This article is Part 4 of a four-part series focused on subscription-based services for law firms.  READ PART 1 and PART 2 and PART 3.

law firms, subscription services, AFA

Given the necessary focus, developing a customized subscription-based agreement for legal services can be beneficial for both law firms and their clients. Communication is the key to success. When a law firm’s incentives are aligned with their client’s expectations, the focus is on end result, not the number of hours it takes to get there.

Front-end loaded agreements and service level management

Developing a customized subscription based agreement can present challenges, especially when a client requires a disproportionate level of initial time investment. In such instances, a law firm can find themselves with negative profits for several months. For example, an on-boarding process that requires an initial review and documentation process of several files before new work can commence. Status reporting and progress reviews can ensure that clients appreciate the level of the firm’s commitment.

The decision to include the start-up costs at no additional cost or to charge an on-boarding fee is another significant consideration. It is certainly an inducement for the law firm to absorb the startup costs of a new agreement, but it is better to negotiate an on-boarding fee if possible. Law firms that have good pricing processes can also consider a hybrid approach that includes absorbing part of the startup costs and spreading the remaining amount over the term of the agreement. Other options include a higher first-year fee with future adjustments based on negotiated volume, results, realized efficiencies, and other agreed upon metrics or milestones.

Each practice area comes with unique priorities, and professional responsibilities stand. But working to an agreed upon service level can produce efficiencies that help manage the level of time and cost invested in matters at a given point compared to the revenues.

Value-added Services

As mentioned previously, law firms can learn a lot from technological and other value-added services that provide clients additional insights into managing their legal efforts, budgeting, best practices, improved outcomes, and advanced legal business intelligence.  Today, law firm must provide value-added services to have a competitive advantage.

Examples of value-added services include:

  • Activity management and reporting;
  • Response time management and reporting;
  • Real-time case status reporting;
  • Average cost per matter;
  • Average matter duration;
  • Service level compliance summary and detailed;
  • Exception reporting and early warning systems;
  • Predictive metrics and trend analysis (legal and cost);
  • Document repositories and forms management;
  • Web-based portal for requesting services and managing open items (dashboard);
  • Recommendations for improving the client’s customer service regarding legal.

Many other value-added services can exist based on the practice area, client practices, industry, and the role of legal services in a client’s business. We recommend creating SSA’s using a value-added approach that only an outside law firm can provide.

Perfecting a subscription based pricing model can be difficult for law firms, especially for firms geared to hourly billing. Several key business processes will need attention, including profitability measurement, workload distribution, productivity measurement, compensation and incentives, advanced pricing, and marketing support. An objective 3rd party is often necessary to help support the development of the necessary processes and improve internal core competency.

Though some time and effort are needed to initially develop these customized agreements, the end result includes strengthened client relationships and increased firm profitabililty.