Most law firms pay lots of monthly fees for different services. The lines in our credit card statements flow over to the second page. And those fees add up.
Some lawyers are enraged by those fees, but not me. I love them. I see those fees like I see the cost of groceries used to make dinner. They represent ingredients.
Over the past several years, many of us have shifted from buying technology products to renting them. We pay monthly instead of making a one-time payment to own it.
I pay monthly for our practice management system, document management system, phone system, legal research system, marketing products, and so on. The vendors love this model.
In the old model, a server in our office (or in some data center) ran software we owned.
Today, we "rent" the whole thing - hardware, software, development, and support. The vendor creates the software and runs it on their servers. We pay monthly for the use.
Recurring monthly fees drive some people nuts. They can’t stand all those small bills on their statement.
There are actually services that analyze your credit card statements, identify the billers, and help you cancel the ones you’re not using. Of course, those services bill monthly too.
When a company can sell a monthly service designed to cancel other monthly services, you know people are agitated with recurring fees.
Some lawyers get so upset by monthly subscriptions they find ways to return to buying instead of renting.
Some go to extremes…
I know a lawyer who bought and installed an internet server in his office to host his website because he was angry about paying his web host each month.
Another lawyer has a hosted wiki for his office procedures because he doesn’t want to pay a service specializing in checklists and systems documentation.
Many lawyers still own practice management software running on their own server in an office.
These lawyers can’t stand paying monthly bills so they’ve found a way to get things done without paying a vendor on a monthly basis. They're buying software, building software, and hosting it themselves in an effort to cut some of those monthly recurring expenses from their budget.
Unfortunately, they're being penny wise and pound foolish. They're sliding backward instead of plunging forward.
I love the monthly bills
I adore the recurring business model. I’ll happily pay my monthly bills, month after month, forever.
Those monthly bills are a big part of what has freed up my time, given me the opportunity to focus, and facilitated my full-time travel. These services let me work on the business instead of in the business.
I can use my limited brain capacity where it has the biggest impact. These services are key to why I'm writing this article as I watch boats sailing by on the Adriatic (where the water, by the way, is incredibly clear.)
I’m not bothered by the recurring billing model. I was annoyed at first. But over time, I adapted. Now I’m a fan.
I love seeing these on our credit card bill…
Salesforce - Our practice management system
G Suite - Our email, calendar, contacts system
Sharefile - Our document management system
Vonage - Our voice system provider
Zoom - Video conferencing and webinar provider
Expensify - Expense reimbursement provider
Front - Group email and customer support provider
XpressDox - Document assembly provider
SweetProcess - Systems document provider
ManageWP - Web host
CoSchedule - Marketing calendar
Google Adwords, Facebook - Advertising
And so much more
Why do I love a monthly fee?
It's variable, so it's affordable
I like the variable expense aspect of it. I'm all about variable expenses.
In fact, it's one of the key elements of the Rosen's Rules free course. Whether it's payroll, rent, or a software service, I always want my expenses to be variable.
I don't mind paying more when we're booming. I love paying less when we're slow.
Most of our monthly bills provide a fair amount of flexibility, either because (1) they charge more or less when we use more or less or (2) they're quick and easy to cancel when we aren't using them.
We can ramp up when we're busy and cut back when we're slow. Avoiding fixed expenses has been an important element of remaining profitable during both up and down cycles.
In the old days, we were committed to owning servers, meeting payroll for technicians, and making payments on leases and loans for hardware/software purchases. Now we're paying for what we need when we need it.
We can walk away if we're not happy
We live in a world where better products are just a click away. There's something newer and better coming out each week.
When I buy something, I'm locked in. When I rent it without any long-term commitment, I can switch instantly.
One day we were using GoToMeeting. The next day we were using Zoom. The switch was painless. We saved money and got more features. If GoToMeeting catches up, we can instantly switch back. It's awesome and puts us in the driver's seat.
Rented products get better every month
Cancellation is always just a click away.
That kind of pressure forces vendors to improve their products. They've got to keep rolling out features, improving performance and optimizing the user experience. We get the benefit of their focus and expertise. I can see it happening right before my eyes.
Salesforce rolls out significant improvements quarterly. Many of the products we use get better each month. It's not extraordinary for us to see weekly upgrades and enhancements.
These products are built by experts focused solely on the product we're using. They're incorporating user suggestions, borrowing the best ideas from competitors, and dreaming up enhancements we would have never considered.
The vendors feel the pressure of ensuring account renewals. That monthly billing cycle is constantly breathing down their necks. They keep rolling out the goodies so that we'll keep paying.
There's someone to fix it
Technology breaks. It's unavoidable. When that happens, we need someone to fix it - fast.
Hosted technology is supported by layer upon layer of expertise, backups, and redundancy. When something breaks, you either never notice or it gets fixed almost immediately.
A chill runs through me when I think back to the days of running our own servers. A midnight outage meant calling our guy at home and asking him to drive to the office so the machines would function at 8 AM for work. He'd be up all night tweaking, restarting and testing. Those days are long past.
We've certainly bumped into problems over the years. Google has an outage from time to time and our email is down. Salesforce has a glitch and we can't get into our practice management system. Sharefile stumbles and we have to shoot them a message.
But when something goes wrong with one of these vendors, they fix it. They've got a tight system and we're surprised if things aren’t functioning normally within a moment or two. Those issues are few and far between. And they happen less and less frequently with each passing month.
Our clients' data is safe
Data security is complicated. Most of us don't even know what we don't know. It's way outside of our expertise.
But security of our data and our clients' data is essential. It's not optional.
In the old days, we worried whether our in-house IT guy really understood all those boxes he convinced us to buy for our server rack. We weren't certain that our consultants knew much more than the information found in the slick brochure.
Now, paying our monthly fees, we're more comfortable. We know that our vendors can spread the cost of security over thousands of customers and afford the best and the brightest personnel.
Of course, there is always the risk of a breach, but we're better protected than when we had to make our own security decisions and supervise the work.
It's cheaper over time
I've spent time supervising our computer guy. At one point we had two in-house computer guys. Truth be told, I had no idea what they did all day.
I've spent time managing software projects. It was mostly trial and error. I knew when it worked and when it didn't, although even that was tricky because often I didn't realize it was broken until after we thought it was finished.
I've requested changes, tweaks and improvements to our software. As often as not, my requests fixed one thing while breaking others.
Every business should focus on what they're good at. We focus on legal work. The vendors should focus on their work. We make more money doing the things we know. So do they.
When we're trying to fix a server, we're losing. When we're trying to build a wiki, we're losing. When we're developing a practice management system, we're losing.
The first time we have to fix the broken software we own, we lose all of our savings. It's almost always better to rent than to buy when you consider lifetime costs.
There is money to be made by law firms. Some of us are good at building relationships and marketing our services. Some are good at thinking through complex problems. And some are good at cranking out the work. That's where we win.
If you're the exceptional lawyer who's great at technology, then maybe you should run a technology company. Those folks do pretty well from what I hear.
Paying someone to do things for you makes sense when their work gives you time to maximize your value. Optimizing you law practice will make you more money than creating, supervising, managing and repairing technology.
We are not alone
I used to buy software and have it customized for our use. We had a pretty good system built on Lotus Notes and hosted on an internal server.
But we were the only customer. New features only came when we requested customization. We could have anything we could imagine, but our imagination was limited. Basically, we only built solutions to the problems we encountered. We had no idea what might be possible.
Now we benefit for everyone’s imagination.
When we buy a software service, we're part of a group of customers. They're speaking up, complaining, asking questions, making suggestions, and checking on things. The improvements are driven by the group. In total, the customer base drives the vendor at a pace we could never achieve on our own.
The other users are demanding improvements that we never knew we needed. When those enhancements and fixes roll out, we benefit too.
I like rented products even when the fees are high
When we pay a lot, we get a lot.
If we aren't satisfied, we leave.
We spend a small fortune on Salesforce, but they've got 25,000+ folks working on the product we use 24/7/365. They hire the best and the brightest and deliver for us in every way possible.
We're happy to pay when their focus is helping us serve our clients and grow our business. We've learned that they're excited to keep moving us forward by packing in new features, whether it's the latest in artificial intelligence, data security, or enhanced user experience. In the dynamic, fast-paced environment of technology, we nearly always get more when we pay more.
It's awesome when great technology comes cheap. But ultimately, technology products are a relatively small expense for most law firms compared to the cost of our team.
Having great technology enables us to produce a better product at a lower cost. Spending money on technology is nearly always a good investment. The challenge is finding new technology which improves your offering. The cost of that technology is easy to justify.
I'd like more monthly bills
Each bill represents one fewer headache, one less late night, one less phone call, and one less hour wasted by employees twirling their thumbs while waiting on slow, buggy software.
I want more monthly bills.
I used to think I wanted to own it, pay it off, and be done with it. Now I see the opposite. I want to borrow it, use it, and walk away when I'm finished.
I love the variable cost of constantly improving products. I love the security of knowing we are grouped with other customers worried about the same issues. I love when vendors feel pressured to deliver because we can switch to something better in an instant.
More great technology is exciting to me. I'm always on the lookout for the new thing that'll improve performance, lower costs, improve service, or grow our business. I welcome the opportunity to pay more monthly fees - I'm getting my money's worth.
I used to believe that owning things had value. I thought we could build something and milk its value over the long haul. I imagined that technology products had equity I could exploit.
Now I know that last cycle’s technology is worth very little. Now I know that most tech services evolve at rapid speed. The value of yesterday's technology diminishes quickly.
Owning the technology isn't how we increase equity. Building on top of someone else's technology is how we leverage ourselves to fulfill our potential. We need them to do what they do best so we can use their tools. That's how we create value for our clients.
The equity we create comes from building our reputation, from optimizing a network of people using systems to satisfy clients, and from constantly incorporating expertise into those systems enabling us to stay at the top of the game.
Paying those monthly bills represents an opportunity to create more value for clients, grow more equity in the business and do it in a way that makes your offering more appealing than that of the others in your marketplace. Don't shy away from recurring fees. They are the ingredients for the recipe that cooks up success.
Lee Rosen practices family law and has offices in Raleigh, Durham and Charlotte. He serves as Chairperson of the North Carolina Bar Association Law Practice Management Section. He is the Law Practice Management editor of the A.B.A. Family Advocate. Rosen writes extensively on law practice management, marketing, technology and finance issues and is frequently published by leading legal trade publications. He writes a practice management blog at DivorceDiscourse.com. His firm website is Rosen.com.