Identify a Pain Point
Build a law practice – an eight-figure one. It might seem like puffery in the title to entice readers, but that is exactly what Jon Colgan (@JonColgan) did. He built $13,000,000 in annual run-rate revenue helping his clients terminate their cell phone contracts early. And he is not a lawyer.1
Justice as service providers are moving into areas abandoned by #lawyers or #courts.
Colgan is leading a new industry called “Justice as a Service” and he is doing it by moving into areas that lawyers or courts have abandoned. In this case, the impact of arbitration limiting class actions in consumer cell phone contracts left consumers fighting cell phone providers one-on-one, un-represented. To Jon Colgan, it didn’t seem like much of a fair fight. Cell providers could charge exorbitant early termination fees and set up countless obstacles to contract termination. Most consumers had limited or no recourse.
Building a sustainable law practice requires identifying prospective clients’ pain point.
To build a law practice that is sustainable you must learn how to identify a potential client’s pain point. For Colgan, he knew the pain point because it was personal. He experienced how hopeless he was in facing cell providers alone. So the first place to look is areas where you may be suffering personal pain.
The pain doesn’t have to be personal. Talk to your clients or prospective clients. Find out what their pain points are. Wherever your prospective clients are suffering pain, there is an opportunity.
Stopping the Pain
While trying to resolve his personal cell phone situation, Colgan spent about a year scouring the internet for help and researching. There was a lot written about the problem, but no proven solutions. He spent the next six months testing methods through trial and error until he found success.
Finding a way to stop the pain is the legal service you are providing. Most lawyers will not struggle with this phase of building a practice. Most lawyers are problem solvers by nature. Even if the problem is complex, lawyers who have been practicing for any length of time know the importance of collaboration. The collaboration may last through the problem solving phase or it may extend to a new partnership.
For #attorneys, unbillable hours may be an investment in a new practice area.
The obstacle for many attorneys at this phase is that a lot or all of the initial work may not be billable. Remember that Colgan spent over a year-and-a-half developing a profitable solution. Consider that these unbillable hours are actually an investment in a new practice or new practice area.
Building a Community
Of course, he told his friends and family about his successes and found out that he wasn’t alone. A lot of people shared his problem. So, for the next five years he helped people resolve problems with their cell providers with no intention of starting a business.
Build a new #law practice where you want to spend your time.
Colgan built his model around consumers, but the same technique works in any community. This should be a significant consideration when you are choosing which pain point you want to solve. Offer a solution to a pain point in a community where you want to spend your time. Since you are building a law practice, build it where you want to spend your time.
Colgan’s business, Cellbreaker, emerged when he married his technology background with his hobby of advocating claims with cell providers. He explains the concept like this,
Imagine Verizon opens up the curtains of their home one night and there is one guy standing there with a pitchfork holding a torch. That is sort of scary. That is sort of like dealing with one attorney for an entire class of say 100,000 people. The alternative would be Verizon opens the curtain and there are like 100,000 pissed-off people holding pitchforks and torches. That’s way scarier. So that’s what’s we manufacture. We make it efficient enough for you to pursue your claim individually which is way scarier, way more costly for Verizon to deal with. They don’t have one set of attorneys to fight with, they have however many customers we have.2
Colgan keeps data on all of the wrongdoings that a cell phone provider (Verizon, Sprint, etc.) recently did. He then uses technology to compare his client’s contract to the catalog of wrongdoings and make a claim with the cell service provider. Using technology empowers consumers to make tens of thousands of claims contemporaneously.
Further, Colgan offers a faster turnaround. Class actions take from months to years to resolve. Colgan gets results in seven days.
Refusing to include technology in your #law practice is equivalent to refusing to use the wheel.
To build a law practice, consider technology. Sometimes the technology is part of the solution itself. Other times, like in Colgan’s case, technology allows the solution to be scaled from one client to tens-of-thousands. Either way, refusing to include technology in your business model is equivalent to refusing to use the wheel.
Create a Revenue Model Your Clients Talk About
As a class member, the client would get a nominal recovery or a coupon for a non-cash value (like a free upgrade). That’s nothing to brag to your friends about. Colgan’s clients keep the lion’s share of the recovery.
At first glance, Colgan’s charges look very similar to the traditional contingency fee charged by plaintiff attorneys. Colgan charges his clients 35% of what they save the customer in early termination fees. So, if the client benefits $1,000, Colgan makes $350.
The client pays the fee up front. If the cell provider refuses to drop the early termination fees, Colgan pays it.3 With that type of fee agreement, Colgan’s clients become evangelist for him. The next time one of their friends or acquaintances start talking about how they are being mistreated by their cell service provider, Colgan’s former clients are directing new business to him.
As of August of 2015, Colgan had 13,000 clients with a $13,000,000 annual run rate. His services have already expanded into monitoring his client cell phone bills for unauthorized charges.
Using Colgan’s model increased the possibility that the legal service you provide coupled with the fee you charge will get people in your community talking. This may not totally eliminate the need to advertise your service in some way, but it will eliminate the pressure to build a law practice using the practices of carnival hucksters. With Colgan, the press he received from the novelty of the service added to word-of-mouth went a long way to building eight-figure revenue.
The Future of Justice as a Service
Colgan has announced that he is broadening his business model beyond cell phone contract. Although he may be ahead of the curve, he is riding a wave that is overtaking the legal industry.
In February 2016, AVVO Legal Services announced that it is offering legal services directly to clients through its “fixed fee service.” The client is then assigned to an AVVO participating attorney before AVVO takes its marketing fee. An example of this service might be an uncontested divorce which AVVO is offering for $995. The fee is split between the participating attorney who receives $795 and AVVO who receives $200 for marketing.4
Justice as a service companies are not just targeting consumers. Kira is currently offering a platform for contract analysis, summary creation, and contract management.5 Kira’s offerings extend to all sorts of sophisticated business transactions including real estate, M&A and securities transactions. Tools like the ones offered by Kira enable in-house counsel (or even non-lawyer business management) the opportunity to avoid hiring outside counsel.
These are just three justice as a service providers. There are countless more. The writing is on the wall. The legal services industry is undergoing massive changes. Colgan has given lawyers a blueprint on how to build a practice in the new legal environment. The question remains: who will follow the blueprint? Lawyers or non-lawyer justice as a service providers.6
- (c)2016 Brandon L. Blankenship, Image Credit: Brick Laying Scott Lewis CC flickr 23DEC2014 ↩
- http://nathanlatka.com/ (retrieved 9 FEB 2016). ↩
- https://www.cellbreaker.com/faq#q4 (Retrieved 11 Feb 2016). ↩
- http://thedailyrecord.com/2016/02/08/avvo-legal-services-the-good-the-bad-and-the-ugly/ (retrieved 11 FEB 2016). ↩
- http://www.kirasystems.com (retrieved 11 FEB 2016). ↩
- http://blog.cellbreaker.com/founder-jon-colgan-founded-cellbreaker/ (retrieved 8FEB2016), http://techcrunch.com/2014/08/05/the-jury-is-out-on-legal-startups/ ↩