Micha Smith is a young attorney who has decided to leave her current employer an
ID: 2378028 • Letter: M
Question
Micha Smith is a young attorney who has decided to leave her current employer and set up her own law practice. She has prepared the following monthly cost estimates.
Salary of Legal Secretary.....$3000
Office rent and utilities........$1,200
Other costs ..........$1,500
Total cost ..........$5700
Micha would like to earn $3,300 a month and feels that she will be able to bill 150 hours of her time per month to clients.
Required:
a. Assuming that Micha is correct in her estimates, what fee/hr should Micha charge her clients?
b. At the fee calculated in (a) what would Micha earn in a month in which her time charged to clients was only 100 hours? Assume that all costs are fixed.
Explanation / Answer
Total Monthly costs == 5700 Micha's Salary = 3300 ------------------------------ Total Monthly income needed = 9000 Micha can bill 150 hrs pm. So Micha hrly rate = Total Income needed/No of hrs = 9000/150 = $60 per hr .....Ans (a) If Micha could bill for 100 hrs only, her income will be 100*$60 = $6000 So Post her expenses of 5700, she wil have $300 to herself.