The Hidden Risk of Providing Legal Subscription Services

Over the past two weeks, we’ve written about 4 reasons to rethink hourly billing in your law practice and what happens when flat fees are even worse than hourly billing for your law practice.

So, you may be thinking that recurring revenue by offering legal subscription services is the way to go.

And it definitely is! But, only if your legal services plans are set up to pay you enough to provide a truly meaningful service to your clients, and not to get you stuck in time debt to your clients or your law practice.

Real quick, before we get into the specifics of legal subscription services that could work for you and your clients, let’s talk about time debt.

Time debt is when you have taken on too much work and not gotten paid enough on it to deliver well, spent all the money, and still have the work to do. And, you’ve over-promised how much you can actually do in the time you really have available.

This is a common problem among lawyers, and results in a lot of unhappiness for both the lawyers and their clients. According to the Hamline Law Review Statistical Analysis of the Nation’s Most Common Ethical Complaint: "The most common complaint [against lawyers] nationwide is a 'failure to communicate.'"

Could there be a correlation between time debt due to 'too low' fees for legal subscription services and a failure to communicate—or even becoming neglectful of clients?

We think so!

When you create legal services plans that do not pay you well enough to meet your clients’ needs, and you do not set the proper expectations and boundaries, you are at HIGH RISK of going into time debt, not communicating well, and having clients be extremely unhappy with you.

This is exactly what happens when lawyers try to switch to recurring revenue fees, copying what they see other lawyers doing, without understanding all of the ramifications.

I learned this the hard way.

When I first considered creating my legal subscription services back in 2004, I thought I would model it after Pre-Paid Legal.

In fact, I tried out the Pre-Paid Legal model first, considering that maybe I would just become a Pre-Paid Legal affiliate and/or service provider. But, I quickly realized that while Pre-Paid Legal is a great idea, the execution doesn’t provide a great service for the clients.

I tried to use it as if I was not a lawyer, but just a business owner who needed legal help. Immediately, I could see there were going to be problems.

I had an issue with a fee I needed to collect, so I called my Pre-Paid Legal rep, and they assigned me to a junior lawyer. This lawyer didn't know me and didn't seem fully understand my problem; it seemed they were incentivized to either a) scare the person I needed to collect from into compliance, because they were getting a letter from a lawyer, or b) move the whole thing into litigation, where I'd pay for litigation counsel.

The “lawyer letter” that my Pre-Paid Legal counsel proposed to send to my client was full of mistakes. I couldn’t possibly send it as-is, but if I were not a lawyer who knew what to look for, it would have just gone out like that. And, it would have made litigation far more likely than necessary.

I decided that I would give Pre-Paid Legal a second chance, and contacted them one more time on a different matter, but the experience was exactly the same.

A new lawyer, who didn’t know me, incentivized to move as quickly as possible, and not incentivized to resolve anything, because I’d get charged more if we went into litigation. Not good.

And, due to the financial model, it makes sense, right? I mean how much legal service can really be provided at $19.95/month, even at economies of scale?

So, I decided I would launch my legal subscription services, and I’d charge $49/mo or more, and my clients would get personal legal services from me, the lawyer who knew them, and who they trusted.

But, because I didn’t know how to create clear expectations and boundaries, my early clients were not that happy, and I often ended up feeling taken advantage of.

I recently saw a lawyer who must be in a similar situation. She’s offering business owners a $99/mo legal services plan, and included in that is a call per month with her. In her mind, that must seem like a great idea, recurring revenue, woohoo! I see her running ads on FB, so she must be looking for a high volume result here.

Let’s imagine that she’s trying to get 100 clients on her $99/mo plan. That would be $9,900/mo in income. A 6-figure income from just 100 clients, and totally possible when running FB ads to a great offer...

Here’s where the problem with offering legal subscription services in this way:

While it might sound doable to manage 100 clients/mo who you are promising just one call a month plus other deliverables, it is not actually possible.

If all 100 clients take you up on that call a month, that’s a minimum of 25 calls a week with existing clients. Not to mention all the work that will come out of those phone calls. That is going to leave you in massive time debt.

Most people, especially lawyers I think, overestimate the amount of time they have available for work, and underestimate the amount of time it actually takes to get things done. Here’s what I mean.

If you run your own law practice, you have to allocate your time among 5 different areas:

  1. Administration: things like billing your time, tracking your metrics + financials, managing a team (if you have one), strategizing your growth plans, etc.
  2. Continuing Education: you need to stay up to speed on so many things, including your legal//technical education and the education you need to keep getting to grow and run your law practice;
  3. Marketing/Educating Your Community: if you don’t consistently market, you will not have the client flow you need.
  4. Sales/Enrolling Clients: You won’t get hired by clients, unless you are consistently managing your intake + enrollment process.
  5. Serving Your Clients: Finally, after all is said and done, how much time do you really have leftover to serve your clients?

After coaching and consulting thousands of lawyers and tens of thousands of non-lawyer business owners, I’ve concluded that a practice owner working full time in her business, has at most 20 hours a week for serving clients. At most.

If you are budgeting any more than 20 hours a week to serve your clients, you are going to be in time debt, and dying a little bit more each week in your law practice.

Can you see why building 25 hours a week of you talking with clients just to meet your base obligations in offering legal subscription services will not work?

I hope so! This is why our member lawyers at New Law Business Model charge on average $750 – $3,000 per month to serve business owners as strategic business counsel. These are the minimum rates they can be paid to be able to deliver a truly meaningful service to their business owner clients, without going into time debt to themselves or their law practice.

If you think you could never command $750 – $3,000 per month for legal subscription services, it may be time to uplevel your legal services and your understanding of yourself as a counselor.

Most lawyers, who are doing what we were taught to do in law school, simply cannot command fees of $750 – $3,000 per month, because they cannot possibly be providing enough value if they are using their law degree in the traditional way to provide legal documents that their clients can basically do themselves online.

So, if that’s the case, it’s time to uplevel what you provide and how you operate as a lawyer, and that’s exactly what we teach you to do at New Law Business Model. Book a call with a Law Business Advisor today.