The Two Most Important Questions Businesses Should Ask about Legal Support
Why Are Small Businesses Underserved by Lawyers?
Every year, millions of small businesses go without the preventive legal support they need.
The market for this legal support is worth more than $90 billion.
Small businesses have a huge need. Business lawyers have a huge incentive to support them.
So, why can't the little guys get the same kind of legal support big companies receive from their legal departments, outside general counsel, and other legal vendors?
I believe the reason is that small businesses and business lawyers simply don't have the right conversation with one another.
Having the Right Conversation
The conversation starts with two important questions.
Question One
The first question is: "How can we make the cost of legal support predictable?"
When legal costs are predictable, businesses can budget for them. Like all predictable costs, legal support's cost can be passed on to consumers in the form of prices for goods and services. Businesses, then, don't feel the pinch of legal costs, as they do when such costs are not foreseen and businesses, therefore, have not budgeted for them.
For over a decade, Executive Legal Professionals, PLLC ("ExecutiveLP?") has been providing flat-fee and avant-garde subscription-based legal support to businesses. With these service offerings, ExecutiveLP? has made it possible for our business clients to predict and budget for the cost of preventive legal support.
Question Two
The second question is: "How can businesses use legal support to become more profitable, valuable, efficient, and stable?"
If a business can engage with legal support in ways that result in a positive return-on-investment ("ROI"), then, in the long run, legal support shifts from being a cost center, in the business, to becoming a profit engine for the business.
I've spent a lot of money, time, and energy to answer the ROI question. I spent a year in the world's best brand accelerator developing Profit from Legal?.
Now, ExecutiveLP? offers courses, communities, and coaching + mentoring to businesses that are serious about using legal support to become more profitable, to raise their valuation, to streamline their operations, and to build resilience against disruption.
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Why Aren't Lawyers Having This Conversation with Clients?
Why aren't more lawyers asking these questions and leading their clients to have the right conversation? Why are they leaving over $90 billion per year on the table?
They're stuck in the past. They're too attached to a business model that depends on the billable hour. But you know what?
Billing by the hour sucks!
For one thing, many of the ways lawyers set their fees have nothing to do with how clients value the services lawyers provide.
And for another thing, when lawyers have an incentive to bill for time, instead of results, why would anyone ever be surprised that results take a long time to deliver and are very expensive? Why would anyone be surprised when unscrupulous lawyers pad their bills?
Billing by the hour doesn't just suck for clients, though; it even sucks for lawyers!
Even though average billing rates have increased over the last few years, they haven't matched the Consumer Price Index since 2019! Lawyers can't raise their hourly rates fast enough to keep up with inflation!
Lawyers (and clients) would do better if lawyers charged fees based on the value of their services (i.e., the results they deliver), rather than charging -- let's be honest -- a pretty arbitrary fee for time spent working on a client's legal matter.
As I have been saying for over a decade, the primary way lawyers have billed their clients for over 60 years is no longer ideal for clients or lawyers.
The Future of Business Law
There's a revolution brewing in the business law field. The days of the billable hour, I believe, are numbered. It won't go away overnight or even in ten years' time. It will go away, though.
As businesses get smarter, more data-driven, and more A.I.-enabled, the ability to forecast the value and cost of preventive legal support will only increase, increasing demand for flat fees and subscription-based billing for ongoing legal support services.
Ten years ago, I saw the writing on the wall. I've been pioneering subscription-based billing for businesses, including small-to-medium businesses, for over a decade.
The time has come for the conversation to change. Businesses need to start asking:
And lawyers need to take those two questions very seriously.
As a profession, for our own good and in the best interests of our clients, we need to do a better job of aligning our fees with the value we provide to our clients. Not only will clients increasingly expect this of us, in the future, I believe it is our ethical obligation.