Subscription Legal Services: A Niche for Small Law Firms – Interview with Andrew Legrand, founder of Spera Law

September 24, 2021

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Andrew Legrand has been doing subscriptions for a while. And when I say a while, I mean he's been a pioneer of the subscription model for law.

Since starting his practice over a decade ago he's experimented with various alternative fee agreements, looking for the right fit for his firm.

As an entrepreneur, he's been bold, taking new and innovative routes in law without a clear path laid out before him. As a lawyer, he's been well-regarded, listed as one of the Super Lawyers Rising Stars from 2015-2020, interviewed on Forbes, Business Insider, and has spoken at ABA Tech Show along with five Clio conferences

His firm, Spera Law Group, runs an innovative program called Collective Counsel Services, which offers legal services on a subscription model. It’s a major focus for their practice.

They take a holistic approach towards serving clients, focusing on solving problems while they’re small, before they snowball into something bigger. 

I had the chance to interview Andrew last month, I wanted to learn more about his use of subscriptions in law and alternative fee agreements. In particular, I wanted to know why he chose them, how he organizes his practice around them, and what he thought about their adoption for small and mid-sized firms.

Kurt

Andrew, thanks for joining me.

Andrew

Happy to be here.

Kurt

You started in law about a decade ago, right after the Great Recession, and you've been doing things a little differently from the outset. Could you give a quick background on your firm?

Andrew

Yeah. When I started my firm, I wanted to take a technology-first approach. So I tried to solve operational issues I saw law firms experiencing by not adopting technology and using it to its greatest extent possible.

We've also been remote-first for a long time, we have a physical office here in New Orleans, and the whole team is based here so that when we need to meet face to face, we can. But we have the flexibility of being remote. If I want to, I can move to the beach and work there for a month.

Kurt

You've been an early adopter of alternative fee arrangements. Did you start offering the subscription legal service-type model, or did you find your way into it? 

Andrew

It's been a long time since I started doing it; I’m not sure if I can tell you who the first client was or when it was, but it's been around for a long time. It came about for a few different reasons. One of the reasons is a little bit selfish: to help level out our cash flow. When working with business clients, I found that they would ask something from us in March and then wouldn't contact us again until October. 

On our side, it made our lives easier to know that we had those future cash flows. We still do some hourly work, and we still do some one-off work. However, we’re slowly declining that to move to the full legal subscription model. We find that having a base level of income guaranteed next month puts everyone in less of a ‘sell everything’ position.

So it has benefits on that front.

From the client-side [for business owners], frankly, it just makes sense. We find that many of our business clients have issues that they don't bring to their lawyer because they're either worried about the costs or don't realize that there are issues. We regularly deal with clients who will casually mention something to us off-hand, and we'll say, "Wait, hold up. What did you just say?" And we'll help them appreciate that whatever they just said has legal implications that they didn’t initially realize. 

In addition, it creates a better relationship from a business counseling perspective, clients want to meet with us since they're already paying this subscription. Clients want to have those conversations but without a rush. We schedule the conversation for as long as it needs to be. Sometimes they go a little bit over, but they're not watching the clock because we're not watching the clock. I've had clients complain about "Anytime I call my lawyer, they just want to chat for 15 minutes. That's great, but that just costs me a hundred dollars."  It lowers the friction with our clients. 

Rally's ebook for lawyers who want to offer subscription legal services at their firm


Kurt

How did you figure out what you were going to include in the subscription? Is it fixed, or does it evolve?

Andrew

As lawyers, we’re the service provider, so we continue refining our offerings and defining what is omitted. 

For example, at one point in time, we said, "Okay, litigation isn’t included," and we still exclude litigation. Then we realized that clients might spend a lot of time resolving a dispute that is headed towards litigation. So, we rewrote our definition to include time spent on matters likely going to litigation.

It takes time to perfect.

You do get lawyers who are just pre-selling hours. So they’re saying, "Okay, I'm going to charge you $3,500, and that's going to get you 10 hours a month. And if you go over that, you're going to be paying $400 an hour. And that's a discount because I normally charge $500 an hour" 

I have seen success with that. But, the client takes the position of “Okay, I just did the math; I’m paying you at least $350 an hour. Now I can price shop that with other lawyers”. Then, they’ll usually follow that up with, "This other lawyer is willing to be paid $325 an hour, and they don't want 10 hours a month minimum guarantee."

Anytime you start charging a regular monthly fee with a set amount of hours, you aren’t selling a subscription; you’re pre-selling hours. And, now you're easy to compare to every other lawyer that's charging by the hour. So, we say, "This is what we're going to do for you, and this is how much we're going to charge you,” I don’t think many lawyers are doing this. So, we're creating a new service that allows us to compete against the big partner law firms that will never move to this model. They just can't; they're too big. So, it gives us a competitive advantage.

Kurt

It sounds like subscriptions would be a good niche for smaller law firms, where larger firms would have a more challenging time transitioning into them. 

Andrew

I don’t think it’s easy for them to do.

The hard part about a subscription law firm is that your revenue is typically consistent, but the time you need to spend on a particular client's matter is not. So, you have to figure out a creative way to rectify those two things. The hourly rate is attractive because, for example, “I earned $3,000 from this client this month, and these three lawyers each generated the same amount of time.” So there, we know how much you generate. It's a straightforward way to assign the amount of work with revenue. 

Whereas the amount of work and revenue is not so easily connected on a subscription model. And I think that disconnect will make it harder for a more prominent law firm to adopt.

Kurt

Right. That's a great point. Where this is such a different model, has the marketing, promotion, and client acquisition been challenging? What’s been your primary channel?

Andrew

I find that in-person networking is kind of the best channel.

We get many clients from the internet. We sometimes find that people are opposed to memberships. For a while, we kind of just accommodated them and said, "Okay, well, you don't need a membership to work with me. I'll still work under a flat rate fee or this model or that model." Over the last year, we've started to appreciate that if this business is not willing to pay a monthly fee to work with us, they're not our ideal client, and we're just going to decline to work. So we’ve grown in that sense, and we believe a business should pay a monthly fee and get proactive advice.

There is a marketing challenge. A lot of business owners say, "I'm not paying a lawyer anything right now. So paying a lawyer $750 a month is a lot more than I'm used to." I think it's hard for many business owners to see that this thought process creates liabilities that, in the long run, may cost them significantly more than a monthly fee. 

That is a tricky marketing challenge, showing people that yes, you're paying a monthly fee, but if you're not you run the risk of having a minor situation (that could have been solved with 30 minutes’ worth of work) expanding into a major problem which may now cost 300 hours of work to fix. A lot of the litigation we see between business owners is stuff that could have been avoided. But, it's difficult to tell people that they will fail or run into a big problem. 

Kurt

I like the holistic approach you take to solving clients’ problems while they're small before they snowball into bigger things. 

Andrew

I'll give you an example. Suppose you don't have a good hiring process (i.e., the application process, onboarding, and training) and getting someone adopted to your culture. In that case, you increase the risk of a harassment lawsuit or some sort of harassment, discrimination, etc. 

Most people don't hire a lawyer until they get served with that lawsuit or the unemployment claim they dispute or something along those lines. As lawyers, we can look at your hiring process, make recommendations, and oversee changes there. We think that reduces the liability of employee lawsuits. 

You can apply that to many different areas, but it's these types of business problems that result in legal issues. So by looking at these business problems before they become significant issues, we can prevent legal issues.

Kurt

I think that's where the subscription legal services model shines.

You've been doing this for a while now. It's becoming a hot topic. Have you seen a lot of firms transitioning to this type of model recently, or is it still kind of pretty new and under-utilized?

Andrew

Both maybe? I think there’s more interest in it, for sure. Many lawyers talk about wanting the subscription model. However, I think it’s easier for the business lawyers out there compared to other practice areas. For instance, nobody probably wants to put the divorce lawyer on subscription. Some areas of law are just too hard to sell repeatedly. 

But, I think it's on the rise for business attorneys. I’m not sure why now. Maybe it's the technology making it more accessible. Perhaps it's the fact that more lawyers can start smaller firms now because there's less required overhead. So, they're leaving the more prominent firms and creating their own and saying, "Hey, let me offer this retainer, this subscription, this sort of thing."

Kurt

Right. SaaS (Software-as-a-Service) has been doing a sort of subscription model for a while now. It's almost like a prototype. Lawyers might be thinking, “okay, this can work for me.”

Andrew

Right. And everyone pays now for a subscription for everything. So it's kind of there.

Kurt

Have you seen a lot more support out there for folks who want to get started, like tips and guides online and just general support in how to transition your firm?

Andrew

Yeah, I think there are some providers out there who are focusing on that. I guess Rally might be one of the first software companies that I've seen that's aimed at lawyers using a subscription model. The more prominent practice management folks in the space, the Clios, the MyCase, the more established ones haven’t started supporting it yet. At least not out of the box.

A couple of providers are offering consulting services on it, but generally, it's still a new space. And again, just by the very nature of the work, I think you're going to have a small percentage of lawyers who do subscriptions. It's hard to do it in almost any practice other than businesses. Even in industry, it will be tough for the big regional law firms to offer it. So, you're stuck with this niche of small, one or two partners with associate, law firm models that can actually do it and implement it successfully.

Kurt

I’ve heard that there are ethics issues with subscriptions, as there are months when there won’t be as much work performed. How have you managed over that hurdle?

Andrew

I don't know what the ethics issue is, to be honest. I've heard people say it's an ethics issue. I don't know what the actual problem is because I haven't seen it. I know some states have stringent ethical guidelines that you have to follow, such as fees that can be charged.

The first thing is, from an ethical standpoint, the fees have to be reasonable. If the client knows what they're getting into and they signed a fee agreement that says they're paying X amount per month, and this is what they're getting, I think that's a pretty clear indication that the fees are reasonable. No one's twisting their arms to do it, and you do not surprise them by saying, "Hey, sign this. I'm going to charge you a random amount each month." 

Business clients are typically sophisticated clients, at least in our industry. They know what they're getting involved in. So, from a reasonable perspective, that would be my argument. The client agreed to it, and they decided to buy and pay for the service. 

The second, more practical, issue is this: “What do people do with subscriptions when they're not using them?” Typically, if they’re not using it, they’ll cancel. They just get rid of it. So the question is, how do you provide value for a client every month so that they want to pay the fee next month. It's a retention question, not an ethics question. When you look at it like that, it's just a business question. 

Here are two examples of subscription models. 

On the lower end is the LegalZoom-style model, a $40-a-month model, a subscription where you don't expect the clients to use the service every month. And when a client's paying $40 a month, I don't think there's an expectation that they’re going to use it every month. It's more the Netflix model; I’m willing to pay for the next month because I might need help in two months. On that side, you've got the reasonable fee argument.

On the higher end, if you're charging thousands of dollars to a client, you need to find work. If I have a client paying thousands of dollars a month, which we all want, and you're not doing work for them, you're doing something wrong. 

Aside from weird state bar rules, it's not an ethical issue.

Kurt

Last question. We’re a tech company, so we love this stuff: what does your tech stack include? 

Andrew

Sure. Our primary tool is something called Accelo. It was built for managed service providers, primarily. But it has professional services automation. It handles our business model very well and allows us to do what we need to do. It allows for a lot of automation and configuration. I'm probably more of a tech nerd than a lawyer, so it's not something that I would recommend to everyone. You need to have somebody on your team willing to invest the time in building it out.

We get a lot of use out of Zapier. We use Google and Office, unfortunately, because I need Microsoft Word. But we started with Google, and we have a lot of automation that runs in the background. We use Acuity to schedule appointments. We have Acrobat back there for PDFs.

Kurt

That’s great. Thanks a lot for your time, Andrew. 

Andrew

My pleasure. Thanks, Kurt.

Rally's ebook for lawyers who want to offer subscription legal services at their firm


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