Monetizing Legal Apps Through Alternative Fee Structures

In this article we cover several monetization options that will help lawyers scale their businesses from bespoke legal services to recurring revenue legal product models, monetizing their legal apps and allowing them to sit on their favorite beach while clients buy the workflows, forms, and documents that the lawyer has already built through automation.  When you first consider building your legal application, you’ll want to survey the current range of different services models to see which fits best with your capabilities and goals. Options to monetize your legal products include:

1. Free software that serves as a lead generation tool;
2. One-off payments for a form set;
3. Monthly subscription legal services;
4. The “Netflix” model (all you can eat);
5. The software plus services model; and
6. The LegalZoom consultation model.  

At this stage you want to be clear about your concept and which model (or hybrid) you’re going to follow.  Once you decide upon a legal services delivery model, it’s time to start thinking through the process of how to automate documents.  You want to do this before your first build.  Let's take a look at each of these alternative fee structures to monetize your legal apps in more detail.

1. Free Software that Serves as a Lead Generation Tool (through a "TurboTax for Law")

An example of this monetization model is Cooley Go, which provides entrepreneurs with the ability to generate core legal and financing documents from either desktop or mobile devices for free.  It serves a lead generation tool because it provides a doorway into providing premiere services to clients as their businesses grow.  

Since its launch five years ago, Cooley Go has been visited 1.25 million times, with 3.3 million page views, by entrepreneurs in over 160 countries.  The site has been used to generate more than 166,000 document packages, including over 30,000 incorporation packages and 60,000 financing-related packages.  A full 25% of visitors return to the site for multiple sessions, a strong indicator that free software can serve as a lead generation tool.

To guide people to a free software site, you could also accompany this software (your own "TurboTax for law) with informational products (like content, checklists, manuals, newsletters, and ebooks) and resources like webinars and online courses.

2. One-Off Payments for a Form Set

This may be what many people first think of when they think of building and monetizing legal apps and products.  Once a document package is built through document automation, you can make it available through your website using a checkout cart or other means of allowing your clients to make a one-time purchase of a particular document or document package.  Check our our article on landing pages for more on how to structure your site

3. Monthly Subscription Legal Services to Clients for a Specific Set of Form Types

Here, LegalShield and LegalZoom provide the examples, and they do it with monthly subscriptions for lawyer time.  In this model, rates can vary greatly depending on the complexity of the service and the market you seek to grow.  For example, LegalShield and LegalZoom rates range from $10 per month to thousands of dollars per month depending upon the scope of the legal service and its complexity.  For an example of a particularly great monthly subscription legal service, take a look at Freshlease (freshlease.com), which allows clients to “create an impeccable lease that continuously updates to reflect current best practices, laws and legal strategies.”  Its subscription plan is just $250 per year to create an unlimited number of leases, each of which “is meticulously crafted to ensure ultimate protection.”

4. The “Netflix” Model (aka “All You Can Eat”)

Another effective way to monetize legal applications is to allow clients to generate as many different “workflows” as they want for either a flat fee or for a recurring subscription fee.  (freshlease.com, discussed above, is an example of the latter.)  Clients value “workflows” -- the term used to describe a legal application that asks a set of questions in order to generate a set of documents.  Because clients value workflows, and because many clients have a repeated need for multiple workflows, the Netflix Model can be an effective way to monetize your legal applications.

5. The Software Plus Services Model

This alternative fee structure method both monetizes your legal applications and offers the widest range of fee options, all at the same time.  First, as the name of this model suggests, fee structures are based on software as well as services.  As a result, fee options can range not only from a choice of installment plans and one-time payments, but also from pure software options (think do-it-yourself) to hybrid options providing both the software as well as different levels of guidance.  This itself can range from software-based guidance to human-based guidance to, at the highest fee level, a set amount of time with a lawyer for specific legal advice.  Monetization methods under this model are almost endless.

6. The LegalZoom Consultation Model

This alternative monetization method combines technology and services in a unique way.  Specifically, this model provides certain discounts to incentivize the user to use the platform for additional services, all while maintaining their membership.  Recurring revenue is generated as follows.  A membership fee provides the user with 30-minute phone consultations with attorneys on an unlimited number of new legal matters; free attorney review and revisions of any completed documents as long as the membership is maintained; and -- here is the incentive -- if the user maintains their membership, they get 10% off any any future LegalZoom purchases.  Structuring incentives like this is another effective way to monetize your legal applications.

7. Variations on All of the Above for Monetizing your Legal Applications

Finally, alternative fee structures can be fine-tuned to monetize legal apps by adding pricing variations to the above models.  One variation is to establish different tiers at different prices, so that clients are confident that they are only paying for what they need.  Another variation is to offer discounts for repeat customers who prefer one-time purchases to membership subscriptions.  The model for this variation is the well-known loyalty reward program.

This article has covered some of the most effective models for monetizing legal apps using alternative fee structures.  These models are proven methods for enabling providers of legal services to scale their businesses into recurring-revenue legal tech companies.

For our comprehensive guide to alternative fee agreements in law firms, read our guide here.