How I Killed Billable Hour

Years ago, while working in my own law firm, I was constantly bothered by the problem of not being able to serve enough customers. I wanted to build a profitable business that would help those customers who have been excluded from legal services but that would not trap and drown me to work. The equation seemed impossible for a long time until I found a solution in productizing legal services and killing billable hour.

Ever since starting my business, it had been important to me to be able to lower the threshold for buying legal services and for the first few years the only way I knew how to do this was by lowering the price, that is my hourly rate. I billed a really low hourly rate for my work compared to the general market level and my competitors. Over time, however, it became clear that this was not a sustainable model. I shot myself in the foot in many ways.

First, I found that too low a price was detrimental to my brand – I inadvertently gave the impression of an inexperienced beginner, even though I already had a decent long work experience as a lawyer and knew, at least quite often, what I was doing. Second, the clientele for which I wanted to lower the purchase threshold was still unable to purchase my services despite the low price. Third, because my prices were so low, I needed a lot of customers in terms of volume, so a lot more work was needed and I worked long hours.

The strategy I chose didn’t work, or in fact it worked just the opposite of what I would have liked.

The customer doesn’t want to pay for the hours and I don’t want to sell them time

My target customers were new and small businesses and entrepreneurs who I knew had compelling needs for legal help and at the same time a very limited budget.

Text This is the reality for many companies law is handled with google - Legal Design Blog Something Simple FirstI had found the channels through which I reached the new businesses and got a lot of contacts from entrepreneurs in need of legal advice. However, the assignments bounced at the bidding stage, customers did need a service, typically a shareholder agreement, but the fee I asked for was too high for them. Often, the conversation ended with the entrepreneur stating that he would just have to google some template and move on with it. This is the reality of so many companies and entrepreneurs – even the most demanding law is handled with google.

My own challenge was also that at the time I was a single mom with a small baby, and the time available for work was really limited. I had not been blessed with a baby who would play alone or nap for hours every day, but an active and quite vocal young man who was taking only half an hour naps and to whom mommy’s computer was the worst enemy. The only hours available for work were late evenings and nights.

Text I was baffled with how I could serve more customers profitably - Legal Design Blog Something Simple FirstSo, I was stuck. There was a demand from paying customers, I had a desire and know-how to serve them, but the barrier was manual work and the price of the service. In practice, I had to sell my time, which I didn’t have and which customers couldn’t pay for. I was constantly baffled with how I could serve more customers profitably and without having to work overnight.

Legal design in action – From billable hours to legal products

In the first stage, my solution was to productize the shareholder agreement into a fixed-price product with a standardized process.

Through practice, I had learned that the needs related to the shareholder agreement in my own customer base were mostly very similar, if not the same. I had defined my own target customers quite precisely and also selected the marketing channels and my marketing message according to my target customer. As a result, I gained customers whose needs matched my own offering.

Text My solution was to productize the shareholder agreement as fixed-priced product - Legal Design Blog Something Simple FirstMost of the shareholder agreements requested from me were fairly basic agreements between entrepreneur shareholders. Entrepreneurs just had to get started and the shareholder agreement had to get done. Often, the shareholder agreement was required by an external party, such as a bank, and the entrepreneurs themselves did not have much passion for the content (although many times they of course should have). I did not aim for very complex cases, such as those involving, for example, private equity investors or employee option programs or other more specific needs.

I started the legal design process by analyzing the customer needs and steps of drafting a shareholder agreement, identifying recurring elements, and documenting them. On this basis, I formulated the following process for drafting the shareholder agreement:

To start the process I mapped out the customer need through a few key questions. At this stage, the aim was to understand whether a simple, fixed-price shareholder agreement was sufficient or whether a more tailor-made solution was needed, in which case the service and the pricing would be different.

For simple shareholder agreements I gave a fixed price and explained what the package comprised: a fixed price package included the first draft, a half-hour online meeting and one round of modifications. I was also clear about what was not included in the package or where I would charge extra. This, managing customer’s expectations, was important so that the customer knew what to expect as a result of the service. In order for the customer to get a cheaper and predictable fixed price for the service, it meant that the service did not include so many customized steps. And customers were fine with this.Text Managing customer expectations is important as what to expect as a result - Legal Design Blog Something Simple First

After customer accepted the offer and after the customer onboarding process, I sent a questionnaire to the customer, which mapped out the customer’s needs and desires in terms of content. This list was based on years of practical experience of what kind of needs entrepreneurs typically have and what were my recommendations for the minimum content of a SHA. The list of questions included plain language explanations of what the questions meant and what kind of things the entrepreneurs should consider among themselves. Later, I developed an online shareholder agreement guide to support the questionnaire.

Crucial at this point was that I explained to the customer the concepts I used, what was the intended purpose of each contract clause, and how the issues were typically agreed upon. For example, if I had only asked the customer whether or not the agreement is subject to a competition restriction, the customer would probably not have been able to respond and would have needed me to open the concept to him. Instead, I had translated the questions into the customer’s language and told about each item from the customer’s perspective. Short practical examples were also good help.

Text Best legal service is not always that you serve the customer tailored end-to-end - Legal Design Blog Something Simple FirstThis is legal design in action, how you design the legal process and the information to be provided in such a way that it serves the customer in the best possible way and empowers the customer to make decisions about herself and also to implement them, for example by creating her own contracts. The best legal service is not always that you serve the customer personally and tailored from start to finish, especially when a tailored service excludes most customers from the entire service.

After receiving the answers to the questionnaire from the customer, I compiled the shareholder agreement from the pre-made and adjustable modules by choosing the appropriate clauses and combinations for the first draft based on the answers. I also added explanatory comments or additional questions to the draft for entrepreneurs to consider before the joint review. 

I sent the agreement draft to the customer and asked to go through the draft carefully. An important part was to encourage an open dialogue on the actual real life questions behind the clauses, after all, agreements are for the most part much more than what is recorded in the agreement as a text. It is a matter of trust, transparency and mutual support in different situations.

Finally, the process included a half-hour meeting face to face, as well as making the agreed changes to the contract.

The end result of the entire design process was a relatively predictable service product that started to work well right from the start. However, hunger grows while eating and I wanted to improve and optimize the process even more.

Automating the agreement creation

The idea for the next step, namely the automation of a shareholder agreement product, ignited during my morning run. I figured that I had already developed my process for creating a fixed-price shareholder agreement. Why not automate part of the process to make more work more efficient.

Text Personalized legal advice could be limited to areas with tailored needs - Legal Design Blog Something Simple FirstAt the time, I didn’t know anything about legal tech yet, which was kind of lucky because I also wasn’t discouraged by everything that was already found in the world. I thought very simply that since I already had a paper-based process where, based on the customer’s responses, I compiled the customer’s shareholder agreement from different modules, I could try to automate the same process. In that case, the personal legal advice could be limited to those areas that would need tailored advice, and the standardized creation process would be handled digitally.

Frankly, I didn’t know anything about what I was doing at first, but luckily I thought my own idea was so good that I was excited to promote it. (Admittedly, people who know me know that I’m usually so enthusiastic about all ideas that my enthusiasm shouldn’t be considered a very objective measure of quality for new ideas.) I learned by doing. I hired a sw developer for the project who then hard coded for me an online service where the customer could create a shareholder agreement tailored to her own needs and get my advice afterwards. I designed the questions in Excel, compiled and / or follow-up questions, as well as the clause modules to be added to the agreement based on each answer. The sw developer coded the service based on this Excel.

Again a side note: I make it sound quite simple, which is not very true – I learned the hard way. Luckily there are nowadays tools that you can use yourself for creating automated templates without going through this hard-coded route!

In addition to creating the SHA, the service included a 30-minute call to ensure that the agreement was suitable for the customer’s needs. Incorporating counseling into the service was important for the customer to feel the service was reliable and safe. I learned along the way that if counseling was not included in the service but was offered as an additional service, the purchase threshold for customers was higher.

Dare to challenge the tailored lawyering

Text Over-customization in practice means the service becomes too expensive - Legal Design Blog Something Simple FirstOne of the important lessons in this design process was that if I want to offer my legal service as a product, and especially if I want to offer it online, the service needs to be as little customizable as possible. It may seem counter-intuitive. Can I reduce customization and still serve my customers well?

You may have learned that as a lawyer you need to tailor your solution very individually to the needs of each customer, and of course in many cases this still holds true. However, I challenge you to think about not over-customizing, that is, offering a solution that is sufficient for the customer to solve his or her needs. Over-customization in practice means that the service becomes too expensive for most to buy. Or too burdensome for you to produce it. At present, the customer’s range of alternatives is very narrow, on one hand there is the option of complete self-service with google and on the other hand an expensive end-to-end service, even if the customer’s need is likely to be something in between. Now there’s some market potential right there!

Text Customer's alternatives are very limited either DIY or end-to-end market potential is in between - Legal Design Blog Something Simple FirstI know that the reality is not quite that simple and that regulation in many countries limits a lot of opportunities for lawyers to offer services online. However, there are many things that can be done right now to design and digitize your own service. By experimenting and developing, you will find ways that suit you and your customers.

My first sales online

It was a great moment when I launched an online service that I invented and designed myself. I pressed publish and there it was, out in the world. Even bigger moment was when the first money paid for the first online shareholder agreement slipped into the account. I got a notification from my phone of the payment confirmation. I remember the moment vividly, I had just come home from work and was feeding my hungry toddler. It felt pretty unreal. It felt pretty great.

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