Alternative Fee Arrangements: The Ins And Outs Of Legal Subscription Services

Before the internet, subscription services had a bit of a bad reputation. Famous subscription blunders, like the Columbia Record Club, made receiving products you didn’t need from a very difficult to cancel service seem like the norm.

But since the advent of subscription-based, on-demand services like online streaming services, people are much more amenable to subscribing for the things they want or need. The modern American’s bank statement is full of monthly deductions in all ranges of pricing when these subscriptions automatically renew every month.

This has spread into the legal world too; where a decade ago the idea of legal subscription services would have sounded absurd to all but the most in-the-know attorneys, there are now more than a few law firms out there making a name for themselves in subscription-based billing. It’s shaping up to be a viable alternative to the billable hour model for a lot of firms out there.

As part of our Alternative Fee Arrangements theme this fall, in this blog we’ll be covering the ins and outs of legal subscription services: how they work, their pros and cons, and whether or not they’re right for your firm.

How Do Legal Subscription Services Work?

Legal lay people might think of legal subscription services as a different way of having an attorney on retainer. While there are similarities, it’s quite far from true. As you know, having an attorney on retainer is little more than pre-paying for an attorney’s services. That attorney likely still bills by the hour; when the retainer is up, it automatically refills, the attorney asks for the retainer account to be refilled, or the attorney begins billing the client as usual for their services.

Legal subscription services involve pre-paying for an attorney’s services, but that’s about where the similarities end. In a subscription-billing firm, clients pay a monthly fee to gain access to a certain service package. Every firm would have a different set of packages based on what practice areas they cover and what works for them.

That monthly fee guarantees access to diverse services, from legal advice calls to contract drafting to even, in some cases, litigation. Rather than billing a client in six-minute increments on every phone or Zoom call, that client would instead have plenty of time to schedule a meeting and ask all their questions without worrying about what it may cost them.

Subscription billing isn’t necessarily a single-solution billing method. While some practice areas could charge on a pure subscription model, others would have to build in some amount of flat fees for documents drafted or litigation services rendered. Obviously, in a practice area with heavy litigative responsibilities, a client paying a few hundred dollars a month and getting weeks of litigation would not be worth the attorney’s time. That client paying a smaller monthly fee, and paying for the value of litigation services rendered as they come up, however, is a completely different story.

If you’d like to hear about subscription billing from an attorney who has experience with it, check out the below clip from our Everything Except the Law podcast.

Host Nick Werker and Subscription Attorney Mathew Kerbis discuss how Kerbis decided subscription billing was the right move for his firm. You can click here if you’d like to see the full episode too!

Pros And Cons Of Legal Subscription Services

If there’s a theme to this blog post, and indeed our whole Alternative Fee Arrangements theme, it’s that there isn’t really a one-size-fits-all solution to billing. Rather, it’s about what fits your firm. We’ll talk later on in this blog post about what kinds of law firms are best for subscription billing.

Still, we won’t let the specificity and uniqueness of law firms keep us from getting into specifics. Let’s get down to business: what are the strengths and weaknesses of legal subscription services?

The Strengths Of Legal Subscription Services

First and foremost, subscription services give you access to a continuous stream of income. As long as you build your packages correctly, you’ll always have income that doesn’t require you to work yourself to the bone like the billable hour model might. Firms with a lot of repeat clients who would be happy to pay a monthly fee to gain access to an attorney’s services will definitely benefit from this arrangement. You won’t ever have to chase down unpaid bills again!

Subscription law firms also tend to be more tech-forward, and involve client-centered tech like portals and online scheduling. That means subscription firms are more adaptable to future changes in legal tech. For example, because you’re not billing time, you won’t have to worry about things like AI tools making your job faster. Your schedule may be more flexible too, as many subscription-based firms are virtual-first and meet with their clients over Zoom rather than in offices and conference rooms.

In addition, you’ll be able to help clients who may not be able to afford traditional, billed-hourly legal services. Clients who only need some legal advice and maybe a few documents every few months, for example, might be better served paying you a small monthly fee rather than paying through the nose for a few hours of an attorney’s time.

A study from the American Bar Association found that 80 percent of Americans can’t receive legal help because of the cost.

Subscription billing allows people like freelancers, who may need a lot of legal help but may not be able to afford it, access to a lawyer without breaking their bank or expecting their attorney to work for free.

And finally, perhaps most importantly, clients will be much happier knowing exactly what everything will cost up-front. They’ll have a clear understanding of the relationship between themselves and their attorney, and know exactly what they’re paying for and what they’re getting for it. That kind of transparency helps make interactions with clients less transactional and more effective at getting transmitting information between both parties.

Possible Pitfalls Of Legal Subscription Services

Of course, you have to weigh both sides of every issue. If legal subscription services made sense for every law firm, every firm would be doing it!

To start with, there’s a considerable amount of start-up cost associated with making the switch to subscription services. This is true of most alternative fee arrangements, of course, but the tech-forward nature of subscription billing makes it even moreso.

Also part of setup costs, building your firm’s rates and packages will require considerable research and maybe even outside help. It’s a Goldilocks situation: charge too little, and you won’t make enough money or demands on your time will be too great; charge too much, and nobody will pay for your services. Finding the balance of price and service that’s just right will be a lot of work.

You may have to do some selling on the business model to your clients. Clients who are used to a certain way of interacting with their attorney may be reluctant to make a change.

According to Clio’s 2022 Legal Trends report, 97 percent of firms bill by the hour, meaning you may have to convince them that a subscription model is better for both parties.

Luckily, if you have a lot of long-term clients, this may be easier to do. The subscription business model fits those firms and clients better than others.

And, finally, there may be some practice areas where it’s not easy or feasible to move to a subscription-based model. One can imagine it being difficult to get remarried if you’re subscribed to a divorce attorney’s services as a precaution, for example. We’ll discuss exactly what kinds of criteria you should look for in your firm when considering a switch to legal subscription services in the next section.

Is A Legal Subscription Model Right For Your Firm?

As a reminder, a legal subscription model is not necessarily exclusively subscription-based. In litigation, for example, a subscription model alone would not be ideal; those firms might be better served using some combination of a subscription and value-based or flat-fee billing.

In a firm more focused on drafting legal documents, on the other hand, a pure subscription model might work. For example, If your clients are mostly businesses that need trademark documents or contracts supplied regularly, a pure subscription model might suit your firm well. In that case, the businesses would pay for one of a few packages of services, each bringing with it a higher cost, but more of that attorney’s time, and more of their legal documents.

At the end of the day, perhaps the best measure of whether legal subscription services are right for your firm comes down to one question: does your firm handle a whole bunch of small cases, or a large number of more substantial matters?

For example, a traffic attorney probably wouldn’t benefit from a subscription model. Clients might subscribe until the end of the matter and then unsubscribe, hoping never to need your services again. Practice areas with a large volume of new clients with smaller cases might be better served by a flat-fee arrangement.

If you’re looking for advice specific to your practice area, Mathew Kerbis, the attorney mentioned earlier as a guest on our Everything Except the Law Podcast, has a podcast called Law Subscribed where he dives even deeper than we have into legal subscription services. He interviews attorneys in all kinds of practice areas making subscription billing work for them, and you may find some very valuable information inside! You can check out the podcast here.

Small Firms And Solos Need All The Help They Can Get

Regardless of your billing model, the primary way clients will reach you is over the phone. It’s still the most popular way to make first contact with an attorney, and even if you’re not billing by the hour, delegating the time you spend on the phone would open up more time to actually practice the law.

Smaller firms and solo practitioners are the firms that stand to gain the most from moving to a subscription model. The smaller the firm, the more personal the relationship between attorney and client, and a subscription model clears up any bad air billing by the hour might have created.

These firms would also benefit the most from hiring a legal answering service like Answering Legal. We pride ourselves on having a similarly personal relationship with our attorney customers. Our virtual receptionists answer only for lawyers, and learn the ins and outs of each firm, so they make the perfect extensions of your firm to greet your customers and give them a personal welcome to your business.

Make the most of every minute with a 24/7 answering service. Click here or call 631-686-9700 to sign up for our free trial. For a limited time, we’re offering firms that sign up for our service their first 400 minutes free.