Monday, November 23, 2009

Attorney Fees: Why Free is Not Always Free

Following up a bit on my post on consultation fees, I want to talk about free.  In the past year there has been made much of making money off of free.  Chris Anderson's book Free pushed this idea and made it sexy.  My understanding of the idea may be an oversimplification but is that this is a rehash of the idea of loss leaders. This blog represents - to me - what Mr. Anderson was talking about.

I also have another idea in my head that opposes Mr. Anderson's ideas.  That idea is there is no such thing as a free lunch.  The best, longest explanation I found years ago in Robert Heinlein's novel The Moon is a Harsh Mistress.  Or this variation;  you get what you pay for.  For some clarity, you should also read Binary Law's Free - radical or not?.

Those of you seeking a free lunch (and who actually does not) need to consider just what you are getting for free.  Taking this blog as an example, you get free information but this is not all the knowledge that is in my head.  Those not seeking education will find this blog (and every other one) seriously lacking in content.

You consumers of legal services also need to know what you getting.  With family law cases, you are not getting only litigation but knowledge purchased with experience.  I had an experience last week that I want to discuss on its own but some points cna be made here.  At a minimum, litigation requires witness preparation, getting familar with the documents in the case, learning the facts and not just showing up at court.  Just showing up and not knowing the facts of the case brings to mind George Armstrong Custer and the Little Bighorn.

On the other hand, lawyers need to consider what we do in these days of the Internet. has a very good article, Free and the GP, discussing all these points but here are what I thought were the highlights:

Interesting as all this is, what does it have to do with the legal profession? Potentially, a great deal, as some legal bloggers have noted. Carolyn Elefant and Doug Cornelius both point to innovative new offerings from two well-known US law firms: Wilson Sonsini has set up an online term sheet generator, while Orrick has created a start-up forms library on its website. Both of these products (or are they services?) are entirely free, to anyone (client, non-client, other lawyer) who wants to use them. They’re also products from which these firms and others have traditionally made money. “But there’s a method to Orrick’s apparent madness,” Carolyn writes:
Orrick’s freebies help it capture a segment of the market which either couldn’t afford to hire Orrick or if they could, would not have been worth Orrick’s time. Consider the example of a small business — typically the type of client outside of biglaw’s demographic. The business might download and fill in Orrick’s incorporation form and then say to itself “I’ve already filled out the data. How much could it cost to pay an Orrick attorney to look this over?” Likewise, Orrick could charge far less to eyeball a completed form which it prepared itself than if the firm were to begin the incorporation from scratch (in which case, it would have to invite the client to the office, interview the client, gather the data and prepare the incorporation papers).


Giving away something for free or ultra-cheap in hopes you’ll entice users to buy your other services is not a new phenomenon, even in law: smaller firms have been using items like wills as “loss leaders” for years. What’s significant here is what’s being given away.

Legal forms aren’t matchbooks or Bic pens — or at least, they didn’t use to be: they were once important elements of the lawyer’s inventory that required a lawyer’s skills. The fact that they’re now customizable and downloadable on the Net tells us that the skill to produce them is now available widely. That implies a lack of scarcity and a consequent inability to charge much of a price. Legal knowledge, as Doug points out, is already being given away free by law firms; now, it appears that legal processes like document creation are following suit.
Again, I do not do free consults.  What fees I do charge are directly related to what your case needs done.  I will be discussing those in the next few days.

Since I wrote the above, I ran across Law Firm Price Wars Break Out as Some Try ‘Loss Leader’ Bids for Work from the ABA Journal.  This is not good news really - at some point the lack of income will cut into services.


Doug Cornelius said...

Sam -

Free is not just about loss leaders. Those are the bricks and mortar take on free. The real focus is that as your marginal production costs get close to zero, you should just round down to Free and find ways to leverage the increased volume.

The free term sheet generator is a great example of the theory. It costs close to zero to produce each term sheet from the online generator. Yes, there is the initial creation cost. But it can go from producing one term sheet to producing thousands (millions?) at no additional marginal cost. The production is not constrained by the cost of production.

On the other side of Free is your own personal time, which is a finite, fixed resource. Nobody is proposing that lawyers give away their time away for free.

Free did make me think about what a lawyer could give away to stimulate revenue. Or on the other side, what can the lawyer do to generate revenue that does not have a constraint on production like their time?

Sam Hasler said...

I appreciate you r comment but I think you miss the point that this a continuation of an earlier discussion about free consultations.

Oddly enough, you are the only person to comment on either article. Of an earlier post I wrote about improving client- lawyer interaction (, there were no comments from non-lawyers. I am not so sure that the public cares or thinks about alternatives to the usual fees/services paradigm.

Frankly, information is the best are for implementing the idea of free. Secondly will be some sort of form generator - that is true in the UK at this time.