Mathew Kerbis, co-founder and CEO of Practi and host of the Law Subscribed podcast, presented to the Stanford CodeX community on transforming law firm revenue from hourly billing to subscription-based models. 

The discussion covers practical subscription pricing strategies (do-it-yourself/done-with-you/done-for-you tiers), the future role of human lawyers in an AI-powered legal landscape, and why the profession must adapt as consumers already demonstrate willingness to pay $20-$200/month for AI-assisted services. 

Kerbis emphasizes that lawyers’ future competitive advantages will be taste, curation, relationship-building, and human judgment—capabilities that don’t fit the billable hour model but align perfectly with subscription-based services.

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Transcript

Roland Vogl:
Welcome everyone to our CodeX group meeting. We have a great session today with Mathew Kerbis, who is the co-founder and CEO of Practi, which offers an alternative to hourly billing. Welcome Mathew. I’ll turn it over to you.

Mathew Kerbis:
Thank you to Stanford and the CodeX community, and for everybody for having me. I last spoke to this community over two years—wait, three years ago. It was January of ’23. I was almost a year into having my own subscription-based law firm, and that was getting some press. But since then, I have won a couple of awards for the practice and for my podcast Law Subscribed, where I interview other lawyers or innovators in the space. I’ve had Megan Ma on the podcast, and really a lot of things came to a head over me teaching lawyers how to use AI and adopt alternative business models for their law firm, where it ended up being—it was too much to run a practice, have a podcast, do one-on-one coaching, and all this teaching.

Actually, a software play kind of became—later became necessary to go from one-to-many and try to let other law firms and lawyers adopt the subscription model and alternative fee business structure for their practice. And just the way AI has been accelerating everything—you know, there’s a lot of pressure coming down on law firms from clients, both sophisticated and unsophisticated. You know, Roland, you said it’s very timely. I’ve been beating this drum for over four years, and just finally AI has gotten good enough that it’s really highlighting it.

With that, I am going to hop into just a quick presentation to set the table about what Practi is, talk about myself and my co-founder just for a quick second, and then show off the product. But at any point in time, if folks have questions—and I see my co-founder Shomari Ewing is here too—if anyone has any questions, yep, interrupt me, ask questions, disagree with me. It’s okay. I’ve heard it all. I’m happy to have lively debate if it comes to that.

With that, though, I will share my screen here just to show off the quick deck. All right. Okay, just moving some things around on the screen here for me. Okay.

We’re Practi, and we transform law firm revenue from hourly to subscription. Maybe you’ve asked yourself this. Maybe a client has asked this of you: “Should my lawyer be using AI to save time and reduce my legal bill?” Well, what Practi is, is the business model solution for this looming revenue crisis for billable hour law firms. That’s because—this community has probably already seen this graphic—lawyers have 855, probably more because this is like a month or two old—now this chart: legal AI tools available to them from almost 700 different companies.

Right. Last year alone, $6 billion was invested into the legal tech ecosystem, and a lot of that was AI-related. And the data show that 80% of lawyers or more are using AI, whether it’s these tools or the foundational tools. They know that it’s reducing their time, the time it takes to get high-quality work done. But what Practi is—we are betting on a future where it doesn’t matter if one of those legal AI solutions wins, or if the foundational models win, you know, with Claude and their legal plugins. Right. We don’t care. We know there will be winners, though.

And we are focused on building for what comes next. According to Clio’s data that they’ve taken—their private data and applied it to the public data from O*NET—they found that AI can already automate 75% of a law firm’s billable hours. It’s a combination of lawyers and their staff, but that’s revenue that’s gone.

Practi—since we’re trying to drive systemic change in the profession, and I’ve had my own practice and I have legal tech companies trying to sell to me all the time—we’re trying to make it really easy and really frictionless for lawyers to at least try this out and to get a sense of what the ROI is. That’s why we let law firms sign up for free, create their account, build out subscriptions for free, and get on calls with me and other users on the platform to strategize good subscription billing techniques and strategies.

And then after that, while we’re in this early access phase, we’re just charging $20 a month, right? We’re trying to keep it super affordable, super reasonable in these early stages. Later this year it will go up to $100 a month, but even then we only charge after the second client subscribes. We want to help law firms make more money before we even start charging anything.

And I will say here, just to note at the bottom, yeah, our target market—we’re trying to help the solo small firm attorneys. And we believe that with the Harveys and the Casetext of the world starting to go into enterprise markets, we believe part of the reason they’re doing that is because Big Law won’t need as many lawyers to continue to be Big Law and generate the revenues that they’re generating in light of these AI efficiencies. We’re going to be there to help Big Law attorneys that either get fired or decide to get off the billable hour hamster wheel soon. And that’s another reason for our pricing, because we’re really targeting those smaller law firms in the future—smaller and solo law firms from attorneys who are leaving bigger law in light of these AI efficiencies.

Rght now this is per firm because, again, we’re targeting solo small firms. Realistically, for firms on our platform to make it—the way that the product is designed, they may only have a handful of attorneys. We have interest from one mid-sized firm, but the way that we might have to set it up to work for multiple attorneys would be—it would ultimately mean they need multiple accounts. While it’s not meant to be set up as per-seat pricing right now, this is just per-firm pricing with the expectation that most firms will be solos or smaller, very much on the smaller side. Yeah, because we also predict that that’s the future of actually what the vast majority of the legal—of the law firm delivery model will be, will be these solo and small firms in light of AI efficiencies and the ability to do more work at higher quality and faster.

We’ve been building since last fall, and my firm, Subscription Attorney LLC, has been using it exclusively to sign up and charge clients since November. It’s fun to be a guinea pig—dog food—at your legal tech startup. But we soft-launched just about a month and a half ago, we’ve got some early traction. We’re not spending any money on marketing yet. We’re still having that direct communication with early users. But we’ve seen some good usage of the platform for just being out of stealth mode for just a month and a half.

For those of you who don’t know me, I go by The Subscription Attorney. I adopted that brand about four-plus years ago, and I have a podcast. Like I mentioned, I create a lot of content around this. I do a lot of teaching for free, basically, and guest lecturing. I also do—I’ve done paid workshops and trainings for bar associations and law firms. I am the subject matter expert in the space, but not just because of me and my stuff, but I have guests on my podcast. I’ve had over 100 lawyers who are leveraging subscription in some form or another.

Then my technical co-founder, who again is here, Shomari Ewing, he’s got over a decade of software development experience. He’s worked at companies like Google and Amazon Web Services, and he also has an MBA and a sales background. That’s always nice to have a technical person who actually understands business.

Again, we’re Practi. We transform law firm revenue from hourly to subscription. And with that, I’ll just show you the product, and I’ll be happy to entertain any questions.

Oh yeah, when I’m sharing my screen, it’s hard for me to see the comments here. Let me look into the chat. “Have you considered creating an insurance-based subscription scheme that aligns the ability to help people reduce their future prospective problems or not being compliant with unlicensed practice of law while also providing leads for retrospective problems?”

You’re asking—I mean, we are building a software solution that’s essentially Shopify for SMB law firms. But you’re asking about an insurance product. You know, I mean, look, if anyone’s out there and they watch this on YouTube later and you’re a professional liability insurance carrier and you want to create a particular insurance product for something like this, I mean, we’re happy to have a conversation. I think existing professional liability covers the type of work that’s being done, especially when you have jurisdictions like my jurisdiction in Illinois that are changing their Rule 1.5 on fees to expressly allow alternative fees.

Also, it was—I believe it was last year—the Illinois Supreme Court promulgated Rule 302 of the rules of professional conduct, which say if you’re not billing by the hour and you’re using a fixed fee, you could recover that without tracking your time. I think we’re going to see a lot more jurisdictions allow for express adoption of alternative fees, even though if you probably haven’t read your rules on fees lately—if you are an attorney, a majority of them allow for fixed fees. And the way that I encourage lawyers to use subscription is it’s a recurring fixed fee, whether that be on a monthly basis, quarterly, or annually. Right. But it’s a recurring fixed fee.

All right, let me share the product. Yeah, I’m curious to see what—I got a demo now. But one of the members of this community who works for a Big Law firm running AI and machine learning for them, she described a scenario where she said, “Okay, her firm is helping companies in a cyber breach situation, right?” They know the playbook—you know, what do you do? You have to go to all the states and inform the authorities and on, right? And it can quickly generate—cost a client like $1 million in legal fees, right, if you have a big cyber breach. Right.

And they thought, “Well, what if instead of that, we have a product for our clients where our clients pay us like, say, $100,000 a year as a subscription fee?” They will pay that even if there’s no cyber breach. But if there is a cyber attack, then the firm will handle everything, all the legal stuff that’s entailed, right, even if it costs them more than $100,000. I think that’s kind of going in that direction of creating an insurance-like type—turning a legal service into like an insurance type of—I don’t know if there are many practice areas that are accessible to that, but this cyber breach thing is like one, for example.

I think that’s a fantastic example. And I think that, you know, it is legally separate and distinct from actual insurance, right. But having a lawyer that you subscribe to that’s in the problem-avoiding space, that’s in the fire prevention space, right, rather than in the putting-out-fires phase, or you only contact them when there’s a problem, right—because if that client is paying that law firm 100Kayearminimumannualsubscription,right,yeah,somemembershipbenefitsofthat100K a year minimum annual subscription, right, yeah, some membership benefits of that 100Kayearminimumannualsubscription,right,yeah,somemembershipbenefitsofthat100K a year better include “we contact our lawyer to avoid ending up with a cybersecurity incident in the first place,” I would hope, without being on the clock, because maybe it could be avoided.

And then when you get to the costs part of that conversation, when you bill by the hour, it’s hard to not think of things in terms of cost accounting, with “Oh, that took ten hours. My hourly rate is $1,000 an hour, you do the multiple,” right. Like, no—that’s what you would make. That’s more opportunity cost than it is what your actual costs are, what your actual costs are, because you could—not necessarily fudge the numbers, but depending on how you present the numbers of cost accounting—Ron Baker does a great presentation on this. I highly encourage you to seek that out. He did it on my podcast last year.

But it’s, “What does it cost to run your business, to pay your people, to pay to subscribe to your software?” Right. It’s not about how long something takes being your cost. It’s about what does it actually cost to pay your people and have your software subscriptions. And then if you’re tracking time, it’s not about how long it took—”that cost us that much.” It’s about, “Okay, that took ten hours. How do we make it take nine hours, five hours, ten minutes? Automate it.” Right. And if we could continue to charge and command that price because that’s valuable for our client, then it doesn’t matter how long it takes because we could try to automate it.

Getting to the product—Practi—how is the website? You know, it’s live. Lawyers could sign up. Again, it’s free to set up your account. You know, we’re just getting the newsletter off the ground. If you want to sign up, you can, or you can even book a call with me and Shomari if you want to follow up. That’s all on the website.

When you make an account—I’ve just got a demo account set up here—you will be asked to either sign up for or connect your Stripe account. Right now we’re built on top of Stripe. Stripe’s secure. It’s a leader in the space. It’s one of the reasons why we’re building on Stripe first. We have been asked, “Will we integrate with other payment partners?” And, you know, that’s a maybe. We are still very early days in the first few months of operating as a company, we want to stick with the best of the best for now.

And after you connect your Stripe account, this will be a blank page, but you could set this up before setting up a Stripe account. But we have some templates. The templates will get better over time, right. Practi is not selling AI to law firms because there’s enough of that already. We are using AI, right. We’re an AI-native startup. Shomari is using, you know, Cursor and Claude and, you know, to build and ship features faster than we could pre-generative AI being useful for that. I’m using a boatload of AI tools. NotebookLM, Perplexity Pro are my daily drivers, right. What you saw earlier was Gamma, right. I’m using Gemini. I’m using a ton of AI. I think I’m at 27 right now. Whisper Flow—if you haven’t tried Whisper Flow yet, highly, highly recommend.

But in any event, we’re going to be collecting data of what subscriptions are working, and eventually we’ll have some sort of AI recommendations on what to build. Right now they’re very generic, but some people find that it’s easier to just add a template and then edit the template, right. I just added Homeowner Basic. You’ll see here, Homeowner Basic is here. And if I wanted to, now I could come in and I could edit this instead of just starting from scratch.

But for law firms that are already leveraging subscription, or they already have some ideas, they could just add custom subscriptions. The point here is that we’re trying to be as flexible as possible for law firms to offer whatever sort of subscription packages they want without giving you much freedom that it’s paralyzing, right. We just let you name it, put in a price. If you want to have a tagline or a description, or you just want to talk about the member benefits, right—I’m showing you the demo on the back end. I will show some front-end live pages of actual law firms, including my own, that are actually charging—what it looks like.

But for this demo page, whenever you make a change in the back end, it automatically pushes it out to the front end. It’s actually kind of zoomed in a lot on my end. You’ll see there’s also standalone services down there. We’re not trying to replace law firm websites, by the way. Lawyers spend a lot of money on websites, and I’ll get to what we’re offering for those websites here.

But going back to those lawyers who I know are going to be leaving Big Law or leaving other firms and starting their own practice—they’ll have a URL and a way to make money. And as long as they’re registering with their states, setting up their law firm—and we have a lot of content forthcoming about how to actually set up your law firm, right—they’re getting their malpractice insurance, right. We don’t help with the delivery or the business stuff yet, but you’re getting a URL. You’re getting a way to actually start charging clients on a recurring basis.

Mathew, can I ask you a question? Yeah. Okay, you have some templates that you have thought through before, like, you know, what would be, for example, a homeowner’s type legal subscription—what would be in that, right. And but presumably every firm’s a little different in the sense of the services they provide and understanding, like, because, you know, there’s always some things that are just repeat business, right, that they get all the time—standardized stuff—and then some stuff that’s more bespoke, right.

With your customers, these law firms, do you go through some kind of discovery in the sense of, “Oh, in your firm, you might think about these parts of what you do as things that are even amenable to creating a subscription around, and here are the things that you should continue handling in a billable hour way”? Is that part of what you offer?

We’re more a software company right now than we are a consulting company, right. Like, as we grow, we’re going to be hosting weekly 30-minute Zoom meetings with me as a group where we can talk those things through, because the chances are if one person’s asking those questions, somebody else already is. But thanks to the power of AI, we actually have—I’ve curated, it’s right now over 250 sources, a lot of it from my podcast, right, and CLE presentation materials that I’ve given—where you could come in to this link. And for folks who are watching live here on Zoom, I’ll put it in the chat.

You do have to be signed into a Google account to access it because it saves your chat history, which you could delete if you want. You could ask it these questions, right. This is our hack right now to be like, “Hey, yeah, I’m only available once a week on these 30-minute Zooms with all the users.” Well, you could ask this NotebookLM curated database that I’ve put together as the subject matter expert about—hey, I’m in immigration, right. We can even—I’ll just give an example. You know, I’m an immigration attorney. Oh, actually I’ll use Whisper Flow. For those of you who don’t know what Whisper Flow is, you basically just talk to your computer.

“I’m an immigration attorney and I’m not sure how I should price my subscription and/or fixed-fee packages. What do you recommend?”

And this is—no. And if you haven’t come across NotebookLM yet, it’s by far the best tool for $14 a month. This version that I’m using to do a forward-facing sharing version of it—for NotebookLM, you have to do it from a Gmail account because Workspace and Enterprise and school accounts don’t let you share outside your organization. It’s $20 a month to have up to 300 sources and higher usage limits.

Here you go. Immigration attorneys often use different pricing models like that. And then it’s pulling—it’s telling you where it’s pulling from for the actual sources, right. And that’s really important. Now we are playing with whether or not we want to let people see the sources, but it’s going to be able to tell you where that information is coming from. And it’s not just like a made-up thing, right. It’s not like just a chatbot making it up.

And actually, I think I want to share—yeah, I know I’m doing this live, but I’m going to share more than just this note—NotebookLM for this audience here. Hang on a second. I’m moving it from chat-only to full notebook. Bear with me here because we did just build this out by request. And some of these—here, I’ll refresh this now. I just sort of opened this up a little bit. “Answer again with examples, please.”

What’s great about NotebookLM is you could create resources on the side here. Yeah. Well, it’s a good thing NotebookLM is in my product because it seems to be having some issues right now, but that’s our stopgap measure. You know, Roland, in the future we’ll have more—I’ll either be more available or we’ll be able to productize those features a little bit more.

But basically, you’re creating a platform where these different subscriptions can be offered through—all of them, however you want to structure it. That’s the idea, right? Because like you said, there are different practice areas, there are different sizes, there are different ideal clients that law firms are serving. We believe we’ve built a flexible enough platform that you can showcase whatever sort of subscriptions you want, right.

Here’s Next Step Legal. This is a live firm that you could go to right now and you could check them out, right. And you could see—I’m signed in. In a second here, I’ll sign out. I just want to keep showing the back end a little bit because once you’re signed in as a law firm, you can’t actually subscribe to other law firms. You have to be not signed in or signed in as a client. Before I sign out, I just want to show some folks—here you put your engagement terms in here.

And again, I’m not giving legal advice, but just suggesting as a best practice, it’s always good to have. And we do allow $0-a-month subscriptions. I don’t recommend it. I recommend at least $1 a month for fixed-fee shops, or like—oh, because we’ve had some people say, “Hey, I mostly just do fixed fee.” Well, you could still engage your client. They’ll agree to your subscription terms even if it’s for $0. They’ve agreed to your engagement terms even if it’s for $0 or $1 a month. But then you could always go and follow up with them to have customized engagement terms that amend that, right. But this way they’re going to be able to see what your engagement terms are when they sign up, right.

You copy and paste those in there. And by the way, mine are available for free at subscriptionattorney.com/#engagement. I put them out there for my clients, but I also put it out there for other lawyers that want to adapt it to their jurisdiction.

Then there are the fixed-fee services, right. We don’t have templates for this yet, but that may be coming in the future. But for those fixed-fee, one-off transactional things that you want to charge to clients that aren’t included, this is where you could build out those services as well. You can track the revenue that you’re getting through your firm. This is a demo account, I’m not showing you a live firm account. We don’t have that fixed-fee revenue showing in the demo account. Shomari, that’s something to figure out, maybe for the next presentation we give.

But we let you track the revenue. We let you see the clients and what they’re subscribed at. We let you manage the clients. The clients can sign in, and I’ll show you what the client-side dashboard looks like in a second. Or, you know, we’re almost at time, you know, we have a widget button that you could use on a website where you could come to the website and you could click “Sign Up.” And I just want to be respectful of people’s time.

And then this is the same checkout page if they were to click on your Practi page, right. Like, if I’ve spent a lot of money on my website, we still let you connect it to your actual site. And if you’ve ever checked out with Stripe before, that’s going to look very familiar to you. And then, yeah, we let firms link back to their website and put in a scheduling link for their Calendly or something like that, right.

Yeah, I, again, I want to be respectful of everyone’s time. You know, there are basic settings you could add here. But again, we’re not trying to replace anyone’s—you know, the rest of your tech stack. We’re just trying to be a super simple, easy-to-use subscription revenue management platform.

With that, Shomari, thanks for answering people in the chat here. Yeah, sure. I think, thank you much. It seems like you tried to answer most of the questions that people in the group asked. Yeah. Do you have anything to add before—Mathew, do you have anything to add to what I’ve said?

Yeah, I’m going to need to catch up on it. Yeah, same here. Wow. But there was, you know, just kind of—yeah. In the same way that I’ve curated that NotebookLM—that RAG-based chatbot—for users of Practi to query against the database of curated sources that I’ve provided, you know, we’re giving that away for free for now, right. I mean, we’re still sort of testing it. You all got an early sneak peek at what that looks like.

But that’s, I think, the value of subject matter experts—the attorneys or any other subject matter expert in this AI-automated, supercharged, powerful world. It’s taste. Like, people have taste, and they maybe like working with somebody. Like, it’s relationship. It’s taste and it’s curation. I think those are the future superpowers of lawyers and professional service providers. And it doesn’t make sense to charge by the hour for those things because that doesn’t take a long time. It might take years to acquire taste and years to acquire an understanding to be a good curator. But once you have that expertise and that taste that people are willing to pay for, I think subscription makes the most sense. And it’s made sense before AI.

But we know—I just want to end with this, and then I’ll take any—people can unmute and ask questions. We know that the time is ripe for subscription-based legal services because today, already today, if somebody has an AI subscription that they’re paying for, they are asking it for legal advice. And it’s maybe giving them legal information in exchange and giving a disclaimer that says “contact a lawyer.”

My firm has gotten inbound from those types of communications, right, that clients are having with their AI tool before they contact you. But we already know that between $20 and $200 a month is a price point people are willing to pay. They are asking these AI tools for legal advice. I think that means the profession has to be ready to find a way to adapt the subscription model to their practice. With that, I’ll open it up for questions from the audience.

Roland Vogl:
Thank you, Mathew. Yeah. I’d like to ask the good question, which I think you answered already, but I think the question is, you know, what happens to the law firm pyramid if AI compresses junior associate-level work into AI systems? Do we need to train them differently or have a different revenue model entirely?

I don’t know how you’re thinking about that, right. Like, I agree with your premise that, you know, there will be a move away from the billable hour, which we have seen already—alternative fee arrangements, right, flat-fee billing and on, where the firm is encouraged to be more productive, you know, with its human resources. But there is also, you know, the question of, like, you know, what is the role of the human lawyer going forward, right? Like, AI can handle more and more legal tasks and, you know, do more and more reliably. But there is still this human oversight layer that’s needed, right. Maybe the subscription at the end will be for that human oversight, right regardless of how it’s paid, it is for that human oversight and context awareness. I don’t know if you have any thoughts on that.

Mathew Kerbis:
Yeah. There’s a three-tiered subscription way to price anything, right. And subscription, especially in the services space—in the software space, there’s good, better, best. And that can work with law firms. But I think what works with law firms even better for simple three-tiered pricing—though we certainly see more nuanced approaches on Practi, and I’ve interviewed lawyers who have more nuanced approaches to this—but a good starting point for some law firms is the do-it-yourself, done-with-you, done-for-you three-tiered pricing structure, right.

And you charge more—and for the done-for-you, top-tier pricing structure, you don’t just charge a simple multiple. That’s going to be many multiples more than the do-it-yourself and done-with-you service, right. And sometimes that might even be faster service for most clients, not certain contexts. And I’ve done both. The context where slower is better is foreclosure defense, sometimes insurance defense, right. If they get results faster, that’s actually more valuable to them.

There’s a UK expert in the space, Sean Jardine, who talks about how giving three-tiered pricing to your client for fixed-fee pricing—more on the fixed-fee pricing side of things—and he’s like, if they need it and you have a month to work on it, it’s the lowest price. If you want to get it to them by next week, that’s a mid-tier price. If they need it in 48 hours and they’re willing to pay that super high multiple, you give them that choice, right.

And in his coaching of lawyers, he’s on record saying how clients pick the more expensive option to get things faster. And sometimes faster is more valuable, and clients are willing to pay more for it than what you’d make on the billable hours. I still think there’s that side of it.

I think the learning—going back to that part of your question—is, how do lawyers learn if they’re not junior lawyers? Because that junior work can be automated by AI. Well, how do lawyers learn now? They learn because they do some work, they send it to the partner, and the partner marks it up and gives it back to them. And rinse and repeat, and rinse and repeat, and rinse and repeat.

You’re going to be doing that with these AI tools. But instead of it taking hours and days and weeks and months to learn, we’re going to compress that time. I’m using three AI tools—well, four if you include Whisper Flow—but three that are actually helping me with my substantive legal work daily. And that’s Perplexity Pro, NotebookLM Pro, and Paxton AI. I don’t know if you guys have had Paxton on—they’re a legal AI company. They’ve raised some money. They have their own legal large language model in addition to being multi-model.

And I’m using these three tools as though I have three team members. And sometimes I have multiple tabs open for multiple different files, and I’m just going back and forth with these AI tools. And I’m learning things, maybe about a particular nuance for a particular contract that maybe I didn’t know before, even though I’ve got over a decade of legal experience. But I think you’re going to see this learning compacted as new lawyers learn to use these legal-specific AI tools.

Benjamin
And what I like to tell people is that the calculator didn’t get rid of accountants, right. And it may be the case that we have like a legal tax calculator, but that’s only part of the profession. Part of it is knowing sort of the series of events that’s going to follow. There is no explicit law that says, you know, “don’t put soap on the floor.” But we all know if you have soap on the floor and someone is walking by, they may very well slip on that soap, right. And the number of ways that you can foresee—or negligence being unforeseen—is almost limitless. And you can’t just explicitly put it into an AI such as this.

And I think that with regards to the representation, a lot of the representation has to do with being able to foresee the results of your actions—the consequences of your actions—and other people not being happy with it. And I feel like that human factor is going to be needed, and it’s just going to take the role of the legal tax calculator, right, where we all want to know what the rules of the game are. We should all sort of agree, but that doesn’t tell me how I’m going to interact with the world and how I’m going to resolve conflicts with people in that world.

Mathew Kerbis:
I don’t think the role of the lawyer’s going anywhere. I just think it’s going to be different, right. I mean, if you think about, you know, pre-motor vehicle, it was people’s jobs to shovel horse manure out of the roads, right. I don’t think anyone’s complaining that that work has gone away. It used to be—somebody, before electricity, it was someone’s job to replace oil in lanterns at establishments, right. No one’s complaining that that job has gone away, right.

I think that the writing things from scratch that we do as lawyers—and we don’t always write from scratch; we write from templates or similar docs, or, you know, we find other ways to do this. Maybe we have automations built out in a tool like HotDocs or something, right. But we’re still doing a lot of manual work. And I think all that gets automated, and we’re billing time for it, and clients are paying it, but they’d rather not.

Paige:
This reminds me of and sort of touches on what you were just saying about Benjamin’s question as well. It’s felt like the billable hour—we know it has been going the way of the dinosaur for a while, and I feel like this new age we’re in is just really—it feels like, you know, what rideshare did to the taxi system, where it just fundamentally undermined the basis of the whole system in a way that it had to change largely.

I’m curious what you see going—where do you see the future of the billable hour and these alternative structures? Like, what do you see the new standard being? For some context there, like, I’ve worked in—I’m not an attorney, I’m a paralegal—and I’ve worked in many areas. I’ve worked in areas of law that are very much billable-hours dependent. I’ve worked in other areas where it’s only flat-fee models. Nobody’s doing hourly. Where do you see kind of the new standard for fee structure and the billable hour being in ten years?

Mathew Keribs:
Yeah. I’ve been having a lot of conversations on my podcast about this lately, and I tend to record live on LinkedIn. And people are giving the estimate—not me, although I agree with the estimate—3 to 5 years, and the billable hour would no longer be the dominant business model in 3 to 5 years, right. And again, that’s just sort of like experts pulling their opinion out of, you know, where. But like, our intuitive sense is 3 to 5 years before it’s not the dominant business model.

The reason it’s survived for long, even though people have said it’s going to go away, is partially because it’s been profitable despite there being better ways. But that profit number is going to start going down. To make up for it, rates will go up, right? The Wall Street Journal article—$3,400 an hour is out there now. Billable rates out there. But eventually, when push comes to shove, in my class I actually give math examples of, like, if you really have a 90% time savings, you’re going to have a 50X rate—$25,000 an hour from $500 an hour—which is probably an unreasonable fee, and certainly no client’s going to want to pay it, right.

You have certain economic forces at play here. Finally, thanks to AI efficiencies being exponential, I think that the reason flat fee has not supplanted billable hours is because of the underscoping/overscoping problem. And I get this question all the time from lawyers who are like, “Well, I’m not sure what to do. I’m in litigation or I’m in complicated M&A transactions, and like, how am I supposed to handle it if things start taking a lot longer or if it gets more complicated?”

That’s what subscription tiers are for, right. And your engagement agreement could say, “Okay, it’s an uncontested divorce. It’s $2,000 a month. If it goes to contested, it goes up to $5,000 or $10,000 a month,” right. That’s what subscription tiers are for. And if it’s even less complicated than we thought it was, we bump you down to tier one, right. You go down a subscription level. Subscriptions solve the underscoping/overscoping problem. At least it solves it as close, I think, as we can, right.

Yeah. And then you’re incentivized to just use the tech, use the tools, and adopt the technology. Like, we’re not selling AI, but we are friends with every legal AI company. Why? Because we want the lawyers to use the tech, because we think—I think ethically, just my opinion, not ethics advice—Rule 1.5, Comment 5, I believe, for the Model Rules, Comment 5 says you can’t bill and use wasteful procedures if you’re billing by the hour. That’s the implication. If you can use AI to make a ten-hour task take ten minutes, you have to do it. It’s already in our ethics. It’s just not being enforced right now. Yeah, I think it’s just a matter of time for that.

Sorry, Roland. Go ahead. I know we’re over here—ten minutes over time.

Roland Vogl:
It’s such a fascinating discussion. Not just your business which I think is very interesting and really showing a path forward for legal service delivery, but everything else you taught us about thinking about how to measure the value that lawyers provide and scoping and all of that. I think there was a lot of interesting stuff there.

I really appreciate you coming to join the group today and giving us an update and telling us about Practi. Please keep us posted in the future. And yeah, everyone else, thank you for all the great questions and the good conversation. And yeah, I look forward to seeing you all next time.