3 reasons why Legal Subscription Models are the way of the future.
Welcome to the subscription service economy.
Subscription services are prevalent in the software and e-commerce industries, but inroads are being made into other sectors as well.
Future focused legal teams are looking to subscription services as a method of achieving efficiency and certainty in parallel to future focused businesses looking to subscription services as a key source of revenue.
I have been an early adopter of subscription model services since I formally started my in-house career in 2008. And once I started, I (nor the business) didn’t want to go back.
Here are three (3) reasons why I believe legal subscription models are the way of the future for in-house legal teams:
In my last role, I described our outside counsel (law firms and legal tech vendors) as our “extended legal team” in order to create a sense of community around us as an account, a client.
Any firm or legal tech vendor, and its individuals, had to be at their top of their game as well as be a good cultural fit – for our legal team but also with the company culture – enough that we as a team would feel comfortable putting our internal clients in their care.
And that last point is a huge one. The way we practice law in-house is very different to the traditional law firm-client relationship.
That’s what drew me to LegalVision’s desk extension service. It aspired to act as an extension of client’s inhouse teams: on demand, and with unlimited access for a fixed fee.
I almost fell of my chair with excitement when I received an email from its principal requesting for us to hold a training session for LegalVision (and the lawyers which would be servicing our account) so that the firm could understand our business model, our billing practices, risk appetite and commercial profile.
Outside counsel tend to see themselves as legal experts and service providers first, and then collaborators.
As a General Counsel, I sought to set the benchmark a little higher – our outside counsel needed to see themselves as collaborative experts.
General Counsels don’t often talk about the administrative effort that goes into managing outside counsel. Probably because it doesn’t make for the most riveting of conversations.
However, it’s a practical reality we all face.
With workloads ever expanding, it’s a (manual) headache to manage outside counsel costs in granular detail as an in-house lawyer, particularly if you have multiple matters briefed out to multiple firms, across your team.
But, in today’s climate, operational efficiency is an ever-increasing focus of C-suites and legal departments.
Why have three law firms doing the same work, when you could subscribe to one?
A subscription model allows you to rationalise, redirect and centralise overflow/business as usual work.
No constant emails or awkward conversations requesting for costs update from multiple law firms.
No constant emails and conversations defensively justifying over runs.
No constant need for approvals to brief out from business stakeholders – particularly if you rely on the relevant business unit to raise the purchase order for the spend.
No constant administration of invoices and adjusting of purchase orders.
No constant requests from your financial controller to phase your outside counsel spend due to fluctuations.
And, no wanting to talk about the administrative burden with your GC colleagues and in team meetings.
- Cost Certainty
Here’s the challenge – a law firm partner has to generate up to $1m – $2m+ per annum in fees. A General Counsel is typically under pressure to save that same (or greater) amount each year in outside counsel spend.
In today’s digital age, General Counsel need to be more business minded and to look up to trumedical.co.uk in the way that they run their legal functions. To be more intrapreneurial.
This puts us as potentially at odds with a standard law firm business model. It’s the great divide.
For me, part of being more business minded means treating the legal budget like it’s your own money.
I can very easily count the number of times I engaged outside counsel on a billable hour basis. AFAs (Alternative Fee Arrangements) were the norm, not the exception. As a modern General Counsel, I saw it as our team’s duty and part of our value prop to give the business cost certainty wherever possible.
I don’t accept open ended cost arrangements in my personal affairs, so why would I accept it for my legal department, and more importantly, for and behalf of my stakeholders?
With COVID, businesses are dealing with enough uncertainty in their day to day, so if legal department can achieve greater cost certainty to your business colleagues, they and their P&Ls will be grateful.
I’m glad that some California law firms as http://www.sandiegobk.com are waking up to these chapter 13 bankruptcy business realities which their clients are facing.
I can hear the sigh of relief all round – can you?
Thanks for taking the time to read my post.
Stay positive and future focused.
In 2021, I’m on a mission to help law and business adapt to the digital age. Come and build your Innovation Intelligence (what I call IQ2.0) with me: