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On Balance

The Ethics of Subscription Legal Practices

By Megan Zavieh

subscription legal practices

Subscription legal practices are all the rage and with good reason. They clearly meet a need for consumers of legal services, and the subscription model gives lawyers more freedom in their practices. But are subscription plans for legal services ethical? The simple answer is yes, but there are important considerations when designing your subscription offering.

Do Your Homework

Just because everyone else is doing it does not mean it is permitted, so it is a good idea to do your own research on the ethics of any new product or service you want to offer in your law practice. Plenty of discipline cases arise from a lawyer following the lead of others without doing their own due diligence. “Joe Smith down the street is doing it” is not a defense to ethics violations. If anything, you will simply point the state bar to Joe Smith for another prosecution.

FAQ: Key Questions About Subscription Legal Practices

Almost every lawyer looking at the ethics of subscriptions has similar questions, and they are the key ones to investigate to ensure your new service line meets with ethical strictures.

  1. Are your fees conscionable or reasonable?
  2. Where are your fees being deposited? When are they earned?
  3. What is included in the fee?
  4. When does the representation end?

Lack of Authoritative Guidance from the Bar

As is typical in the legal profession, the business model for subscription legal practices has developed faster than the ethics rules can evolve. As a result, we have to extrapolate existing ethics rules and opinions and general best practices to determine the answers to key questions.

The Maryland State Bar Association issued an ethics opinion in 2020 that hits on these and other questions related to subscription legal services, and it is definitely worth a read. It runs through many of the options discussed here, and while most states do not yet have ethics opinions on this subject, Maryland’s approach serves as good guidance.

1. Conscionability or Reasonableness of Subscription Fees

ABA Model Rule 1.5 on fees deals with “unreasonable” fees, and the versions of Rule 1.5 adopted around the country include a prohibition on “unconscionable” fees. While the application of Rule 1.5 and its outside boundaries vary from state to state, the basic concept for any lawyer considering subscription services is to delineate what services of value the client is getting for the subscription fee. Then, judging by your state’s criteria for unreasonableness or unconscionability, ensure that what you are offering is of sufficient value to justify the subscription fee.

Of great importance in this analysis is to step away from the hourly billing model. Your services’ value is not the time you spend tending to that client. If it were, then there would be no reason for a subscription — just bill the client hourly for the work you do for them.

Rather, the value can come in the form of access to you and your schedule for last-minute phone calls, access to a database of materials that can assist the client even if they are not reaching out to you directly, subscribers-only newsletters with valuable information, and any other creative ideas you may have on how you can serve your clients.

2. Earning and Banking Subscription Fees

Another key question is how to account for fees paid by subscribers. Again, this implicates Model Rule 1.15. In traditional representations, it is easy to see that a fee paid upfront before work is done is an unearned fee (and should be in trust or have necessary disclosures if your state allows that), and fees paid for work already completed are earned and should not go into the trust. But what of subscription fees?

A safe route to take for subscription fees is to charge them at the end of the month for which the subscription was provided, and then they are clearly earned. Another safe route is to put all subscription fees in trust until the period of service they cover has passed and then withdraw them. Unfortunately, both of those options are undesirable to the lawyer. The first means risk of not getting paid after services are rendered, though, with credit card automated processing, the risk can certainly be mitigated. The second means two accounting steps every month — once to collect and put into the trust at the beginning of the month, and a second to withdraw from the trust at the end of the month.

Another option is to describe the fees and the services in such a way that the fees are earned at the time they are charged at the beginning of the service period. Here is a place to check your state’s rules. It is not typically permitted to call the fees “nonrefundable” because they must be refunded if you have not provided anything of value. But you can describe the services as being provided at the time the fee is charged on the first of the month.

For example, if your subscription provides access to materials available only to subscribers, the access begins on the first of the month and continues all month. Thus, the subscriber has that access on day one and has obtained the value of that service. Similarly, if the subscription’s value lies substantially in your availability to provide last-minute advice, you only have the capacity to provide it to so many people. So, that access to you can be a service of value made available on the first of the month.

Since trust accounting violations are a common basis for disciplinary actions, it is worth spending a fair amount of time running down your state’s rules on this question before launching a subscription service. If your state bar offers a trust accounting course, take it. Trust accounting rules are deceptively simple, and a good number of questions can arise in the actual implementation. Being armed with knowledge on this topic makes setting up a subscription practice far less stressful.

3. Included Services

Perhaps the biggest practical worry for lawyers is how to avoid subscribers taking advantage of the subscription service to the detriment of the lawyer’s profitability. But, in reality, this is also an ethics question: Providing a clear description of included services is necessary to prevent ethics issues.

On the ethics side, if your services are not clearly defined, the client may expect more from you than you intend to give. This could mean you breach your duty to diligently represent the client because you fail to do something the client expects. If your service agreement is unclear, it will be read to your detriment. You could be found ethically culpable for failing to provide services deemed covered.

On the flip side, if you believe you are supposed to be doing more for the client than they anticipate, you might overstep your bounds. Acting without client authorization would also be an ethics violation.

From a profitability standpoint, failing to define services clearly can lead to your services slowly growing beyond what you anticipated when you figured out how much to charge for your services. This is a problem. A simple way to work this out is to include a clear statement of how much additional services will cost in your subscription agreement. By providing this detail, you inform the client that there is a limit on your included services. Then, if the client requests services beyond those included in the plan, you will have a clear reference point.

Your clear statement of included services also helps buttress concerns over the amount of your subscription fee. As you develop your description and decide what to services to include or exclude, you can clearly see whether the service you are providing justifies the cost.

4. Ending Representation

The fourth issue frequently raised by lawyers is how to determine when representation ends. In an ongoing monthly subscription, is there no end until the client says there is?

This, too, can be clearly explained in the service agreement. Many lawyers will offer a discount for a yearly subscription over a monthly one. While a big incentive for this is a larger upfront payment and more cash flow certainty for the lawyer, there is also a benefit to knowing the client has requested service for a full year. You won’t be wondering whether the client will continue month-to-month and plan to offer services the following month. This is particularly helpful when some plan benefits are limited by the year (such as one review of your estate plan per year as a subscriber).

The agreement should provide clear cancelation terms for the client so that they can clearly see how to do that when they want to cancel. Keep in mind the reasonableness of fees and the value for services received. It should also clearly spell out when the attorney can end the subscription — with the same considerations. After all, the lawyer may find that the subscription is not working for them in some way. It may not be profitable. It may be in an area of law that the lawyer has chosen to abandon, or the terms might just need to be changed to make it work for the lawyer. The lawyer must have a way to make changes or cancel altogether, and you guessed it — this goes in the fee agreement.

Providing Subscription Legal Services Is Totally Doable

While these are the primary ethics concerns facing lawyers who want to build a subscription legal practice, the critical takeaway is that it is completely doable to build ethical subscription plans for your law firm. First, think carefully about these key issues and others you may spot as you focus on the specifics of what you want to build. Then work through them and see how your subscription can come to life.

Illustration ©iStockPhoto.com

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Megan Zavieh Megan Zavieh

Megan Zavieh is the creator and author of “The Playbook: The California Bar Discipline System Practice Guide.” At Zavieh Law, she focuses her practice exclusively on attorney ethics, providing representation to attorneys facing disciplinary action and guidance on questions of legal ethics. Megan is admitted to practice in California, Georgia, New York and New Jersey, as well as in multiple federal courts and the U.S. Supreme Court. She podcasts on Lawyers Gone Ethical, blogs on ethics at California State Bar Defense and tweets @ZaviehLaw.

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