TLIE Top Tip: Subscription-based Fees
TLIE Top TipsSubscription-based legal services are making their way into lawyer’s practices across the country. There’s even a podcast and at least one startup software company dedicated to lawyers using these fee arrangements. Fortunately for Texas lawyers, The Professional Ethics Committee for the State of Bar of Texas recently set out guidelines for us to follow if we want to offer subscription services.
First, the fee must be kept in the lawyer’s trust account and segregated from other fees until each fee period ends. Lawyers typically collect subscription fees monthly or annually under agreements that require the fee to be paid in advance. The Committee has made clear that these fees must be segregated until the end of the fee period.
Second, the fee is refundable if the client cancels during the fee period and cannot be made non-refundable, even with the client’s consent, unless the entirety of the fee is to secure the lawyer’s availability and to compensate the lawyer for the loss of other employment resulting from being hired by this particular client.
Third, the fee must not be unconscionable. The subscription must align with the client’s needs. A client paying a subscription for review of real estate acquisition contracts who neither owns nor is seeking to purchase real estate may be unconscionable because it’s not likely the client will actually need those services. Similarly, the Committee notes that a client paying for subscription family law services when the client is not married and does not have children may be unconscionable.
Subscription-based services may provide many advantages for you and your clients and can be ethically entered into when you follow the guidelines provided by the Committee and outlined above.
