
Key takeaways:
- The traditional billable hour model is outdated and limits growth.
- A subscription-based model provides financial predictability, client satisfaction, and scalable growth potential.
- Matthew Kerbis’s experience showcases the long-term benefits and operational efficiency of this modern approach.
Are you a law firm owner seeking to unlock explosive growth and financial stability? The traditional billable hour model might be holding you back, limiting not only your revenue but also your client satisfaction and retention.
On this episode, we’re thrilled to host Matthew Kerbis, a seasoned attorney who has successfully adopted a subscription-based model for his practice. Now, let’s dive into why the billable hour is dead and why a subscription model could be the key to your law firm’s future growth and stability.
The Problem with Billable Hours
The billable hour model, typically considered the cornerstone of legal billing, is increasingly seen as a relic of the past. Matthew Kerbis emphasizes the various downsides of this model:
- Counter-productivity: It caps revenue based on the number of hours worked, creating limitations on potential income.
- Client Dissatisfaction: Clients often balk at unpredictable billing, leading to dissatisfaction and strained relationships.
- Market Limitation: It hinders growth by failing to tap into the underserved markets seeking affordable legal solutions.
Why Shift to a Subscription-Based Model?
Matthew Kerbis champions the subscription-based model, highlighting numerous benefits:
- Financial Predictability: With around 60% of his firm’s income derived from recurring revenue, financial predictability is significantly enhanced.
- Reduced Startup and Operating Costs: Kerbis managed to establish his firm with just $5,000 in the first year and projects only $8,000 in operating expenses by the third year.
- Client Satisfaction: Fixed, transparent pricing that aligns with consumer expectations across various industries.
- Debt-Free Growth: Recurring revenue allows avoiding heavy debt and expensive marketing methods.
Addressing Access to Justice
One of the standout features of Kerbis’s model is its impact on access to justice:
- Affordable Services:Unlike traditional subscription models targeting high-paying clients, Kerbis focuses on underserved markets and small businesses.
- Preventative Law:His approach emphasizes proactive legal support, teaching clients to avoid problems instead of just resolving them.
Operational Efficiency with Technology
To run a streamlined and efficient practice, Matthew Kerbis leverages a tech stack of 43 tools. This utilization of technology not only enhances service delivery but also ensures quick turnaround times, which clients value.
Building a Sustainable Brand
A significant aspect of Kerbis’s strategy is branding his firm as “Subscription Attorney LLC” rather than using his personal name. This not only helps in building a sellable, scalable entity but also differentiates his practice from traditional, name-based firms.
Challenges and Rewards
Kerbis openly discusses potential challenges, especially in selling a solo practice without employees or established processes. However, the benefits far outweigh these hurdles, offering a path to:
- Increased Firm Valuation:Recurring revenue models boost the firm’s long-term worth.
- Growth Potential:Consistent revenue streams pave the way for scalable growth.
AI and the Future of Law
Artificial Intelligence (AI) is poised to disrupt the traditional billable hour model by increasing efficiency without compromising quality. Kerbis anticipates AI to play a significant role in reshaping how legal services are billed and delivered.
Marketing Strategy and Client Education
Kerbis emphasizes a “make money marketing” approach, leveraging a $20/month subscription model that serves as both a service to clients and a marketing strategy. He also stresses the importance of client education about the benefits of AI in legal practices.
Strategic Partnerships and Referral Networks
Building strategic partnerships with real estate agents and brokers can channel clients seeking to save on legal fees into longer-term opportunities. Additionally, maintaining a strong referral network ensures clients receive specialized assistance as needed.
Conclusion
The transition to a subscription-based model offers numerous advantages for law firm owners, including financial stability, client satisfaction, and scalable growth potential. As Matthew Kerbis demonstrates, embracing this modern approach can revolutionize your practice and unlock new opportunities for success.
Resources:
- Book a Call with Darren
- Wurz Financial Services
- The Lawyer Millionaire: The Complete Guide for Attorneys on Maximizing Wealth, Minimizing Taxes, and Retiring with Confidence by Darren Wurz
- LinkedIn: Darren P. Wurz
Connect with Matthew Kerbis:
- Linkedin: Matthew Kerbis
- Website: Matthew Kerbis
- Website: Subscription Attorney
- Press Kit: Matthew Kerbis
Transcript:
Darren Wurz [00:00:00]:
The billable hour was on life support, and the plug just got pulled. Welcome to the Lawyer Millionaire, where we help ambitious law firm owners expand their businesses, maximize their profits, and grow their wealth. Are you tired of tracking every minute and chasing your clients for unpaid bills? The traditional billable hour may be killing your productivity, client satisfaction, and even your growth potential. Imagine a model where clients pay predictably and your firm operates efficiently. That’s where subscription based law practices come in. Today, we’re joined by Matthew Kerbis, the subscription attorney. Matthew is leading the charge for law firms to adopt a subscription based pricing model, and he’s here to explain why it’s time to say goodbye to the billable hour and how your firm can benefit.
Intro [00:00:51]:
We are on a mission to help lawyers and law firm owners maximize wealth and achieve financial independence. Welcome to the lawyer Millionaire with Darren Wuertz from Wuertz Financial Services.
Darren Wurz [00:01:05]:
All right, Matthew, well, let’s kind of jump into this topic here and tell us why you think the billable hour is dead and is it still relevant for modern law firm law firms, or has it become a relic of the past?
Mathew Kerbis [00:01:20]:
I mean, the billable hour has been on life support for at least a decade of, um. It’s just that, uh, it’s just that when, when Gen-AI hit the scene, um, the life support got unplugged. Um, and so now, now the billable hours slowly dying, now that it’s off life support. And, and that, that’s to say that before Gen-AI, for a long time, not billing your time was, oh, it was more profitable. It was going to be more profitable to make money, because why would you put an artificial cap on the revenue that you could generate, let alone put a limit on the types of markets that you can serve as an industry?
Darren Wurz [00:02:02]:
Interesting. How does it limit the types of markets that you can serve?
Mathew Kerbis [00:02:07]:
Darren, do you pay anyone or anything by how much time it takes them or the thing to do the thing?
Darren Wurz [00:02:14]:
Nobody.
Mathew Kerbis [00:02:15]:
Right, exactly. We are one of the only professions still around that charges time. And so most consumers expect a known price when they go into something, even if, you know, even if that known price is. There can be like, service order changes. Right? Like you, you know, you’re doing some work on your house, and they discover all this mold, you know, well, in order for them to complete, you know, doing the work, they’re gonna now have to do mold remediation. So that’s gonna be an increased cost, but then they’ll tell you, or you could quote out what it’s going to cost to remediate the mold and then get back to work. Right? So in everything that a consumer engages in, and by the way, business owners are consumers in their own right and their personal lives as well. So if you’re serving businesses or general counsels inside of businesses, if you’re outside counsel as a lawyer, like, they are still as a person consuming things on subscription and fixed fees, the only, at least for our industry in particular, like, only lawyers are charging billable hours.
Mathew Kerbis [00:03:21]:
And that’s it. And don’t get me wrong, like, it can be super profitable, right? Like, that’s why it’s been around. That’s why it succeeded as a business model. But then you like looking holistically at the industry, you’ve got a lot of mental health problems. You’ve got a lot of substance abuse problems. You’ve got problems at the big law firms, in particular of retention of women and attorneys of color. And so, like, I’m not a, you know, I’m not, I don’t have all the stats and the data to necessarily back that up right here at my fingertips because that’s not the business I’m in. I’m a practicing attorney who’s a thought leader in the space.
Mathew Kerbis [00:03:56]:
But I think the billable hour plays a significant, if not sometimes the only role in some of those problems with the profession.
Darren Wurz [00:04:04]:
Wow. Wow. Yeah. That’s interesting because we’re trading our time, literally for money, and the only way to work, earn more is to bill more time or raise your rates. And there’s a cap on that, of course. So that’s, the other thing you mentioned is that it limits your earning potential. Right.
Mathew Kerbis [00:04:23]:
There’s, I can only bill and collect on maybe 8 hours a day if I’m a really good lawyer. Right. Like, if I have all my systems, all my processes figured out, I’m still going to have to work, at minimum, 10 hours.
Darren Wurz [00:04:34]:
No one’s billing 8 hours a day.
Mathew Kerbis [00:04:37]:
Billing and collecting.
Darren Wurz [00:04:38]:
Let’s be real.
Mathew Kerbis [00:04:39]:
Yeah. Like, like, when I was at a billable hour firm, the way that I used to handle it was I would have a whiteboard. Like, I’m so digital and I love tech. We were talking tech before we went live and recording.
Darren Wurz [00:04:49]:
Yeah.
Mathew Kerbis [00:04:49]:
Like, I had a physical whiteboard in my office, and at the end of every day, I would put ten billable hours for and then the next date, and I would just estimate based upon my to do list, here’s something that’s going to take this amount of time, this amount of time, that amount of time. And I would try to have 10 hours of billable time for the next day. So at least maybe, maybe I could get 10 hours of billable time done. But even if I couldn’t, I could at least get eight. And that was the goal. It was billing 8 hours every day. Of course, realistically, collection wise, you know, we collected, you know, four to six of those hours. Cause insurance companies would always, you know, haggle on the bills.
Darren Wurz [00:05:26]:
Interesting stuff. So you’ve created an alternative solution. Tell us, what exactly is the subscription based law practice and how is it different?
Mathew Kerbis [00:05:37]:
Yeah. And something I get all the time with that is, well, doesn’t that already exist? Isn’t legalshield? Isn’t that what that is? And here’s the thing. Like, legalshield could be a great alternative for folks who, like, still want to save a little bit of money when they need legal services. But when I went solo, I tried to sign up with every place to potentially get clients, including legalshield. And you know what they told me? You can’t join us because in order to join us, you need to give a reduced billable hour rate because that’s one of the insurance benefits. It’s not. It’s, Legalshield’s not a law firm. It’s legal insurance.
Mathew Kerbis [00:06:11]:
And one of the insurance benefits is a reduced billable hour rate to do legal work. Well, you know what I’m sure every lawyer does before they sign up with legalshield? They increase their billable hour rate, and then they’re still getting paid what they want to get paid. So it’s still billable hours. Right. For like, some of these alternative ways to get affordable legal, quote, unquote, affordable legal services. When I set out to do this, I looked at what some other lawyers were doing in the space. And to be fair, there were many of them. And I’ve interviewed them all on my podcast.
Mathew Kerbis [00:06:42]:
At this point, if you’re out there and you’re hearing this, and you’re like, well, I’ve been using subscription for over a decade. Find me, because then I’ll put you in that echelon of lawyers who have been doing this for a long time. And I really stand on their shoulders. But I decided that the way that they were doing things wasn’t the way I wanted to do things still. And a lot of them were still targeting. Now, this is a lot less true these days, thanks to programs like justice entrepreneurs project through the Chicago Bar foundation. That’s a law firm incubator program that helps lawyers launch sustainable lifestyle law firms that target these long unserved markets. So other attorneys, what they’re doing is they are trying to figure out what’s the highest amount that I could charge so that I could still be super profitable while still taking clients away from these institutional law firms and these institutional clients who don’t want to pay the billable hour anymore because they would still pay a premium to get higher quality legal services, which, by the way, if, if you’re not billing by the hour, you’re incentivized to adopt technology, create automations, and more efficient, higher quality products, and your turnaround time is going to be a heck of a lot faster.
Mathew Kerbis [00:07:50]:
And usually just when you get something faster, that’s going to be more valuable for their client. And even if they’re paying a premium, if they have pricing certainty, they will pay for that. So previous subscription based law firms were taking that approach. They were targeting this red ocean of clients. Well, I decided that, and some of this goes back to my upbringing and volunteering in my community and giving back and, like, realizing I’m very lucky and fortunate given my circumstance. Like, I grew up very middle class, but still, we never had any wants for anything, which I think I’m very lucky because of that. But most folks don’t fall into that category. And I learned in the ABA, the American Bar association, I’ve been a leader in that organization for over a decade, though I finally just got out, which is like a huge relief.
Mathew Kerbis [00:08:37]:
I could focus on my business more because I’m not getting clients through the ABA or referrals or anything. Well, I learned that there’s this massive access to justice problem, but also my entrepreneur brain was like, ooh, market opportunity. I could actually do good, which most law students, before they’re out in the real world, want to do good with their law license. And I can be super profitable. And so I just saw that incredible opportunity to adapt the subscription model to that market of long, unserved latent legal market clients. And so that’s how, why I specifically designed the model, the way that I designed it was to provide affordable access to legal advice and legal services to people and small business owners who never would hire an attorney unless they literally had no other choice.
Darren Wurz [00:09:28]:
Wow. Yeah. So you kind of opened up a whole new market there and thought by thinking differently and making it more affordable to consumers who might not otherwise ever approach an attorney for any kind of legal services. That’s really, really cool. I love that.
Mathew Kerbis [00:09:50]:
Another thing on that, because I know what lawyers think when they hear that it is mile wide, inches deep law, meaning I practice in multiple different areas of law. But when your clients are paying you every month, even as low as $20 a month, they contact you before you know what hits the fan. And so I’m in the problem avoidance business. I’m not in the problem solving business. Sure, I could help clients solve their legal problems, but at my prices and with the subscription model, lawyers know law is the operating system of society. Law is happening right now in this podcast interview, Darren, you know we’re creating intellectual property jointly and together, right? Like, literally, you cannot live in a society governed by laws and the law not be happening. So there is always an ongoing need for legal services. And if you’re like a divorce attorney and you’re thinking, well, what happened? Well, then they get divorced, and now that’s it.
Mathew Kerbis [00:10:47]:
No, they have to comply with the divorce decree. They have to comply with the marital settlement agreement. There are so many opportunities beyond just the, I see a nail. I’m a hammer. I was hired to hammer the nail. I’m going to hammer the nail. Well, you could come in to a project, and you could see these loose boards, and you could see all these other things and improvements and how to avoid the house from collapsing. The quote unquote legal house from collapsing.
Mathew Kerbis [00:11:11]:
And when you’re on an ongoing subscription with your client, every time they contact you or you reach out to them is an opportunity to identify more legal work that does help them. You just have to have a fee structure that makes sense. And $20 a month doesn’t get them, like, the whole kit and caboodle, right? I don’t even how old that phrase is. That’s just the phrase that popped in. That was my own large language model at work, just predicting the next word. But I. But, but, like, they. They have to.
Mathew Kerbis [00:11:37]:
They. I have all my fees on my website. So, like, what does $20 a month get you? Like, with any other subscription, it gets you subscriber benefits. I mean, and I know. Cause I’ve had you on my podcast there, and you define your subscriber benefits really well. So if your listeners are our customers of yours or the potential customers of yours, and they’ve looked at your content, they’ve seen how you define your subscription benefits. Mine’s very similar. Right.
Mathew Kerbis [00:11:58]:
And what does $20 a month get you? Access to schedule 15 minutes calls with me, it gets you access to $50 per page pricing for a la carte random stuff and below market flat fee rates for anything in which there is a market and there’s a flat fee rate, like real estate transactions for example, in Illinois, it’s very common to do a fixed fee for that. Well, I charge anywhere from two to 300 less as a fixed fee for that transaction because I’m also helping these clients with all their other legal needs.
Darren Wurz [00:12:27]:
Right, right. I love it. And it’s so creative. We’ve done the same thing in our business, and we talked about this because it makes sense from the customer’s perspective. And you can bundle and you can get creative about the additional types of services and benefits that are included in those subscription packages, which is kind of what we’ve done. So we’ve added business planning and networking opportunities and things that are of great benefit to our specific clients who are law firm owners but are not part of your traditional financial planning package. And what I really love about this subscription model is just the transparency of it all. And that, I think, is the keyword for me.
Darren Wurz [00:13:14]:
You know, just, you know exactly what it is. You know exactly what you’re getting, and it’s not this smoke and mirrors, you know, I don’t know what the bill is going to be until the work’s done or is hidden behind, you know, a bunch of things I gotta look through. Yeah. So that’s really powerful, I think.
Mathew Kerbis [00:13:33]:
Yeah. And look, my, you know, one of my, one of my firm mottos is a transparent price for legal advice.
Darren Wurz [00:13:40]:
I love it. Yes. Yeah, yeah.
Mathew Kerbis [00:13:42]:
You know. Cause at the end of the day, that’s. And I. I had a subscription model expert, Mark Steving, on my podcast. Great, great stuff. Impact pricing is his brand, his website, his podcast, and one of his books. And he’s always about, we’re selling the value and context matters. And what we ultimately came to when he was on my show was like, my transparent pricing for the legal industry is a value that I’m selling.
Mathew Kerbis [00:14:14]:
Now, if more lawyers start showing their prices on their website, of course, if you put dollar 500 an hour on your website, that doesn’t actually tell your clients anything.
Darren Wurz [00:14:23]:
No.
Mathew Kerbis [00:14:24]:
But if you have fixed fee or subscription or combination thereof pricing on your website, then I’m not selling. Then the value of my model is not. I can no longer. I would have to change a transparent price from legal advice. I already have some other slogans and stuff that I use that I’m playing around with when that inevitability hopefully comes. Because frankly, and I do a lot of cles on this topic. If you’re billing your time and you want to use AI, or your clients are demanding that you use Gen-AI, your time savings, like, let’s say things that used to take you 10 hours, now take you ten minutes. And that’s being generous because it might take you a minute.
Mathew Kerbis [00:15:03]:
But let’s do simple math here for lawyers, right, Darren? You know, you know math. You know, lawyers don’t mix. You’d have to 50x your billable rate.
Darren Wurz [00:15:14]:
Yep, yep.
Mathew Kerbis [00:15:15]:
Yeah.
Darren Wurz [00:15:16]:
This is so huge. Matthew, I have not really thought about this, but you’re so right. I mean, AI is going to blow the lid off of the billable hour completely because there’s an incentive to not be efficient. And I guess the argument against would be, well, you don’t want sloppy or quick work, but AI is not that way. And lawyers who leverage AI are going to be able to get things done faster. What do you do then? You build less hours and make less revenue.
Mathew Kerbis [00:15:46]:
Fast. Turnaround is extremely valuable to clients. It’s very valuable.
Darren Wurz [00:15:50]:
Yes, it is. Yeah, yeah.
Mathew Kerbis [00:15:53]:
It’s like, what’s the value? Like, do they hire you cause they wanna pay you for units of time or because they have a problem they want solved or in my instance, a problem they want avoided? And like estate planning, lawyers have been selling problem avoidance forever. Insurance agents have been selling problem avoidance forever. Yeah, sure, it’s a harder sell, but. But there are well tested strategies for selling problem avoidance. You just have to think about it in that context and frankly use storytelling. And this is something I’ve actually been working on, right. Is like telling a story of how somebody used my legal services and it helped them avoid a big expensive problem. Not just telling people, hey, hire me to help you avoid big expensive legal problems in the future.
Mathew Kerbis [00:16:32]:
Like tell a specific story about that because that’s how the insurance people do it. Or estate planning people do it. Think about your kids, right? Think about your kids, you know, do you want them to have to, you know, figure out all this paperwork, pay these lawyers. Lawyers all these, all this money, you know, to do a. Open a probate for not having a will or even a trust, if that makes sense for you, you know. Cause you could still avoid most of probate with the trust, right? So like, but like telling a specific story like that, like that’s the way that you do it. Insurance, you know, your loved ones, you know, if anything were to ever happen to you, you know, life insurance, you know, for example, right? Like, don’t you want them to be okay? You know, don’t you want them to be, to not have to, you know, take out a loan to pay for funeral expenses? You have to turn the story, turn it into a story. The pitch into a story of selling the problem avoidance.
Darren Wurz [00:17:22]:
Yeah. Yeah. That’s interesting, thinking about how you sell it. There is going to be probably some education that needs to happen to the public about what this is and what this entails. So I can see where that might be a little bit more difficult, but at the same time, it might be a little bit easier because you’re not competing in this high demand space where it’s like, oh, limited billboards and someone needs me right now. I gotta pay for the keywords on Google that are super expensive. But if they’re already clients of yours, they’re gonna come to you for those issues when they have them.
Mathew Kerbis [00:18:07]:
Yeah, yeah. One of my favorite phrases is, I like to say, would you rather spend money marketing or make money marketing? Because, like, that, that $20 a month, and that is a Matthew Kirby’s original. I’ll throw that one out there. That one I can claim ownership of. But if you. When my clients are paying me dollar 20 a month, who are they gonna call first? Whenever there’s anything remotely related to legal me, they’re gonna call me.
Darren Wurz [00:18:31]:
Yeah.
Mathew Kerbis [00:18:31]:
So, like, and don’t get me wrong, like, I still have to do biz dev stuff, like bring in new clients, but for existing clients, like the $20 a month. Yes, I am giving them actual legal advice over those calls. So they are getting legitimate legal services for $20 a month. But it’s also, I choose to perceive it as a marketing earn instead of a marketing spend. And I don’t spend anything on marketing, in part because the way that they calculate ROI for you when you work with those providers, whether it’s whatever sort of advertising or marketing is, like, how many billable hours you could bill from those clients or something per month. And even, like, what is a client worth to you? Well, if a client signs up with me at $20 a month, and they, they don’t actually hire me for anything else, they’re worth $240 for that year. You know, like, that’s it. So, like, I’m not going to spend, like, if you get me one client, like, a month, like, I can’t.
Mathew Kerbis [00:19:24]:
I don’t know that they’re going to stay subscribed for the full year. Like, the math just doesn’t work out for how they choose to price their services to lawyers. So I just don’t play that game. But I’m still bringing in clients through traditional biz dev type things and building that biz dev flywheel and all that.
Darren Wurz [00:19:43]:
Yeah, I imagine that strategic partners become a part of that marketing effort when you’re running a subscription model.
Mathew Kerbis [00:19:51]:
Yeah, like, I.
Darren Wurz [00:19:52]:
Would you agree?
Mathew Kerbis [00:19:54]:
Yes, absolutely. I mean, yeah, that’s a great insight. Right. Like, real estate agents and brokers are great relationships for me because if they ever get a price sensitive client who’s buying a home, well, they know with me they’re going to save more money and still get excellent service. And I’m happy to not charge them what other lawyers are charging because once they’re a subscriber with me, yes, I’ll help them for the real estate transaction. But now they could ask me about stuff happening in work. Maybe they want to start a business. Maybe they don’t have a simple estate plan in order.
Mathew Kerbis [00:20:26]:
And so I could help them with so many other things beyond just that real estate transaction. And that is one of the areas where I do go mile deep because I’ve been practicing real estate law for ten years. And so, like, it’s one of the, it’s one of the areas I feel comfortable going a mile deep in, and there’s only a handful of those, but otherwise I also need, and you mentioned this earlier, like, I’m not really competing with other lawyers. And once lawyers realize that, like, I need a lot of good referral partners, like, I have a potential. I have a call with a client later this afternoon, and based on the information they already gave me, like, this is a pretty serious employment issue that goes far beyond what I’m going to be able to help them resolve outside of filing a claim. Right. And so I know, like, three employment lawyers that are local. Cause still people, like, even though I’m a virtual law firm, 80% of my clients are pretty local to me.
Mathew Kerbis [00:21:17]:
Like there’s, I’m about 40 ish minutes north of Chicago. And like, it, like, I do have clients even that go south of Chicago into like, will county, but like, other than, like, the counties around where I live, like, that’s where most of my clients are. But I do have some clients outside of those counties in Illinois. I have some clients even like, in the UK, who like to buy real estate in Illinois for whatever reason. I’m happy to help them with that. I mean, I know exactly what reasons, but, you know, they find good investment opportunities. Right. So, so anyway, like, my, my point is I need referral partners to refer business to.
Mathew Kerbis [00:21:51]:
And, like, I’m part of overture. Like, I’m there, like Cook county area, Chicagoland affiliates or liaison or whatever they’re calling me. Like, because I’ve been on the platform for over a year, so I could always answer people’s questions about overture, but that is still growing, right? So I still have to, like, rely on other places to, like, refer. So I am actually a great referral partner for other lawyers, too. The problem is my clients are usually hiring me because they’re price sensitive. So, like, lawyers who only get paid if they win, like contingency or they’re suing an employer and like, their statutory fees, like, those tend to be good referral partners for me right now, the more and more attorneys who are out there like me, which is one of the reasons why I’m happy to come on your podcast, Darren. It just makes my life easier and keeps my clients happier for me to refer them to. So I still think there’s room for highly specialized practices like the riches and the niches and all that.
Mathew Kerbis [00:22:45]:
It’s just that there are also opportunities for lawyers like me who have a broad, transactional, subscription based practice and then just refer cases to the specialists when things get complicated.
Darren Wurz [00:22:59]:
Yeah, let’s shift gears here just a little bit, and let’s talk about the benefit or the relevance to the law firm owner. Specifically, we talked about you can potentially earn more. Are there other financial benefits in terms of running a subscription model and how that can really change the way you run and operate a practice?
Mathew Kerbis [00:23:23]:
Absolutely. And I can’t speak to a litigation based subscription practice from personal experience and what the cost would be, though I have had some litigation based subscription and fixed fee attorneys on my podcast law subscribed, but when I got started my first year, this doesn’t include a little bit of Google Ad spend that I did, which I regret greatly because you got to keep that train going if it’s going to work for you. And I just didn’t realize that at the time. I’ve consumed so much legal marketing content since that. But I spent $5,000, so all I really needed was a client paying me 500 a month. And I was in the black and I did, and I had that coming into it. So I knew that at least from the beginning, I wasn’t going to have to go into personal savings we could float off of. I mean, that’s not necessarily entirely true.
Mathew Kerbis [00:24:21]:
I needed to make a little more than 20k on top of that to actually make sure we didn’t go into our savings significantly. And we didn’t. But that first year was really tough, and I’ve talked to a lot of attorneys who get started, and it seems pretty standard that it takes around three years to start bringing in more revenue than what you maybe were making at the last firm, and I found that also to be accurate. Right? Like, it’s just like when you don’t have a brand that exists before you launch the firm, it’s hard to build up that brand and sell that brand and get clients and all that. So I did have a handful of clients coming in when I first launched, so that I was nothing like all my expense, my firm expenses are all going to be paid for and then it’s just continuing to add on. And a lot of my clients from those early, that first year are still subscribers. And because of like I have recurring revenue scrum, back to your question, right? Like, I have recurring revenue. So I just have to keep clients happy and they’ll stay subscribed.
Mathew Kerbis [00:25:19]:
I have to keep providing value every month and they’ll stay subscribed. And so because of that, now I could like steadily grow. And that’s one of the reasons why I don’t need to take out a loan and get a billboard and do all these other things other law firm business owners do and why it only cost me 5000 the first year. And even now, like, I might cross $8,000 in operating expenses in year three. Like, I haven’t fully completed my third year, right? Like, so my expenses haven’t gone up that much. I’ve, like, I’m subscribed to better software now because when I got started, like I was subscribed to like minimal amount of software. But my tech stack, which I include like Slack, discord and teams in that is 43 tools and I’m paying for half of them. So my tech stack is ridiculous and I’m not afraid to play around with new tools and I’m playing with Gen-AI and all that, but as a business owner, when your revenue is mostly recurring and mine is about 60% recurring revenue and 40% fixed fees that are being paid for from those subscribing clients.
Mathew Kerbis [00:26:22]:
Like with 60% of my firm revenue being recurring, not reoccurring recurring, I am able to easily predict and project my firm finances. And so I know what I could pay myself every month. And I’ll be switching over from single member pass through taxation as an LLC to S S corp and I’ll pay myself a salary. Yes, I’m gonna finally be able to do that for like when I’m done with my third year and going into my fourth year, I’m gonna do that. Cpas are have been wanting me to do that, so I’m finally going to do that. But like now, because I’m subscription based, like I could. I know. I know what I could pay myself every month.
Mathew Kerbis [00:27:03]:
I know what my outgoing subscription is like. I keep track of my tech stack. I could tell you it’s 43 tools because I look at what is my outgoing monthly spend versus what is my incoming monthly spend and my outgoing. I also include now what I paying myself every month. So I can make sure I’m always in the positive. I can make sure I’m building up that war chest. So, like, yeah, if I do lose a big client that I could continue to pay myself and pay all my expenses while I send another client up the subscription stack or bring in more clients at that level. So that is really nice as a business owner and because all my expenses and revenue are more or less recurring or very, very predictable with the fixed fee stuff, the client comes in.
Mathew Kerbis [00:27:45]:
Hey, I need this three page contract reviewed. When it comes to categorizing my finances, I use wave app. It’s just free. It integrates with all my stuff.
Darren Wurz [00:27:57]:
I love wave, and it uses AI.
Mathew Kerbis [00:27:59]:
To anticipate what the categories are based on past history and stuff. So I spend 15 minutes a week not even categorizing all my stuff in wave. So managing the financial stuff becomes much, much easier. I have to imagine it gets more complicated when you start bringing in employees, which I have zero intention to do. But a lot of law firms I talk to that want to do this, they already have employees, or they want to hire even just operations folks or virtual assistant or other things. So I’m able to manage all that right now. But I don’t necessarily plan on managing that forever. I plan on outsourcing some things even to fractional independent contractors at some point in the future.
Mathew Kerbis [00:28:41]:
But it’s just so easy to manage all of that stuff.
Darren Wurz [00:28:47]:
Yeah. Yeah. Okay. So there’s so much here I just want to dive into. The financial stability is huge, and so many law firms are running incredibly risky operations. They are a moment away from bankruptcy, and they don’t realize it. They may be making millions of dollars a year, but they’re one bad month away from bankruptcy because they have no liquidity, they don’t have any recurring revenue, and it’s just a risky operation. I’m reading Mike Morse’s book Fireproof right now.
Darren Wurz [00:29:28]:
So good. And in the forward, he Mike, if you’re listening, would love to have you on the show. In the forward, he talks about he was making great money, but he felt like his firm was a house of cards ready to implode. And so many law firm owners are in that situation. So the financial stability is just huge. It’s so, so critically important. There’s another thing. We talked about this, I think, when we first met.
Darren Wurz [00:29:55]:
Recurring revenue is, number one, it’s a huge growth driver because all you have to do is sign up new subscribers and you’re growing revenue. It’s not about working harder. It’s about working smarter. And I just love that. But even more importantly, if we think long term, you’re developing, you’re creating relationships that you own, that your business owns. Right. Your business owns these client relationships, these subscriptions, these are contracts with your firm that are recurring and recurring revenue is one of the top value drivers of businesses. Right.
Darren Wurz [00:30:37]:
If you are just billable hours and it’s just you, you don’t have a business you can sell. Your business is worth nothing. A lot of law firms are worth nothing because there’s no entity. Right. But if you have recurring revenue, that is something in the financial world. We can. We can model that. We can forecast that.
Darren Wurz [00:30:58]:
You know, we can. We can do present value analysis on that. We can determine a value of that. That’s a. That’s an extremely valuable piece if you’re thinking long term about potentially selling your practice. So I just love that. I think it’s huge.
Mathew Kerbis [00:31:15]:
Yeah, absolutely. And that’s why my firm is not Matthew Kirby, PlLc. It’s subscription attorney, LLC.
Darren Wurz [00:31:21]:
Right.
Mathew Kerbis [00:31:21]:
Like, it’s a brand. I’m building a brand.
Darren Wurz [00:31:24]:
Yes.
Mathew Kerbis [00:31:25]:
And to be fair, too, like, I would have to, like, have probably full time employees if I wanted to sell my business. Right. Like, I cannot just sell a solo practice unless I sold it to, like, another solo practitioner. Like, maybe. Right. So, like, it also increases the value of the business if you have a brand name, recurring revenue, but also, like, people and processes in place that when you plug yourself out of the equation, it still operates. And I couldn’t do that right now because it’s literally just me.
Darren Wurz [00:31:57]:
Right, right. Well, it could be done, Matthew. It had to be done slowly.
Mathew Kerbis [00:32:02]:
Sure.
Darren Wurz [00:32:03]:
But yes. Yeah. It is an interesting thing to think about. If someone wants to maybe start thinking about implementing this in their practice, where is the first place they should start?
Mathew Kerbis [00:32:15]:
They should definitely go to WW dot lawsubscribed.com, which is my podcast, which, I mean, we’re recording this. I don’t know if you like to reveal behind the curtain things, but from when we are recording this, like, about a week and a half, your episode will be there on that podcast stream. But we did live stream our conversation on LinkedIn, and if folks want to go like see some of the content I’m posting on LinkedIn, you’ll also see highlighted my conversation with Darren there, over there to go check that out. Um, but law subscribed. I started that podcast because I was having these conversations with like two or three lawyers who had like been quoted at an article in the ABA from years ago about using the subscription model. I was like, wow. Like, I would benefit from some resources here. So I have a lot of free resources@lawsubscribe.com.
Mathew Kerbis [00:33:09]:
i’ve done a lot of cles. If you go to, if you’re watching this or you find me, you could search the subscription attorney on LinkedIn and connect with me. But if you go to matthewkirbis.com this and all my past speaking engagements, I talk at length about the subscription model and how I do it. I also have some other cles that are out there. I think maybe I want to say episode 52 of my podcast, which is also@matthewcurbus.com comma is an old Cle from a couple of years ago, and very soon I’ll have a newer cle up on my podcast feed, specifically how AI is revolutionizing it, which we just talked about a little bit of, um, today. And, um, I’ve given Cle talks on a lot of platforms, but Lawline seems to really have a good handle on things. So I’ve, I’ve given four talks for Lawline. One of them is also podcasting for lawyers.
Mathew Kerbis [00:34:03]:
So if you’re listening to this and you think you want to get into podcasting, I have a podcasting for lawyer Cle out there. And, um, and so, like, I have a lot of material out there. And also if you want to dm me on LinkedIn, I’m happy to share, just share the deck with anybody who wants to get that deck. Like, I literally have like 70 slides and most of them are like, here’s all the tech that you could go and play around with and try out to see if it works for the type of practice you have or want to have. I do have two sponsors of my podcast, and I do highly recommend them, but they may not be a good fit for your firm. So in my cle deck, I have all the different types of tools that you could try out and might work, and you’re not going to find a lot of legal tech on there. That’s just sort of the reality of it. Look, I do have a seminar called subscription seminar@subscriptionseminar.com.
Mathew Kerbis [00:34:45]:
dot. It’s essentially one on one consulting where I help you improve on or launch your subscription law firm. But realistically, the waitlist is getting longer and longer. I’m trying to find a way to productize or like do like cohort based coaching on that because I am a practicing attorney first who has a podcast already. So, like, I only started coaching because after doing enough cles, lawyers are like, I will pay you to teach me how to do this. So I was like, okay, I’ll come up with a program, but realistically, there is way more demand than I could possibly do. And I the value of me teaching lawyers how to do it is I’m doing it every day in my practice, right. It’s like, I don’t want to give that up and just become an attorney coach.
Mathew Kerbis [00:35:21]:
So I’m just really just doing one at a time right now. And you can see on the website, like, programs are five months, ten months, or five weeks, right? So, like, it’s, it’s tough to get through that list, but I am getting through that list one by one. Yeah.
Darren Wurz [00:35:36]:
Great. Well, you’re in high demand, Matthew. Well, thanks for coming on the show and sharing your expertise with us. I imagine this is going to generate a lot of great conversations. So thank you so much, Matthew, thank.
Mathew Kerbis [00:35:48]:
You for having me.
Darren Wurz [00:35:48]:
A big thank you to Matthew Kirbys for sharing his insights today. If you want to learn more about Matthew and his work, visit his website. You can also find his contact info and all the details in the show notes, so be sure to check those out. Subscription based models can not only provide predictability, happier clients, and a better work life balance for you, it can also be a key driver of your firm’s enterprise value and your wealth. At the lawyer millionaire, we’re here to help you build a business that not only thrives, but supports your long term wealth and personal financial goals. Shifting to a subscription model could free up more time for strategic growth, allow you to build more predictable revenue, and create a stronger foundation for wealth building. Schedule a call with me today and I’ll walk you through our three step process for turning your law firm into a profitable, valuable, and saleable asset. You can find the link in the show notes.
Darren Wurz [00:36:46]:
This has been the lawyer millionaire podcast. I’m your host, Darren Wurz, here to help you expand your business, maximize your profits, and grow your wealth. Thank you so much for listening. Come back and join me next time.
Outro [00:37:04]:
Thank you for listening to the Lawyer millionaire. Click the follow button below to be notified when new episodes become available. This content has been made available for informational and educational purposes only. This content is not intended to represent investing or tax advice. Always seek the advice of a qualified investment or tax advisor with any questions you may have regarding your own financial circumstances.