Lean, mean legal freemium

Though still a relatively new concept, the “freemium” business model is gaining ground.

That is, when a company makes available its core products and/or services for free, and gets its money from a small percentage of customers paying for their high-end needs.

There are thousands of examples, increasing daily (no doubt). Three of the biggest success stories:

• Skype. This internet communications company gets not a bean from 93% of its users, who enjoy the online chat / phone facilities for free. The 7% pay not very much for non Skype-to-Skype calls and Skype hardware. Skype recouped an exceptional $400 million in net revenues in the first six months of 1010 (read more about it by clicking here).
• Google. As you may know, gives stuff away like there’s no tomorrow. Maps, e-mail, document editors, storage, calendars, photo editing software, a fairly decent search engine etc etc. Still makes quite a lot of money…
• Budget airlines. Tickets aren’t free (quite) but airlines such as easyJet and Ryanair gather the bulk of their brass from affiliated services, such as hotels and car hire.

As internet-users will attest, it’s easy to find stuff for free these days.

Do legal freemiums exist?

There are legal services operating on a freemium model, appearing in dribs and drabs. The website http://www.totallyfreewills.co.uk allows users to create their own Will online which is then checked by a solicitor, for free. “Totally Free Wills” makes its money by recouping a 15% commission on any future probate (it’s a condition that the Will you make is stored with the solicitor who checks it, the hope being that the Executors will instruct the solicitor to deal with the probate, which will be at a cost determined by the solicitor).

Online legal services will have to work a great deal harder than “Totally Free Wills” to maintain a level of trust with the customers, a vital ingredient in the online world. The key is open communications, absent from Totally Free Wills. A further flaw I see in their model is that, in time, online tools, free guides and reduced costs will see a greater proportion of the public having the confidence to do probate themselves, with little or no assistance from solicitors, but that’s another story…

And though not quite “freemium”, solicitors have for many years drafted Wills as low cost “loss leaders”. In other words, no profit is made on Wills, with the hope that the work will lead to profitable probates in the future.

More legal freemiums on the way?

So is freemium coming to the legal sector in earnest?

Surely yes.

With the Legal Services Act about a year away (more on this in up-coming blog posts), things are going to change. I’d bet my shoes that increased competition will lead to an increase in freemium models, though the increase may be gradual.

On top of this is the explosion of free and (in part) accurate legal guides on the internet. Law firms must be prepared for customers knowing as much as they do!

What’s more, tools are emerging to streamline legal processes. There will be tools to help the public perform legal tasks online, and tools to streamline solicitors’ workflows. Coupled with competition, new technology will drive down costs, to zero in some cases.

Solicitors vs Freemium

Solicitors, however, can be crusty old beasts, set in their ways. The vast majority still chop their days up in to units of 6 minutes. Five units to draft a Will. One unit to make a cup of coffee. Two units on the telephone to Mr Client. Typically, these units are recorded, and the solicitor’s ability to cram as many “chargeable” units into a day may ultimately determine his success (or failure) in the eyes of the boss.

Though not always a bad model (if managed correctly), it is hard to reconcile with freemium. Many solicitors would cringe at the idea of failing to recording chargeable units, even if there is a carefully-constructed plan to recoup costs in other areas. It requires a big re-think; bigger for solicitors than any other profession that springs to mind.

However, it is the value of services which is the key. Solicitors offering valuable services will survive, if priced right.

Good news for the paying public: freemium is coming to the legal world, and soon. Solicitors need to catch on.

At The Law Wizard, we like freemium; we think it can offer a great deal for the consumer, so long as the product is of high quality. We will be producing tools and guides to help you perform legal tasks online, for free, along with complementary interactive tools which will have a small set charge.