Why the Billable Hour is Dead: Unlock Explosive Growth with a Subscription Model (Ep. 83)
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The traditional billable hour model is outdated and limits growth.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:
Connect with Matthew Kerbis:
Linkedin: Matthew Kerbis
Website: Matthew Kerbis
Website: Subscription Attorney
Press Kit: Matthew Kerbis
