What is a productized legal service?
A productized legal service is a legal service that can be conveniently produced, sold, and delivered to a virtually unlimited number of clients. The main characteristic of productized legal services is scalability. Conversely, legal services are just the opposite, since, by definition, they aren’t scalable.
A couple of weeks back, I missed one of my connecting flights when I was returning from the Berlin Legal Tech Hackathon. The first leg flight was late by just enough for me to lose the second flight.
Hence, I was rebooked for the next day. I had to spend a night in Munich.
And just recently, I decided to try one of those companies that help you receive compensation in such cases. I decided to try one of the locals that I know (ClaimCompass.eu), and I completed the whole process in just minutes.
While I heard about the service and user experience of such companies before, I never had a chance to use them myself. I was astonished by the simplicity of the whole process.
That is a primer of a productized legal service.
Main attributes of productized legal services
Productized legal services have to check a few boxes to qualify as fully-fledged legal products.
Commoditized services. Only certain services are susceptible to productization. Namely, we are talking here about services that do not require a bespoke path. These services should be able to satisfy the needs of various clients, without much differentiation in the approach;
Production. The production of the service itself has to be organized in a way that supports scaled demand. In doing so, you may use technology, certain forms of on-demand outsourcing, and likely a combination of both.
Accessibility. The legal products have to be made easily accessible to the target market. In the case of claiming compensation for disrupted flights, the target customers are consumers at large. Online service available via a website or a web app seems to be the perfect medium. This will, of course, vary on your target audience.
Delivery. Just like production, delivery also has to be scalable, for the service to make economic sense. This aspect is also frequently supported by technology.
Marketing. Of course, depending on the company’s strategy, it may make sense to use scalable channels to reach consumers en masse. It will largely depend on the underlying business model.
Marketing itself is not a differentiating factor between standard and productized legal services. However, legal products are usually supported by the “SaaS-like” online marketing efforts.
Photo by FERESHTEH AZADI on Unsplash
Should Law Firms commoditize legal services?
Heather Suttie also shared her views on why legal service commoditization is essential.
“When many law firms are as fungible as peanut butter, savvy productization and exemplary service are differentiators…” - Heather Suttie
One of the most significant trends brought to the legal market by Alternative Legal Service Providers (the ALSPs) is the variety of delivery methods. These make legal services less complicated and expensive, and therefore easier for clients to purchase.
If law firms wish to stay relevant in this increasingly competitive field, they need to market their services using a hybrid model.
The legal services hybrid model
Of course, nobody should consider cannibalizing their bottom line. However, law firms could consider the path of a cautious innovator, and disrupt parts of their business model at a time.
As a result, a law firm could retain its bread-and-butter billable hour (biglaw) model while it introduces legal products.
Productized legal services (i.e., legal products) could play a twofold role in the said hybrid biglaw business model.
For one, legal products could act as standalone offerings. As such, they would fall under all the SaaS (i.e., Software as a Service) best marketing and sales practices. Revenue modeling would also be reasonably straightforward, given what we can learn from the SaaS industry.
Additionally, legal products may (and do) act as lead generation channels. As such, they help law firms fill the top of their sales funnel, with the intent to upsell those leads with their traditional bespoke line of services.
“While, for the time being, the most complex legal services may continue to be scoped, executed, and billed at an hourly rate — the lifeblood of many lawyers and law firms — astute clients are increasingly expecting that more routine and easily commoditized services will be packaged as products…” - Heather Suttie
The possibilities are fascinating.
Photo by Ilya Pavlov on Unsplash
Why should you productize your legal services
The advantages of offering legal services as products are twofold: time and money.
While delivering a service takes time, there are only 24 hours in a day. As a lawyer, do you want to spend precious hours doing low-level, mind-numbing grunt work?
Moreover, is there any advantage in paying others in your firm to do routine work? Especially when it often has to be written off when clients balk at the antiquated practice that enables young lawyers to learn on their dime?
And really, can you honestly stand to bill for small stuff? Should you even bother?
Your experience, professional reputation, and rates all have a ceiling. It’s no secret that clients have simply had enough with large bills. There is no fixed correlation between your experience and your hourly rates.
Besides, competing on rates is a zero-sum game. Eventually, you’ll lose. There will always be good, less expensive alternatives.
How to productize and package a legal service?
To package your legal service into a product, you have to: 1) define what it is; 2) identify the expected outcome; 3) describe what the package contains; 4) describe benefits to the user; 5) offer easy access and delivery; 6) provide a fixed cost.
Lawyers have been using fixed fees for decades
Selling legal services as products is nothing new. However, it will become much more prevalent as clients demand better service, faster turnaround, and full transparency on project management.
Oh, and let’s not forget cost structures that enable budgeting without financial surprises.
Canadian lawyers have been providing transparency and fixed pricing for years.
Jane Harvey has headed up a storefront law firm since 1980, with price lists posted in the windows for passersby to see as well as on the firm’s website. Offering legal services in real estate, family, wills and estates, litigation and business law, Jane Harvey Lawyers has grown to seven locations in the Greater Toronto Area, most of which are located in shopping malls and concourses.
Prices include bottom-line totals with fees, taxes, and costs of expected disbursements listed line-by-line.
Axess Law has enjoyed success since it launched in 2012, using a similar structure and service offerings with six locations in retail stores and supermarkets within the Greater Toronto Area.
Moreover, the Continental legal system is often based on tariff pricing, which relies heavily on fixed fees. It is no surprise then that lawyers in European countries usually use fixed fees.
Amazon in the legal services market
Amazon entered the legal service market with the IP Accelerator. This venture introduces a select network of law firms based in the U.S. to businesses worldwide needing intellectual property services.
In time, Amazon expects to expand its service roster to law firms and trademark offices in other countries around the world.
Amazon says the participating U.S. IP law firms have agreed to pre-negotiated rates for standard services involved in obtaining a trademark registration. They are also capable of assisting with copyright registrations, design patents, and other IP protection strategies.
These vetted firms should be able to save clients both time and money in securing IP rights as well as enable them to benefit from Amazon’s brand protection program, which identifies and removes harmful online listings to help protect a brand’s credibility.
Amazon has, in effect, packaged IP legal services. Client fulfillment indeed!
Photo by Edwin Andrade on Unsplash
What is the ROI of legal products to law firms?
In addition to the easily calculable ROI (using various SaaS-based metrics and formulas), there is also the brand effect.
If law firms wish to create and retain their client loyalty, they have to consider their market positioning.
Naturally, it is based on their niche, differentiation, and brand, along with continuous customer care.
Commoditized legal services that can be packaged and sold as a subscription, at a flat-fee rate, or even given away free of charge, would undoubtedly bring a good image to clients’ minds.
Palo Alto-based Cooley Go, a division of Cooley LLP, has catered to the Silicon Valley crowd since 2014. Cooley Go has an open store where entrepreneurs with other businesses can get non-disclosure agreements and other small legal documents and services, tips, tools, and guides for free. Giving away the small stuff is a massive help to startups and creates goodwill and trust.
Cooley is smartly playing the long game and betting that a payoff will happen if and when these small ventures grow to the point where they need assistance on more complex legal issues, such as an M&A or IPO.
On the one hand, these smart firms are offering legal services and tools to clients at transparent and predictable costs. On the other, they are providing value through thoughtful and consistent client experience.
And isn’t that what truly matters to clients and those privileged to serve them?
Heather Suttie is an internationally recognized legal marketing and business development consultant.
She works with law firms, law companies, and lawyers — Global to Solo and BigLaw to NewLaw.
Heather is helping them all thrive in the evolving legal industry by claiming a distinctive position and sustained competitive advantage, which results in a more significant market share, revenue, and profits.
Ivan Rasic holds the Transnational Trade Law and Finance LLM, a program by Universidad de Deusto (Bilbao, ES), Universiteit van Tilburg (Tilburg, NL), and Goethe Universität (Frankfurt, DE). After his work in law firms and inhouse, he started a legal tech company.
Nowadays, Ivan leads STP Informationstechnologie AG's Sofia RnD center with project/development management, culture, strategy, and special project initiatives.
Ivan is an Ambassador at European Legal Tech Association (ELTA). He closely follows and writes on future of law, legal tech, ALSPs, and new ways of delivering legal services.