No matter how hard you work, there are only so many hours in a day and only so many days in a person’s lifetime. Therefore, if you get paid by the hour, the amount of money you can get is automatically limited by the number of hours you can work. In the context of personal finance, this fact is often the starting point for a discussion of the importance of passive income and ways to earn income that does not tie to the number of hours you work, such as investments. For law firms, though, the implications are different. The only way law firms get paid, and the only way they should get paid, is in exchange for providing legal services, but charging by the hour is not the only option. An increasing number of law firms, representing a wide variety of sizes and practice areas, offer legal subscription services as an alternative to hourly billing.
Legal subscription services are nothing new; big corporate law firms have been using them for decades, except that they have tended to go by other names, such as legal counsel services, toll bridge agreements, and lawyer on retainer. In other words, a company pays a law firm a set amount of money per month. In exchange, the law firm does all the work that the company needs it to do, including drafting and reviewing contractual agreements, giving advice about the feasibility of the company’s plans from a legal perspective, and providing representation in legal disputes. It makes sense for big law firms with big businesses as their main clients to work this way; it is simply a business contract that provides a steady stream of tasks for the lawyers employed by the law firm. Most law firms with 250 employees or more have a subscription-based arrangement with at least one corporate client. Getting a reliable monthly payment helps these law firms operate; the employees get their paychecks on time, and the law firm does not have to seek out new clients constantly just to afford its rent and utilities.
A subscription-based payment model could benefit smaller law firms, too, including but not limited to those whose main clients are businesses. Family law, estate planning, and intellectual property law are just some of the practice areas for which legal subscription services could be practical.
Many individuals who could benefit from legal services do not seek them out because they are worried about the expense and bills from lawyers who charge by the hour and do little to assuage these fears. Wouldn’t you feel like you were getting ripped off if someone wanted you to pay $40 for something that cost them only 12 minutes of work? Therefore, many prospective clients unknowingly sabotage themselves by trying to file for divorce, challenge a relative’s will, or attend to various other legal matters using free forms they downloaded from the Internet.
Think of how many clients you could attract if you told them that, for X amount of money per month, you would handle their divorce case until it was finalized, or until all the transfer of property was complete, the child support payments were up to date, and the co-parenting was going smoothly. No matter how many emails you had to write to the client’s spouse and no matter how many depositions you had to take from people with knowledge of your financial situation and parenting ability, the client would only have to pay you the monthly fee. You might wonder if this arrangement leaves you vulnerable to clients piling unlimited tasks on you, but it usually does not. During a divorce case, some months are busier than others. Weeks may go by when all you are doing for that client is waiting for their spouse to respond to the divorce petition or attending mediation sessions where no major conflicts arise. During these weeks, you can provide services for other clients who are also paying for the monthly subscription to your services.
Although it is the exception rather than the rule, the possibility exists that a client will need more services than you expected, and you will need to work unsustainably long hours to fulfill your end of the agreement. You can prevent this problem by offering different subscription plans, each with an additional maximum amount of work provided. For example, the basic plan could include unlimited phone calls and emails, plus X pages of legal documents per month, but beyond that, the client would have to pay extra. The premium plan could also include unlimited phone calls and emails, plus a higher number of pages of legal documents and X hours of depositions per month. With enough planning, you can set your prices and make decisions about taking on additional clients or even hiring more employees based on projected income from legal subscription services. By doing this, you can provide stability and convenience for your clients and your law firm.