Post updated March 17, 2022
Legal subscription services go by many names: prepaid legal, toll bridge agreements, outside general counsel plans, lawyer-on-retainer. Essentially, a subscription service is a catch-all for a business model where users pay for ongoing access to a product or service. In any event, the concept of legal subscription services has been around for a long time; in my view, they’re not as disruptive nor innovative as some would claim. That said, for a variety of reasons discussed below, lawyer subscription services have gained traction with lawyers and clients in recent years. So whether you’re interested in launching a subscription services model, or tried one unsuccessfully before and want to revisit the concept, here’s an overview of the benefits of subscription services, tips on developing a subscription program and ethics considerations.
Yet lately, there’s been a resurgence of interest by lawyers in the subscription model for several reasons. First, a subscription model helps clients – especially startups control their legal spend by paying a set amount each month to have a lawyer on call instead of committing to a $5000 retainer fee up front. Second, consumers have grown accustomed to subscription services for every aspect of their lives from meals to streaming television and even – so why should legal be any different. Third, the adoption of technology tools that automate payments or give clients access to online portals makes it easier than ever for lawyers to deliver subscription service without added costs.
Why Should Lawyers Offer Legal Subscription Services?
A few reasons account for increasing popularity of subscription services. For starters, post-pandemic, today’s clients are all in when it comes to purchasing all kinds of goods and services as a subscription – from food preparation kits to streaming television and more recently, healthcare. So the idea of paying monthly fees for services is a concept that consumers understand and are comfortable with.
Subscription services are hot in the consumer industry for many of the same reasons. As Entrepreneur describes, subscription services are relatively inexpensive to start and with today’s technology, automating payments is easy. Plus, overhead costs are low because you’re often repurposing and repackaging products and services that you’re already creating.
From a lawyer’s perspective, subscription services are golden. They generate a steady stream of revenue and keep you in regular contact with your clients so your firm will come to mind when they have additional work or have business to refer. Even form-giant Legal Zoom recognizes the advantages of ongoing revenue versus one-off deals, and included subscription services as one of its intended offerings in its IPO papers last year.
Subscription services also enable lawyers to practice preventatively. Because the subscription keeps lawyers in touch with their clients on a regular basis, they can help clients stay out of trouble by addressing small problems before they erupt into major matters or simply conducting year-round audits of a client’s legal health. That’s potentially one of the biggest selling points of a subscription plan to clients: by paying now, they can avoid paying more later.
Finally, subscription services can increase the value of your law firm as a saleable asset down the line. Having a steady stream of clients who pay a predictable fee each month can be a strong selling point to a future purchaser. Moreover, as deregulation of the legal industry gains speed in states like Arizona, Utah and California, it’s possible that certain subscription programs (such as those offering forms or DIY documents) could even attract venture finding or be acquired by a non-law firm entity.
Still for all their benefits, subscription services have a downside too. Preventative legal services like subscriptions can be a tough sell because there’s no urgent problem that must be addressed like a divorce or drunk driving charge. Though there are many lawyers who have been incredibly successful with legal subscription services as reported in this 2019 ABA Journal piece, there are also several lawyers I know who launched services years ago with no takers.
So if you’ve tried subscription services and failed, there’s reason to give them another shot. Times have changed and today’s clients are more familiar with the subscription concept. Plus, automated online payments removes the inconvenience of having to process a monthly paper check. In fact, today, there are even dedicated tools like Fidu Legal that enable lawyers to create and deliver scaleable subscription services. Finally, with websites and social media, it’s easier than it was years ago to promote and explain the concept of subscription services
What to Sell Through A Legal Subscription Service?
Subscription services vary by practice area and offerings. They’re most commonly offered for small business clients or creatives who have ongoing legal problems but lack big budgets. Some programs consist of advisory services where clients can call with questions, others include products such as a incorporation or trademark registration. If you’re interested in sample offerings and terms, check out these programs by Counsel for Creators, Sentient Law or Elliott Brown Law.
But subscription services aren’t limited to corporate clients. Ethics attorney Megan Zavieh offers legal ethics advice on a subscription basis to other lawyers. North Carolina divorce law firm Rosen Law offers a subscription service to provide ongoing support to pro se’s either considering divorce or handling their case. And like many specialized regulatory practices like my own offer regulatory monitoring, updates and reports to clients on a subscription basis.
One could imagine an appellate subscription service – a monthly payment to an appeals lawyer during a trial to review transcripts and call on for advice on properly preserving issues. Or an employment or Internet lawyer who provides a Birchbox of different template-products each month – like website terms of service, independent contract agreements or employee handbooks – with instructions on how to implement them and a free information call included. In short, the possibilities for subscription services are endless.
How to Price Legal Subscription Services?
There’s very little data on how much lawyers should charge for subscription services. In reviewing prices posted at different firm sites, I’ve seen month rate ranging from highs of $3500-$10,000 /month for IP work and unlimited phone calls for established companies to $99/month for basic matters for start-ups. And of course, lawyer subscription plans also compete with more traditional prepaid legal providers like Legal Shield which offers small business membership plans for as low as $49/month.
However, if you look outside the legal industry, you’ll find information about pricing subscription service, including the five different models discussed here. And you should always offer a menu of different options at different price points which helps guide clients to your preferred pricing option (apparently, IKEA is genius at this approach).
How to Keep Legal Subscription Services Ethical
Subscription services, particularly those that cover actual legal services (as opposed to a more generic monitoring report or video series) raise a couple of ethics considerations summarized below.
First, when providing a subscription legal service, conflicts rules still apply. Most obviously, a firm offering advisory subscription services to Company A couldn’t then register Company A’s litigation adversary for the subscription program a few days later.
But here’s a trickier scenario. Let’s say that Company and Company B are both corporate subscription clients. You register a trademark for Company A, and a few months later, Company B asks you to register a competing mark. In that case, you’ll need to have some plan in place that allows you to either refer Company B to another attorney for the trademark matter – or if necessary, discontinue B’s subscription plan entirely. Conflicts issues aren’t insurmountable, but they just require planning and advance notice up front by advising clients of how conflicts will be handled should they arise. There are different options such as securing a blanket advance waiver referring the client to another firm and/or refunding the subscription fees. You can also pre-screen clients accepted to the subscription plan at the outset as you would any client to minimize potential for conflict.
Some ethics boards require lawyers to deposit and hold advance flat fees in a trust account until the work is complete. That kind of requirement puts a damper on the auto-pilot nature of subscription services, since it’s a hassle to deposit a monthly payment into trust and withdraw and transfer it every month. The easiest way to circumvent this prospect is to bill for the program at the end of the month, rather than at the beginning. If you take an advance payment as security, you could hold that in the retainer initially, then collect at the end of each month.
In addition, in my view, there’s an argument to be made that subscription service payments are deemed “earned on receipt” and therefore, immediately become the property of the lawyer rather than clients. Most jurisdictions treat “true retainers” – i.e., a payment to keep a lawyer on reserve to remain available and conflict free – as earned on receipt. Subscription services are analogous to true retainers – because the client pays for the lawyer’s availability to handle the work promised under the subscription service. Under this rationale, lawyers could charge up front and remit the payment directly into their operating fund. Note: if you’re looking for specific language that allows subscription services to be treated as earned on receipt, consider purchasing The Legal ClauseIt which includes sample subscription service agreement templates and other guidance.
Excessive Legal Fees and Refundability
Subscription services are also subject to bar rules on reasonable fees. Where clients pay a monthly amount, but don’t receive concomitant value in return, ethics boards have expressed concerns that the fees might be unreasonable. Thus, a prepaid program cannot have so many exceptions and limitations that a monthly fee would become excessive because members will likely have to pay extra for many types of services. See District of Columbia Ethics Op. 170 (1986).
Refundability is another concern related to reasonableness of fees. If clients pay a large amount up front for services and can’t get the money back, in effect, the fees for services (or lack thereof) are excessive. For that reason, both the New York and D.C. bars also require that subscription plans be refundable. See, e.g., DC Bar Opinion 264, NYC Bar Ethics 1996-5 (permitted prepaid legal services so long as fees are refundable).
In addition, the DC Bar in Opinion 264 elaborated that a full refund is not required where a client has taken advantage of a service. So for example, if a firm offers an annual plan that includes an incorporation or trademark and the client uses those services in Month 1 and asks to discontinue the plan in Month 2, the firm could still recover quantum merit payment for the work performed.
Many times, firms will promote the value of a subscription plan by proclaiming that clients will receive the equivalent of $50,000 in legal services for the low monthly cost of $99.99!! However, when providing price comparisons, law firms cannot inflate the amount that they would ordinarily charge to make the subscription service appear to be a better value by comparison. So, if a firm ordinarily charges $1500 for a trademark registration and $1000 for incorporation, and offers a subscription plan of $100/month that includes both of these services, comparing the $1200 annual charge to the $2500 per diem rate is reasonably accurate. By contrast, if the same firm claims that trademark registrations and incorporations are $5000, so the client receives $10,000 in value, that type of communication might be considered deceptive.
For more guidance on ethics issues, check out this Maryland Docket No. 2020-01 ethics ruling and this article evaluating the applicability of ABA Model Rules to legal subscription services. Bear in mind that none of these ethics issues are insurmountable or even particularly difficult to address. But if you’re starting a legal subscription services, you need to keep ethics considerations in mind.
So if you’re tired of the peaks and valleys in revenue common to small firm practice, or if you want to explore ways to diversify your offerings to attract new clients and better serve the ones you have now, maybe legal subscription services are an idea worth subscribing to.