Statutory Subscriptions for SMBs: A Meteoric Rise
Legal subscriptions have become one of the fastest growing areas in legal technology. This article will show you how they work.
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The legal profession is evolving into a modern service industry. This is partly due to the technology and capital that keep pouring into the industry, transforming it into something more like the modern accounting industry. On the high end of town, we’ve seen strong adoption of new technology and “non-lawyers” (read accountants) aggressively invading the room. Not to forget, there have also been some major changes in the small legal area. Sometimes overlooked due to its fragmentation, small law accounts for over 50% of total legal spending annually and employs the majority of legal professionals. An important trend has been the increase in legal subscription offers. This is a new concept in Australia, but has been in America and other countries around the world for over 10 years.
What is a statutory subscription?
With a legal subscription, customers can pay a monthly fee to access legal advice, legal instruments, and legal documents. It is usually coupled with a software platform on which customers can manage all of their legal work. Similar to a customer relationship that a larger customer might have with their company, statutory subscriptions are designed for smaller businesses.
Legal pricing models have gone through many iterations over the years. Subscription-based billing (borrowed from SaaS companies) is the next step in developing legal business models. Yes, “retainers” have been around for a long time in the legal industry. However, they were usually reserved for large companies that could pay large sums to have lawyers on call. But now, legal reservations aren’t just for Fortune 500 companies. Nowadays every startup and every small business can access the same offering. In minor law, we’ve seen the progress from hourly billing to value-based billing and now to SaaS-based billing. According to a 2019 survey by Altman Weil “Law Firms in Transition”, almost 98% of the companies surveyed said that at least some of their fees came from non-hourly billing agreements.
Subscription Services Growth
According to a study by McKinsey & Co., the e-commerce subscription market has grown more than 100 percent annually for the past five years, whether it’s the internet, a gym membership, phone service, food, or video . This is the new normal for many consumer software products. Netflix and Amazon Prime are examples of subscription offers. In the B2B sector, SaaS offers have become commonplace thanks to products such as Salesforce, Gmail, Telstra and many more. Customers are now used to purchasing their professional services through a subscription offer. So why not expand to legal services?
There are two main reasons why the unit economy is finally working for statutory subscriptions:
Tech-savvy lawyers can now serve 10x as many clients as before. Online legal services have no geographic boundaries (i.e., restrictions) so lawyers can serve clients in many different locations. The new norms that COVID-19 introduced for workplaces and customer expectations mean customers are now familiar with the idea of seeing their attorney online and no longer the need for stationary office space, further reducing costs and making statutory subscriptions attractive be made.
Until now, legal support has required manual, bespoke services delivered in small quantities and with high margins. With legal platforms, DIY workflows and online systems, lawyers can now serve many more clients at the same time, resulting in lower fees for the masses. The legal subscription model is high volume and low margin. The “unbundling” of legal services also means fewer tasks that require lawyers, which leads to a further significant reduction in costs.
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Findings from building a statutory subscription
With over 170,000 free users and 10,000+ paid subscribers on the Lawpath platform, we’ve learned a lot along the way to becoming a legal subscription model. Here are some of our results:
1. Law is complex
Legal is complex and requires a higher touch than subscriptions just for products like Netflix or Amazon. Successful legal subscriptions use a hybrid model in which around 70% of the offer is completed by software and the remaining offer is still carried out by a lawyer. In order to achieve strong margins it is very important to find the right mix between product and service. The pricing plays a major role and above all determines customer expectations.
2. Cross the abyss
Switching to this model will be difficult for traditional operators as they will have to cross the “valley of death”. If you move to a model that generates predictable long-term revenue, you also have to forego short-term transaction revenue. This requirement is extremely difficult for law firm owners to swallow when they are used to a certain annual EBITA. However, once you cross the gap, you can find predictable long-term earnings that have one particular characteristic above all else. it connects.
3. Use vs. Revenue
It’s all about usage. Traditional lawyer occupancy rates are abysmal and hourly rates are typically padded to accommodate the large amounts of unbilled time. Breaking the service down into short, low-touch service periods allows you to be precise with resource allocation and your usage rates per lawyer stay in the upper percentile. Additionally, it’s a good balance between attorney usage and attrition.
What do they cost?
We’re seeing legal plans between $ 29.95 and $ 400 per month. As a rule, these plans have an annual obligation (pro tip: monthly payment periods do not work).
Features of a statutory subscription
Typically, the plan includes unlimited or limited calls to an attorney. These calls typically last up to 30 minutes and provide the customer with an “attorney on request”. Instead of hiring a lawyer by the hour every time you have a question, the plans allow you to have a lawyer available to answer your questions. The plans usually include a limited contract review where a customer can get legal advice on a document on a limited number of pages or on simple contracts. Most plans include access to legal documents and contract creation software, workflow, and document management such as storage, collaboration, and eSignatures. It’s like having a lawyer without the $ 5,000 a month price tag.
How do you work at Lawpath?
At Lawpath, customers pay $ 69 per month (billed annually) to access unlimited calls with our attorneys, over 300 legal documents and our end-to-end contract management system, unlimited eSignatures and reduced prices for all other services like corporate governance and our to access other automated legal services. To further sweeten the deal, Lawpath is offering partner discount offers worth over $ 10,000, including AWS, Canva, Xero, and SalesForce.