How to Offer Subscription Fees

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Flat fees have become nearly synonymous with alternative billing, but they are not the only alternative to the billable hour. Subscription fees can also be a great fit for legal services, depending on your practice area and whether your clients have ongoing legal needs. Recurring fees are revenue you can count on, and clients who sign up for a subscription can become your best, longest-lasting clients.

Related“Pro/Con: Flat Fees”

The current concept of subscription pricing is inspired by the movement from software as a product to software as a service. As the cloud matured and broadband became ubiquitous, it started to make sense to move software from the personal computer to the cloud. Now, almost everyone uses cloud software.

Software as a product was sold in boxes. You might buy version 2.0, then get free updates to that version until the software vendor — arbitrarily — decided to assign version 3.0 to an update. Then you would have to go buy another box.

Software as a service is different. Typically, but not always, software as a service means web apps like Gmail or QuickBooks Online. You pay monthly for access to the software, whether or not it is upgraded (although upgrades typically come fast and frequently). Some software as a service includes local software — the kind of thing you used to buy in a box and install from discs. Office 365, for example, includes up-to-date versions of the Microsoft Office software packages.

With software as a service, the software vendor can stop worrying about pumping out new features to persuade you to upgrade to a new version. You pay for upgrades as well as the cost of maintaining and supporting the software every time you pay your subscription fee. It is good for the user, too, especially for software that is complicated to install, configure, and keep up-to-date.

At some point, a lawyer (I first remember hearing it from Matt Homann, who used it in his own law practice) started wondering if it might make sense to sell legal services like software services. And it does. Or at least, it can.

Structuring Subscriptions

There is no One Way to structure subscription fees, but there is at least one important decision to make: whether your fees will come primarily from the subscription or from additional services.

Some clients have predictable, regular legal needs. For example, maybe a title company wants you to handle all its closings, which are generally between 5 and 10 a month. For these clients, a subscription fee makes so much sense that your client may even be the one to suggest it. When the work is regular and predictable, it is usually easy enough to come up with an average and set a monthly fee, almost like negotiating a salary.

Those clients are easy, as long as your retainer agreement carefully describes the scope of the services you are providing.

But far more clients have regular needs that are not so predictable. Consider a small business that might want to talk to a lawyer a couple of times a month, and occasionally needs more legal work in bigger chunks. Or families, which may need to keep their estate plan up to date over many years.

It takes a bit more creativity to structure subscription fees for these clients, but it can work as well or better, in the long run. And you can usually re-use the same subscription-fee arrangement for most of your clients instead of having to quote a different fee structure for everyone who walks in the door.

Less for Less

You might be tempted to try to offer more value for more money, like throwing in bundles of documents or weekly check-ins, but you must not promise more than you can deliver. For one thing, that would probably make your fee unreasonable and therefore unethical. For another thing, your clients are not likely to stick around if they aren’t happy with the arrangement.

Plus, you should be careful to tailor your subscription plans to your clients’ needs. If you just try to stuff your plan full of “value,” it won’t be long before your clients realize they aren’t able to take advantage of it.

The most sustainable way to offer subscription fees is probably to offer limited valuable services for a limited monthly fee. If your clients like what they are getting, they are less likely to decide they aren’t getting the value of your fee. For example, if you represent businesses, offer unlimited phone calls and build a set of documents your subscription-fee clients can use for no additional charge.

If you represent startups, you may even want to allow (and encourage) your clients to use your conference room if they need a nice place to meet with investors or hold board meetings. This will help you stay in the loop with your clients’ businesses, give you the chance to network, and help out your clients.

Everything else, though, is a separate fee. The services you offer for your subscription fee must be real and valuable to your clients, but you don’t need to rely on the subscription fee to sustain you. Even if your clients are paying you $99/month, that amount guarantees they will come back to you whenever they need help. If anything, subscriber-clients will come back to you more often. After all, that is what they are paying you for. And at least some of the times they come back to you, they will need work that goes above and beyond their subscription.

Maintain Your Client Relationships

Above all, make sure to keep up the relationship with your subscriber-clients. Buy them coffee at least a few times a year. Or start a members-only whisky club or organize a monthly happy hour. Those meetings are opportunities to get to know your clients better — but also to find out if there is any other work they should be paying you to do.

Finally, make sure you don’t try to fit every client into a subscription-fee arrangement. Just as with flat fees, subscription fees are a tool that can help you serve your clients better. When that is not the case, use another arrangement.

Featured image: “newspaper” from Shutterstock.

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  • Bob Ambrogi

    Aren’t you really just talking about a recurring monthly retainer? That isn’t a new billing concept — it certain goes back as long as I’ve been practicing law (which, I hate to say, is a long time).

    • Maybe. I don’t think the name matters so much as how you go about it. I called mine an availability retainer, actually (with an ethics lawyer’s blessing), since I was committing to be available for unlimited phone calls and emails.

  • Jonathan Kleiman

    Great article… I need to think about what I can offer. My business clients are small businesses and very randomly need me. Could go months without calling.

  • Paul Spitz

    I decided to do this a month or so ago. Nobody is signed up yet, but my practice is really new. I think this will be the kind of service that pre-existing clients sign up for, rather than someone new off the street. Anything to forge closer ties between client and lawyer is a good thing.

  • Great that you’re bringing this model to your readers. I switched my practice exclusively to subscription billing (we declined any client who wanted hourly or project billing) and it was by far the best business model for long term relationships, client satisfaction, and profits. For anyone reading this and thinking “it can’t work” – it can. Find someone who’s done it, and pick their brain. You won’t regret it.

  • Simon Kahil

    We (Bespoke) find it an excellent way to offer complete certainty of legal spend to clients, eliminating peaks and toughs. It also allows our lawyers to become strategic advisors, and truly embed with clients in a way that (despite the ubiquity of the comment ‘we get to know your business’) was previously if not impossible, certainly improbable.