Billing by the hour is all many of us know. The idea is embedded in our psyche as early as law school, when we hear stories of friends who get jobs in big law and have comically large billable hour requirements to make partner.
But, probably for as long as the billable hour has existed, people have questioned whether it is the most efficient way of billing. As a system, it incentivizes lawyers to create more work and work more slowly. For those of us who steadfastly avoid the billable hour, we often find that our flat-rate and subscription clients adore us and our predictable fees, but opposing counselors annoy us.
We quickly come to dread having a lawyer on the other side of the transaction because they will—intentionally or not—create more work and more issues, require multiple meetings and emails to get the simplest of things done and move with the urgency of a drunk snail.
What alternatives are there? Well, in addition to the aforementioned flat fee, many lawyers are turning to the subscription model—a sort of variant of the retainer model where the client pays you a fixed amount every month and smaller routine matters are included without worrying about a lawyer grabbing a stopwatch or a timer every time the client sends over an email or text.
There are a plethora of reasons to look at this alternative business structure. For one, as software and AI become more advanced, more and more of the simple legal matters are going to disappear from our desks. Further, mini-revolutions in states such as Arizona and Utah point towards a future where non-lawyers may own law firms and run them more like software companies—creating more competition. These states and others are also opening the door to non-lawyer legal paraprofessionals, who are often allowed to represent clients in non-litigation matters. This isn’t the future—this is actually the present, though it has only taken hold in a couple of states so far.
Further, even if you like the billable hour, this entire subscription model can be viewed as a marketing and lead generation tactic: by automating trivial documents, creating a bank of resources, and being the go-to person for your clients on smaller legal matters, when larger cases that do require billable hours arise, you will be the first person that they call. Many BigLaw firms have already figured this out, providing low-cost or free services to startups via legal clinics in hopes of getting their more advanced billable work when that company pops an IPO in a few years. And don’t forget: most lawyers who have experimented with the subscription law firm model only include very minor legal issues and consultations in their subscription—this won’t be an all-you-can-eat litigation nightmare.
The last point here is that a subscription model also benefits clients—and not just the clients who are trying to get more legal help for less money. For clients who have a lawyer on call for routine matters and quick consults, the old adage about an ounce of prevention being worth a pound of cure will ring true over and over again. These clients will bring minor issues to you before they snowball into massive litigation costs. And if you are the rare lawyer that saves them on legal fees by avoiding the bigger problem in the first place, that trust will go a long way towards keeping your professional relationship going.
The question that is probably on every lawyers’ mind, (after the question of the finances), is whether or not this is ethical.
Megan Zavieh, a legal ethics attorney, has her own subscription practice. On her ethics podcast, she discussed some of the issues that one may run into while launching a subscription legal practice. The biggest? Billing but providing nothing in return. The idea of getting money every month from a client is great—that’s how the Netflix-es and Spotifys of the world survive, not to mention your local gym—but unlike those businesses, we cannot take legal fees and provide nothing in return. See ABA Model Rule 1.5, which states that a lawyer’s fee must be reasonable.
As mentioned above, this is yet another strong reason to have that bank of resources available for subscribers. They not only receive access to an attorney for basic legal needs but also receive all of these resources that don’t require a lawyer to create more work every month to justify her fee.
Another major ethics issue to keep in mind is limited scope representation agreements. From a client service standpoint, having a clear limited scope agreement will hopefully minimize instances where clients try to wedge issues that are outside of the subscription into their monthly fee. But in addition, most states allow these limited scope agreements under their ethics rules as protection for both the lawyer and the client. As with all ethics issues, your state’s rules may vary so do the research or consult an ethics attorney before diving headfirst into a subscription model.
The main consideration when setting up a subscription law firm is that preparation is almost the entire game. If you jump into the practice of law in a subscription model, using your traditional methods and tools, you will find yourself overwhelmed pretty quickly. The name of the game is now efficiency, and having a bank of resources that you can pull on or provide to clients at a moment’s notice is the key to winning.
For example, one of the biggest proponents of legal subscriptions is Jon Tobin of Counsel for Creators. In a recent podcast interview, he explained that he not only provides rudimentary legal services as part of the subscription, but he also maintains a bank of webinars and forms, and other tools for his clients to use. Not only do they get the value of having a lawyer on call—but they have a bank of vetted legal resources at their fingertips that may help them avoid legal issues down the road.
If you are considering a subscription firm, brainstorm what resources would be useful to your subscribers. Would webinars be helpful? Would sample purchase orders or other routine contracts for matters too trivial to cross a lawyer’s desk be something they would find helpful? What about checklists or how-to guides?
Map all of that out for your resource bank. In addition, consider carefully what legal services you will include in the subscription. Obviously, you don’t want high-stakes litigation included—transactional non-litigation matters are a better fit for the subscription model. And you’ll probably want to explicitly exclude ultra-complex matters. But you may want to include routine things like the classic angry lawyer letter, contract review, or 15-minute drop-in phone consults. As for managing these resources and producing letters and contracts at a moment’s notice, you’ll need to build a tool chest for efficiently producing documents.
Creating a new business model does not have to be expensive, though it will be time-consuming. Tobin, the lawyer we mentioned previously, says that he actually mostly shut down his firm for a couple of months to reprogram everything.
We’ve mentioned document automation—a favourite topic for Rally—and indeed, document automation is one of the quickest ways to rapidly increase the efficiency of your firm. Rally actually makes it easy for you to automate your documents and run your own document generation portal for your clients. Imagine being able to offer your subscription clients a menu of document types that they can generate on their own without even contacting your firm. That alone would be worth the cost to the client of a subscription.
Billing is obviously an important question as well. Most traditional practice management software platforms are not set up for monthly automated invoicing. Instead, if you try to create an invoice, you will be greeted with a screen asking you to input the number of billable hours. If you want an easy and free standalone billing platform, Wave Apps not only has invoicing and recurring invoicing (free), but it also offers business accounting (free) and payment processing (transactional fees, like every other card processor).
If you are considering a subscription practice, the first step is to look into building that bank of resources, as well as any other way you can dramatically increase the speed at which you provide services to clients. Law runs on paperwork, so document automation will likely be the most important hub of a subscription practice.
See how Rally can help you offer subscription billing, starting with document generation solutions for your firm and for your clients, as well as easily integrating with your website to reduce the administrative time it takes to help your clients with trivial matters.
Scaling your productivity and practice is a matter of picking the right tools that exponentially increase your productivity while at the same time don’t require a computer science degree to operate or set up. Once you see how easy it is to build your own document platform, the idea of abandoning the billable hour may not seem so crazy at all.
Stay on the leading edge of legal innovation and legal client experience.