month.
riverside_richard_james_raw-audio_your_practice maste_0389: I've worked with over a thousand of owners of law firms just like you, and I've helped them to accomplish this goal of increasing your fees.
r the trustee, that is going [:riverside_richard_james_raw-audio_your_practice maste_0389: Maybe you think if you charge too much, your clients aren't going to retain your firm.
riverside_richard_james_raw-audio_your_practice maste_0389: The truth is
riverside_richard_james_raw-audio_your_practice maste_0389: you can build a law firm that determines who the most expensive provider is in your town and charge more than them.
: Back in:And most people would think that I would check the prices out and then I would charge less because I wanted to beat them on price.
riverside_richard_james_raw-audio_your_practice maste_0389: But I didn't. I found out what their price was, and then I charged 10% more.
riverside_richard_james_raw-audio_your_practice maste_0389: Why? Because at a very early age, I had figured out, in order to give the proper level of service to the families that I was serving, I needed to have enough labor.
riverside_richard_james_raw-audio_your_practice maste_0389: To make things look good, I needed capital to invest in equipment and upkeep of the funeral home.
I needed to make sure that I [:riverside_richard_james_raw-audio_your_practice maste_0389: So all I had to do was raise fees, and then I was able to create more margin, which allowed me to serve clients better. That's the secret.
Hey, look, if you're stuck trying to figure out how to raise your prices and you want some advice as to how you could do it, we're happy to look under the hood of your firm and show you exactly how you can do it step by step. Just go visit the law firm secret.com and schedule 10 minutes with us and we'll start the conversation.
riverside_richard_james_raw-audio_your_practice maste_0389: when I started teaching this to lawyers 15 years ago, Rick West was one of the first attorney I told this to.
riverside_richard_james_raw-audio_your_practice maste_0389: He told me rich, there's no way I can charge more than I'm charging.
riverside_richard_james_raw-audio_your_practice maste_0389: all my competitors are charging about this average and right where they are charging.
riverside_richard_james_raw-audio_your_practice maste_0389: I knew he was losing money on every case.
riverside_richard_james_raw-audio_your_practice maste_0389: he wondered how I could accomplish this goal. So I shared with him the story of what I did in Phoenix.
m there, was averaging about [:riverside_richard_james_raw-audio_your_practice maste_0389: I knew, because I had worked with law firms long enough, what it cost us to put a case out the door, it was right around $1,100 USD.
riverside_richard_james_raw-audio_your_practice maste_0389: Which means if I charged a thousand dollars a case like my competitor, I was losing a thousand dollars every time we sold a case.
riverside_richard_james_raw-audio_your_practice maste_0389: So I needed to reverse engineer this based on what percentage of the revenue I was gonna collect, the sales that I made, what percentage I was actually gonna collect, and what I wanted my margin to be.
riverside_richard_james_raw-audio_your_practice maste_0389: Once I was able to do that, I was able to see that I couldn't charge a thousand dollars. I had to actually charge $2,300 USD
riverside_richard_james_raw-audio_your_practice maste_0389: most people told me I was out of my mind, But We actually closed 72% of our deals at the highest price.
riverside_richard_james_raw-audio_your_practice maste_0389: Why is that? Well, it's all about the processes and systems you use to market, generate leads and convert those leads into sales.
riverside_richard_james_raw-audio_your_practice maste_0389: And so once you have a confidence in your lead generation and lead conversion machines,
u can safely start to charge [:So let's break this in two primary categories.
riverside_richard_james_raw-audio_your_practice maste_0389: Contingency based fees are not in this conversation unless you're a discount provider.
riverside_richard_james_raw-audio_your_practice maste_0389: But For this argument, we're talking about two fundamental types of fees, flat fees or hourly.
riverside_richard_james_raw-audio_your_practice maste_0389: What I need to teach you is the rules of fives and zeros.
riverside_richard_james_raw-audio_your_practice maste_0389: When we cross over a five, we can raise the price up until we stop short of the next zero.
riverside_richard_james_raw-audio_your_practice maste_0389: If we cross over zero, we can raise prices until we fall short of the next five.
under the five would be like:riverside_richard_james_raw-audio_your_practice maste_0389: My next stop is short of the zero. So 2000 would be my next zero, which means I can charge right up to 1995. And I won't notice one single difference in conversion.
: Now, if you are a, [:riverside_richard_james_raw-audio_your_practice maste_0389: You could raise prices to $395 an hour. And you could have zero difference in conversion.
riverside_richard_james_raw-audio_your_practice maste_0389: If you charge $2,500 USD for a retainer, you can charge $2,995 just raise your prices.
riverside_richard_james_raw-audio_your_practice maste_0389: Using the fives in the zero rule, you are going to likely see a five to possibly 15% increase in pricing.
riverside_richard_james_raw-audio_your_practice maste_0389: So let's say that you are generating a hundred thousand dollars a month in gross sales.
riverside_richard_james_raw-audio_your_practice maste_0389: And a true fact is that most law firms are keeping less than 10%, that means on this a hundred thousand dollars firm. This law firm is keeping $10,000 a month.
riverside_richard_james_raw-audio_your_practice maste_0389: Now, if we increase our prices using zeros and fives, it should yield us a 10% increase in gross sale value.
riverside_richard_james_raw-audio_your_practice maste_0389: when you increase the gross sale value by raising your price,
nothing to increase overall [:riverside_richard_james_raw-audio_your_practice maste_0389: When I increase my fees by 10%, I increase them to $110,000 a month, which means because my cost stayed the same, I now have $20,000 a month in net income.
riverside_richard_james_raw-audio_your_practice maste_0389: The difference between this and this is one hundred percent.
riverside_richard_james_raw-audio_your_practice maste_0389: the path to growing your profit by a hundred percent is raising that top side number of what you charge, which will have a massive difference in your bottom line profitability.
riverside_richard_james_raw-audio_your_practice maste_0389: most law firms don't keep what they should be keeping to the bottom line.
riverside_richard_james_raw-audio_your_practice maste_0389: Law firms should be keeping 25 to 35% total owners benefit to the bottom line.
to the business, cell phone, [:riverside_richard_james_raw-audio_your_practice maste_0389: if you want to grow your firm to the next level, you want to double your profit, start by increasing your fees, shop the competition figure out what they're charging, then charge 10% more.
riverside_richard_james_raw-audio_your_practice maste_0389: I promise you, if you do this one thing, you're gonna have your very best year ever.
riverside_richard_james_raw-audio_your_practice maste_0389: By the way, Rick West saw me not long ago at a convention. Rick said, I just wanna shake your hand and say thank you. It's been 10 years since the time that you and I first met. And when you told me to raise my prices, I thought you were crazy.
riverside_richard_james_raw-audio_your_practice maste_0389: I wanted Rick to double his prices, but Rick didn't want to So we set a goal for Rick to increase the prices slowly.
riverside_richard_james_raw-audio_your_practice maste_0389: By the six months in, Rick had raised his prices by a hundred percent, selling his services at a much higher value. Now, theoretically Rick could have did half the business for twice the money and still did just as well for himself, but He actually did the same amount of business at Double the Money, which meant his profit margin went through the roof,
: [:riverside_richard_james_raw-audio_your_practice maste_0389: You can grow your firm profitably too. Let's start by raising our prices.
Hey, look, if you're stuck trying to figure out how to raise your prices and you want some advice as to how you could do it, we're happy to look under the hood of your firm and show you exactly how you can do it step by step. Just go visit the law firm secret.com and schedule 10 minutes with us and we'll start the conversation.
