Subscription services are an increasingly common way for consumers to access products and services they frequently require. Services like Netflix, Amazon Prime, and Instacart sell a product or service to their consumer in exchange for collecting recurring revenue for continuing to provide that service or product. May a lawyer offer legal services under a subscription service fee model in which the client pays a monthly fee for legal services that the client may or may not utilize? In a May 2024, ethics opinion, the Texas State Bar said “yes.” See Tex. Comm. On Professional Ethics, Op. 701 (2024).
A lawyer asked the Texas State Bar whether the lawyer could offer legal services under a subscription service fee model where the client paid a monthly fee for legal service that the client may or may not utilize. The lawyer designed a plan that provides each client with a set number of hours of legal services a month, access to legal forms, and routine check-in calls with the lawyer. Id. The subscription fee is much lower than what the specified number of hours of legal services would cost at the lawyer’s usual rate. The lawyer also offers a 10% discount for legal services exceeding the specified number of monthly hours, The subscription contract provides that the monthly fee is due in advance. In answering the inquiry in the affirmative, the Texas opinion concluded that the subscription fee must not be unreasonable, and that the fee must be kept in trust until the end of the payment period.
First, all fee agreements—including subscription services—must be reasonable. The opinion explains that there is nothing “inherently unconscionable” about a subscription fee service, but whether a particular subscription fee agreement is unreasonable must be reviewed on a case-by-case basis. Id. Lawyers must evaluate whether the subscription arrangement is reasonable based on each client’s unique circumstances, “including whether the client is likely to use the services offered.” Id. Lawyers should also periodically reevaluate the subscription fee engagement to determine whether the arrangement has become unreasonable over time.
Second, the subscription fees must not be treated as non-refundable and generally must be kept in the lawyer’s trust account until the end of the subscription period. The opinion analogized the subscription fee to a periodically recurring fixed fee agreement but noted that the subscription fee is partly to secure the lawyer’s availability and compensate for the preclusion of other employment, and partly for a pre-paid specific number of hours of legal services. For this reason, the lawyer must keep the portion of the subscription fee that is for the pre-paid legal services separate—and in trust—from the other fees until the conclusion of each fee period. At the end of the subscription period, the lawyer has earned the fees, and the fees may be moved from the lawyer’s trust to operating account.
Finally, the opinion cautioned that “upon termination of a subscription fee arrangement, the lawyer must refund any unearned portion of a prepaid subscription fee.” Id. When the client terminates the subscription services before the end of the subscription period, the lawyer must return an appropriate portion of the subscription fee to the client.
This opinion provides good advice. Lawyers can—and should—explore whether fee agreements other than billing by the hour would be advantageous and desirable for both the lawyer and client. But to comply with the rules, the lawyer must evaluate on a client-by-client basis whether collecting a subscription fee would be unreasonable based on the client’s circumstances. Further, a Louisiana lawyer considering a subscription fee arrangement should consult with ethics counsel to evaluate whether the subscription fees paid in advance to the lawyer in Louisiana belong in whole or in part to the client and whether the rules require the lawyer to keep the fees in a trust account separate from the lawyer’s operating account.