Since I am part of an ABA panel in May where I’ll be discussing trends in legal plans, I thought I would share a few words here so those of you who own, run and manage law firms can see how current trends may present an opportunity for creating recurring revenue for your practice. For those that aren’t yet familiar with legal plans, let me first start with a little history.

Brief History of Legal Plans

Legal access and legal insurance plans are not a new concept, having been around since at least the 70’s. They were originally pioneered by Harland Stonecipher, an insurance salesman who, after suffering through his own legal troubles, was inspired to create a legal insurance product to help consumers.

Most legal plans are designed to meet the needs of the 70 percent of Americans that forego legal assistance because of costs. While the promise of low-cost legal services makes a lot of sense, especially considering that the Legal Services Corporation estimates that 63.4 million Americans would qualify for legal aid funded services. Even with numbers like those, adoption of many plans has not achieved the subscription numbers we all know that legal plans are capable of reaching. However, I think that we are at a point in time where all of that is about to change. The key reasons for that change will be driven by changes in consumer behavior and the creation of newer, significantly more niche legal plans that are now becoming available to consumers and small and micro businesses (SMB).

Changes in Consumer Behavior

Let’s first start with changes in consumer behavior. Most legal plan business models have been built around recurring revenue, where people contribute a monthly fee in exchange for access to certain services. Being signed up for a subscription has not always been in vogue. I remember a time in the late 70’s and early 80’s where signing up for a Columbia House music subscription was considered to be a bad move. The Columbia House model was based on negative option billing, and if you forgot to cancel your subscription in advance of the billing period, you typically were on the hook for some minimum amount of money spread over a given period of time.

These subscription services learned a lesson over time: If you separate the payment period from the utilization of the services themselves, you can create the type of momentum that keeps people paying for a service even if they weren’t taking full advantage of that service every month. Some consumer’s enjoyed the ease of shopping for music that way, while others hated feeling duped when the bill came along with a cumbersome cancellation process.

Today, these recurring revenue methods have changed significantly and adoption is strong. Here’s what I mean:

The Netflix Model

For at least the past 10 years, consumers feel differently about subscription services. This is mostly because technology in the last decade has introduced several services that depend on a collaborative consumption economy. I’ll use Netflix as an example of what I mean. You see at one point, many of us either (a) heavily relied on the video store around the corner for weekend entertainment or (b) built a DVD library of our own by regularly purchasing movies from outlets. If you were building your own library of movies, this could get pretty expensive.

When Netflix entered the market, they proposed a different model. By offering their entire library of movies for a low flat fee every month, they were essentially saying to users, you can all own the largest library of movies online collectively through your monthly contribution that provides you access. In other words, we can collectively contribute small amounts to a system that uses the money not just for profit but to continue to build a library of movies that we (a group of like minded users) can all enjoy. We collectively consume the product and because we do, costs are low while benefits and features are high.

Many major disruptive business models such as Uber, Google Apps for Business and just about any other software platforms use this model, and we consume these products happily. Subscription services are no longer thought of as a pariah of business models. This change in consumer behavior is great for legal plans. The second change is newer niche legal plans hitting the market.

Newer Niche Legal Plans

Up until now, most legal plans tried to take on as many users as possible. Some plans – LegalShield, Hyatt and ARAG, for instance – would create benefits strategies targeted at large segments of the population. While this model has clearly worked well for them, gaining high adoption under these models typically involves significant marketing costs as they try to reach all consumers for all legal issues. Just as technology companies are creating more and more niche solutions for particular problems in certain industry verticals, legal plans that follow this trend will also have greater chances of achieving low cost adoption of their intended audience.

Even while the overall legal benefits for these targeted groups of users may be similar to those offered by mainstream plans, the messaging and understanding of a particular problem for the niche plan users make it unique enough for the end consumer to feel confident that the niche plan was specifically designed for them. This effect of created for them accomplishes two things:

It makes adoption easier.
It reduces attrition.

It accomplishes this because the niche legal plan is able to create and target it’s messaging more specifically and create a unique and engaging experiences for it’s users.

What Law Firms Are Taking Advantage of This?

There are at least three newer legal plans that have been created recently that are taking all of this into considerations. The three are Uncommonly Smart HR, The Creators Legal Plan and 420 Legal Plan. In each of these plans, they are targeting a specific niche segment of the total legal plan market. Once they have strong adoption and have gained market share in their given niche, they can always expand and offer additional services to reach a different segment (think Uber Black going after high end business travelers as opposed to simply solving the last mile problem).

Here is a brief look at each of these legal plans.

Uncommonly Smart HR

Uncommonly Smart HR was started by a Colorado employment defense firm (The AR Group) that has acquired significant experience in human resource (HR) management. They created the plan to deliver high quality HR services to businesses that have between 5 to 150 employees and have not yet hired an HR Director. Because HR advice is not considered legal advice, they are able to scale the plan more quickly and move into other jurisdictions that are not otherwise off limits to them because of where they are licensed. HR issues that ultimately need to involve lawyers are either referred to the firm or referred to a network as necessary.

The Creators Legal Plan

The Creators Legal Plan is the brainchild of Jonathan Tobin, an attorney, designer, coder and musician whose practice serves mostly creative freelancers, agencies and tech startups. He offers a suite of services that are particularly important to creative professionals, mostly intellectual property issues. Because he understands this population of consumers well, he is able to target them with benefits like trademark, licensing and copyright issues that are highly relevant to his end user. His attrition is very low and his platform is gaining traction daily.

The 420 Legal Plan

The 420 Legal Plan is still in pre-launch phase and is rumored to be out at the first of the year. The 420 Legal Plan is being created by Omar Gastelum, a Los Angeles family and criminal defense lawyer, to target dispensaries in California. We have seen several states (CO, WA, AK, OR) pass legislation around recreational use of marijuana and it is expected that CA will follow especially since it has cleared its first step to ballot measure. The benefits will likely include specific assistance with regulatory matters related to the industry as a whole and California specifically.

The Future of Legal Plans

Now that consumers are more comfortable than ever receiving services under a subscription model, legal plans are poised to gain strong momentum. However, it is the niche legal plans that will be the real winners in all of this because they will be creating specific solutions based benefits that will resonate well with their target markets. In today’s “there’s an app for that” consumer mindset, consumers will look for very specific (niche) solutions to their legal issues and that will be the primary drive for low cost adoption and longevity in these plans. I predict going forward, we will see many more niche legal plans being developed by law firms, to help steadily increase revenue and stabilize cash flow issues. In fact, I wrote a piece on law firms of the future using a model like this.

If you are interested in creating a legal plan for your law firm, I can help. Just shoot me an email or give a call. Also, for those of you interested in learning more from other people involved in legal plans, I highly recommend you attend the ABA GLSA conference in Key West.

ABA-GPSolo/GLSA 2016 Conference

The ABA-GPSolo/GLSA 2016 Joint Spring Meeting in Key West is a four-day conference providing lawyers and other legal services industry stakeholders with opportunities for education, business development and fun in an idyllic beach setting only 90 miles from Cuba. Guests will principally be legal plan administrators, legal plan panel attorneys, solo and small firm attorneys, general practitioners, investors, marketers, trustees, and professionals at the nexus of law and technology.

To register for this May 11-14, 2016 conference at the current GLSA member rate of $300, or the non-member rate of $400, call GLSA at 312/988-5751 or sign up online.

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