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One of the most common ways an industry gets disrupted is not through altering or innovating the product, but rather by completely rethinking the way the product itself is purchased. Though this disruption was felt in other industries much earlier, it’s finally arrived in the legal industry.
Throughout the history of the legal profession, hourly billing has been the industry standard. No matter what service a client required or what type of law was practiced at a particular firm, a pay-by-the-hour model reigned. There are many reasons for this, but the primary mindset is that lawyers don’t view themselves as professionals who sell a packaged product; they instead consider themselves subject matter experts who loan out their expertise by the hour. This protects legal practices in that there is never any fear of a client getting more than they paid for.
Consumers are finally demanding a payment model that serves them instead of the firm. This is evident in the emergence and rapid growth of DIY legal solutions that completely sidestep a traditional law firm. While this inherently leaves consumers open to greater risk, they are happy to take that risk in order to save a great deal of money. In addition to cost savings, or the illusion of it, consumers in the modern marketplace DEMAND transparency. Fair or unfair, when clients are paying for hours rather than a product, they just don’t know with certainty what they’re paying for.
The shift toward a transactional, package-oriented legal services model has even become a part of how forward-thinking legal firms market themselves. One of the overriding behaviors when people shop online is digital showrooming. This means they compare products and prices rapidly between potential service providers.
So, when potential clients showroom for business formation and entity management services, and they’re presented with one firm that bills by the hour and one that tells them exactly how much each service will cost upfront, which one do you think they’ll go with? They’re going with transparent pricing. This is especially true of millennial-aged consumers, who are quickly becoming an even larger portion of our economic makeup.
While it’s certainly not impossible to create transactional pricing without handling certain services digitally, it’s much more difficult to ensure consistent margins. Unless a firm knows with certainty that a particular service will cost the same amount to execute no matter what, they can’t count on consistent margins. As we mentioned earlier, that’s the greatest benefit of pay-by-the-hour pricing.
That’s where automation comes in.
In addition to benefits like being more efficient and mitigating risk, automation partners like Legalinc are also reliable. When a service is purchased digitally from an automation partner, you know exactly how much it costs your firm. That means all you have to do is decide what you want to charge clients for the execution. This is where a transactional pricing model can benefit the practice just as much as it benefits the client.
A transactional pricing model can benefit the practice just as much as it benefits the client.
Practices can choose transactional pricing markups based on a limitless number of factors. These include desired internal margin, what competitors are charging, what the market will allow, what existing clients are accustomed to, and much more. While this is true of Legalinc’s Dashboard solution, in which legal teams manually purchase services from Legalinc themselves, it’s also true of white label solutions like Linc.
Through Linc, practices choose the services they want to offer clients via a branded digital portal and set whatever prices they like. With Linc, a transactional approach to legal services benefits practices by ensuring reliable margin, establishing more trust with clients, giving clients an easy way to get what they need, and creating revenue from clients that attorneys never have to meet with in person.
These are all the short-term benefits of transactional pricing, but there is a long-term benefit as well. It’s very straightforward. By establishing trust with clients through transparent pricing on simple legal services, you’ll be the first practice they think of when they’re in need of more intensive legal help. That kind of brand loyalty can’t be established through a means other than transparency and reliability.
Want to take the first step toward establishing transactional pricing? We’re here to help! An account with Legalinc is absolutely free. Even if you’re just curious as to what a legal services automation dashboard looks like, we encourage you to create your free Legalinc account today.