[00:00:00] Speaker A: Welcome to the Relay, the legal show for personal injury law firm owners, presented by Lexamica, the number one attorney referral network. I'm your host, Gabriel Stertz. Joining me today is Matthew Kirbis, founder of the Subscription Attorney. Matthew is a champion for a new billing model for attorneys. And we've done a couple of podcast episodes before. And I'm excited to have Matthew on the show today to talk about that model. It has a lot of parallels with the contingency fee structure. Matthew is one of the smartest people I know. He's been a leader in the ABA for over 12 years. He's pioneered a new billing model and has implemented a lot of really fantastic tools in his law firm. Matthew, welcome to the show.
[00:00:38] Speaker B: Thanks for having me again. And it's one of these episodes I'm gonna have to share with my wife. I appreciate that, Gabriel, thank you. It's a good thing this is recorded.
[00:00:45] Speaker A: I don't let my wife know where my podcast episodes go because I don't want her to listen and then give me her feedback in the evenings.
[00:00:52] Speaker B: Well, you said I'm a smartest person.
[00:00:53] Speaker A: You're a braver man than I am.
[00:00:54] Speaker B: I'm one of the smartest people, you said. So I gotta have to, I gotta share this with her. And my wife actually does know. And I'll let your listeners know that this episode, along with the other one I did with Gabriel and Governor Rorty, you're hearing this and any other time I've given a Talk
[email protected]. that's my speaker portfolio. And because she's my wife, she hasn't listened to a single second of me because she has to listen to me all day, every day. So she doesn't listen.
[00:01:16] Speaker A: There you go. There you go. Yeah. So, Matthew, look, you've got this really interesting billing model which is way more common across every other industry than law, which is subscription. It's a monthly service. I love it. I think it's absolutely genius. I don't know, I. There's some, some high level reasons, but I think more attorneys should be looking at this. It creates consistency for the buyer, it creates better cash flow, more predictable revenue for law firms, and it allows you to focus on the, rather than trying to bill hours, it allows you to focus on efficiencies and productivity and scalability, which are all things that I personally very excited about. So I'd love to hear, just like before anything else like this product that you have, what is it exactly? And how did you get into this. This pricing structure, I had the benefit.
[00:02:06] Speaker B: Of being decades late to the subscription party, right? Because, like, so many businesses, like you said, have been using subscriptions for so long that there's really, like, 20 years of the subscription economy, educational material. And all I had to do was extrapolate and apply it to the legal profession. And, like, that's really all I had to do. Now there's lawyers who just don't want to change the business model because they never were taught to think about the business model. There's this idea of metacognition, which is thinking about thinking, and people just don't do it. They don't do it in their personal lives. They don't do it in their business lives. Well, I've been metacognitive for as long as I could remember. And so, like, I was always thinking, like, there's gotta be a better way to do this. Like, I don't like billing hours. The clients don't like me billing hours. And while I realize that contingency is a whole different world, there's actually a lot of benefits to having clients have some skin in the game. So looking at it from, like, a personal injury, a law firm perspective, think about all those cases that you really thought the best thing for the client was to settle. And then you went to trial and you did your best because you only make money when you win. You didn't win, or you got a whole lot less of an award than you thought than what you would have gotten in a settlement, but your client didn't take it because you know what? It's not costing them anything until they win. And they would rather roll the dice. Now, what if they had some skin in the game? Even, like, $100 a month? Now, not all clients can even afford $100 a month. And the service that personal injury lawyers do to fight for those that don't have anything is incredible, and they should continue to do that. But there are also people who get injured that can't afford $100 a month or 200 or 50 bucks or whatever it is. And now they've got skin in the game.
[00:03:47] Speaker A: So let me, for your client base, what. What's the breakout of types of law, Corporate, family law, personal injury? Like, what does that pie look like for you?
[00:03:57] Speaker B: Yeah, yeah. So I'm like an individual or a small business owner's legal quarterback, right?
And there's a running back and there's alignment, and there's all these other lawyers or professionals that might do very narrow, specific things. But I'm Their fractional general counsel, whether it's a small business owner or somebody as an individual. Now most of my clients are small business owners because they don't want to have to worry about the legal stuff in their business because if it's not them, then it's nobody. Like they are the ones, they're small business owners. And I define a small business as a business that doesn't have a full time in house attorney. So you could get into the hundreds of employees still, but then I'm your general counsel. But at a fraction of the cost. At a fraction of the time. Because let's be real, if you needed a full time in house attorney, you would hire one, but you don't need that. And so that's mostly what I do. And then I do that at a smaller scale for what I call like my retail practice. Like helping everyday people in my particular market that I'm serving is the latent legal market. People and small business owners who have been long outpriced by the billable hour. And so they've been doing it themselves. And so I actually feel like I'm doing fulfilling work, which not a lot of lawyers get a chance to say. Unless you're like a public defender.
[00:05:15] Speaker A: Yeah, well look, that, it just makes so much sense, right? Because if you think about the other billing models, there's hourly, you have flat rate. And let's put contingency aside because that's a bit of a different beast. And but as someone who's running a business that's, you know, you know, we have just over a dozen people right now. Like we don't, we don't have a full time attorney. And even though we have access to a lot of attorneys, most of them are personal injury side. So it makes so much sense to me to say, okay, like there's a cost control way for me to get great legal advice. Even if like I have a big project, you are going to be able to tell me who to go to or what that should cost, right? Like just doing the back of the napkin math. Like if I can save even, what is it, like one or two billable hours a month by having someone who's on my team rather than who's I don't trust. If they're billing me correctly, that's massive. And so I think it just makes so much sense to have that. And I guess my question is like, what, what are the challenges with that? Like to me everyone should just go and hire a subscription mod a billable attorney because it just, it's you know, it's your cost controlled and you have access when you need it. What are the challenges of building and scaling this versus I mean I don't know if you've done the billable hour, but like. Yeah, what, what have you seen?
[00:06:28] Speaker B: Well, to scale it is a heck of a lot easier and cheaper than the billable hour. Right? Because the only way to scale with that is to bill more hours, hire more lawyers to bill more hours or increase your rates that are already unaffordable by like the vast majority of the public and of SMBs, small business, small, medium sized businesses. So like that, that's how you scale. And with the subscription model it's how could I do that faster? How could I automate that, how could I productize that, you know, and then I could scale and bring on more clients without having to hire more or raise my prices. Right? Cause it's about, it's literally about scale. And there are also some lawyers who, and I've even been like, kind of just like business has been going in this direction where you just charge higher monthly subscriptions to a fewer amount of clients and that's, that's a good lifestyle business. Right? Like you don't even need to grow and scale, but you can, you're, you're better positioned to because it's all about adopting tech and creating efficiencies and, and even like standard operating procedures. Like if you're a PI firm, like write down all your sops that like any new employee could come in and follow. Like even having things like that set up, you're just incentivized to do that when you're not billing by the hour.
[00:07:36] Speaker A: So 2024 has been a crazy year for AI, AI tools. I think subscription model is perfectly positioned to just lean into all of that. Right. Because it, like you said, it's an efficiency game. Have you seen the, have you seen those tools allow you to take on more clients, server clients more efficiently, give more self service option to those. I could imagine a Matthew, a Matthew bot that you know, starts to answer people's questions, you know, over chat, you know, email, et cetera. Right. Like how has this affected your business model?
[00:08:06] Speaker B: Yeah, I mean it just allows me to do a higher volume of work faster for clients. I mean, pretty straightforward, right? And if I could do things faster, even the same volume of work, but faster. Faster is always more valuable and that's hard to understand when you're billing time. But faster is always more valuable in particular in like the business arena where you're Trying to get deals done. And once those deals are like, once those contracts are signed, both sides start making money, right? And so like literally the faster you could do it, the more money your client and the other side of the other, the other attorney or the other part of the deal, like, they start making money. And so you don't want to be like. And so unlike a true in house attorney, like as a fractional gc, that's month to month subscription. And I got to keep clients happy. Like the faster I could turn around deals, the happier my clients are, the more money they're making, the more I could say, hey, look at the ROI on this. We got this turned around maybe six months faster. If I had taken as long as the other side's in house attorney or outside counsel, like it would have taken six months, like to make what you're making now. And I was able to flip that around and that pays for the next 10 years of monthly subscriptions or what I'm charging you, let alone all the other times. This is going to compound and I'm going to be able to help you turn deals faster because my red lines are going to be quicker. Right? So like, I mean it's just like the most lawyers and outside counseling and house attorneys as applies are seen as cost centers. I try to show that I am a profit center. I will make you money by being your lawyer.
[00:09:32] Speaker A: That's fascinating. And that, I mean that aligns with the contingency model, which is, look, I'm going to hire you and then we're going to, you know, you're going to work on my case and then we'll both make money together. In some ways, it very much aligns with that.
What are you seeing more people enter into the space now that AI is is around or is this still relatively overlooked as a way to run your law firm?
[00:09:56] Speaker B: It's still largely overlooked because one of the problems is like, why can't I just sign up more clients? It's like it's a market problem. Like people don't know it's an option. People, I include small business owners in there, they don't know it's an option. And they've been doing their own legal and things have been going kind of okay. Right. So like there's a little bit of a market and marketing problem with it.
And that's also true of the lawyers. Like to even know it's an option. Like when a lawyer discovers my podcast or like some talk I've had for the first time, I get a lot of LinkedIn DMs that are just like, I did not even know this was a thing. This is amazing. And so like, so for both my client, like getting clients for me and also lawyers knowing it's an option, there's just like we need like a Got Milk campaign. Like we need like, like seriously, like, like we needed a billboard campaign. Got subscription lawyer.
[00:10:42] Speaker A: Yeah, absolutely. I mean, look, that's like one of the best investments that you can make as a small, small size business owner. Like downside protection on, you know, contracts and other types of agreements. And then there's the upside of, of being able to negotiate better and, and more forcefully when you are in those kinds of situations and just understanding legal frameworks. I think one of the things that I just didn't realize before I was inside the legal space is just one, how big it is, how much specialization there is. So just having someone who understands the landscape and help you navigate it is, is huge. And that the legal terms of deals, in large part, those are all very high leverage. And in other words, they're multipliers on your business where it's like, yeah, I can, I can save some money on this or on that, but like the legal stuff can, can sink your business or it can really elevate your ability to, to do things effectively. That, that, that makes a ton of sense.
[00:11:33] Speaker B: Yeah. And, and, and if I could, if I could hijack this episode just for a second here. Cause I never get to talk about things in the personal injury space. And having been an insurance defense attorney, I actually like have a little bit of perspective on that. And so like if you're a personal injury attorney and you're listening to this, think about all those times you had to go to that extra deposition. You had to respond to that what isn't technically but is kind of a frivolous motion. And you're just like, well, the defense lawyers are just billing this file, right. And it's creating a lot of extra work for you because they're incentivized to bill hours. And I was, when I was originally building a subscription model, it was in an insurance defense environment where I was trying to like create like predictable revenue and expenses, revenue for the firm, legal expenses for the law firm or for the insurance company. And to try to create an incentive to get cases done faster rather than take as long as I can so I could bill the file. So I actually think it's in PI attorney's interest that the profession adopts subscription or in particular ditch the billable hour because it will help move your cases because the insurance defense attorneys aren't going to be motivated to bill a file and take more time.
[00:12:38] Speaker A: I mean, I think they're all in on that math. They're the ones who are on the efficiency side of the game already. Right. Like, let's get this stuff moved through and make it happen quickly.
[00:12:48] Speaker B: But my point is, is yes, they are, but they should share my podcast law subscribed with every insurance defense attorney on the other side so that they could start to like, talk about a got milk moment. Like the PI lawyers listening to this, that we are philosophically aligned on efficiencies, but we need other lawyers in the profession, in particular on the other side of the aisle in litigation, to like adopt an efficiency, a business model that is more profitable when it's more efficient and the subscription model lends itself to that.
[00:13:17] Speaker A: Yeah, yeah. Do you just, I mean, that, that obviously sounds great. What do you see as the objections that lawyers throw once they understand the billing model? What, what are the objections that they tend to throw about the subscribed model? Are they concerned that like their, their hourly rates getting. Because that's gone, they're going to make less money? What, what are the concerns that you find people have?
[00:13:42] Speaker B: Yeah. And look, they will make less money per file, possibly, but their volume, their ability to get things done faster and the ability to take on more files without hiring more lawyers, which is significant overhead goes up so their total profitability significantly increases. And this is one of the hard things to do because one of the ways, as any business owner, you have to look at not only how can I make more money and bring in more revenue, but what are my costs and how can I eliminate costs? And I don't, I don't encourage like with the AI efficiencies to like get rid of people. It's just how do I help them leverage AI to connect their productivity so that I don't have to hire more people? And now I could be a million dollar firm with three employees instead of having to bring on like five more lawyers and 30 employees. Right. Like your ability to get to that revenue threshold comes faster.
[00:14:33] Speaker A: Yeah, yeah.
[00:14:34] Speaker B: So that's the way that I explain, like, possibilities are so much greater. And you can start thinking about clients in terms of lifetime value rather than this one file. And how much can I get from this one file? Think about your client holistically. Think about it over the next several decades, not just over the next two to three years.
[00:14:50] Speaker A: No, I think that's, that's really smart. And to Tie into our mission. At Lexamica, we see this massive, you can call access to justice gap. But from an entrepreneurial perspective, there's this massive business opportunity where three in four Americans are not getting legal help when they have a legal issue. Some of that solved by connecting people with attorneys more effectively. We're helping contingency law firms to take the calls that they're turning down and get them out to other law firms. There's a lot of people in the space that are working on parts of this. I'm always excited when I see a business opportunity that aligns what I also view as a societal problem, which is people not getting legal help. I think what you're offering is a huge part of that gap, which is legal services are very expensive. Like how much of that gap could we close if everyone was aware of and had access to a low cost subscription model for legal services? A lot of that I think would be solved For a talk that I heard Mark Britton give at Clio Con, I think it was three years ago, which has really stuck with me. He talked about the pyramid of legal services where at the very top you have the hourly billing white glove model and at the bottom you have basically you can Google it, right? And then there's in between there's this massive gap of kind of self serve, but you know, with high quality information tools that people can use. And then above that is the kind of the, just across that fences services that lawyers provide that are a lot more scaled than an hourly billing model. And when I look like we haven't made a lot of progress in the industry in the past three years to solve for those middle gaps, Lawyers have a lot more access to those things through Paxton and even, you know, customizing Claude and other LLMs. But I don't think that your average consumer has seen the needle move. So I do think there's a, a real opportunity for people to engage consumers to find services like subscription model for legal and for you and other people like you to really push this out. Especially because now there's this market opportunity that's never existed where you as a lawyer can build legal tools that consumers can use but are safe for them. Whereas a lot of these models like Claude and ChatGPT will just go off the rails. You have the ability to help to develop and then get those tools to market. I mean, look, legal services today is $300 billion market across the country. And we're, you know, we're not serving three quarters of, you know, and that's not a Dollar weighted average. But like there's just a lot of money on the table. And so it's really exciting to me where we are and what you're doing, which looks more and More prescient as LLMs and AI come and say, oh, like we really could have like $100 a month or a 20, $50 a month legal service that does scale as a product. So I just think it's fascinating. I think it really aligns with a lot of what our society needs.
[00:17:42] Speaker B: Yeah, yeah. I mean, like, I've seen the ads, I'm sure your listeners have seen the ads for like these, you know, companies. Look, it's probably unlicensed practice of law, let's be real, that are like offering to settle with insurance companies for you and it only cost you like a few bucks or something like that, right? So like, I think those are going to get shut down because it's upl. But some things are going to start to happen more and more in that space. Like don't think you're safe just because of, of, you know, law license rules and UPL rules. And you know, we have a monopoly on legal services. Like disruption is coming for the legal profession. Whether that's from inside the profession or outside is a question of how quickly that's going to happen, but it is going to happen. And so do you want to be at the forefront of that? And even getting a little bit of recurring revenue, even as a PI attorney and giving your clients some skin in the game that's going to lead to more settlements, you should actually, your clients should actually take and you have recurring revenue now. What do you have to give up for that? Well, you probably can't take a third anymore. Right. And you just have to. And if you're not sure what your business model should be or you should charge, there are some startups for that. Right. Alt fee comes to mind. And if you haven't had them on your show, you should. But like use AI, like use Claude to be like, okay, I'm a law firm, you are a legal business model expert, you know, and I need to come up with a new business model. I'm a personal injury attorney. I'm thinking about offering a subscription and giving up a percentage of what I take instead of taking a third. You know, what are my options? Like use the AI as a strategist to help you come up with what your business model should be. I could certainly make some recommendations. Right, but like use AI based on actual data that you've collected. Right. My average case value is such and such, right? Like give it data and have it analyze it for you and suggest different business models and try them. Don't be afraid to try them.
[00:19:28] Speaker A: That's fascinating. I think it's very interesting. Matthew, I appreciate you coming in with a unique vantage point and perspective. Try to give a key takeaway to our listeners for every episode. You know, this one's a little bit more of a case study on how things can be different. But as far as takeaways go, look, you should always be looking at your business model. Like Matthew said at the very beginning of the episode, this idea of metacognition, you got to think about the business, not just think inside of it. You got to think about your business from the outside. How can it be better? How can you reinvent things, especially with all of these new tools? So I appreciate you taking us down a pathway, thinking about things differently. Matthew, really appreciate having you on the show. And as always, it's a pleasure talking to you.
[00:20:08] Speaker B: Thank you so much again. And look, open invitation. If there's any personal injury lawyers out there that are thinking about leveraging subscription in some way, reach out to me. Search the subscription attorney on LinkedIn or Matthew Kirbys and let me know because I'd also love to have you on my podcast, Lost Subscribed. And let's engage in a subscription therapy session that's also content for other people that might inspire them to make the same choices.
[00:20:31] Speaker A: Fantastic. There you go. Thanks, Matthew.
