The Economics of Unbundling Your Estate Practice: Taking a Close Look at the Profitability of Flexible “Pay-As-You-Go” Fee Structures

November 17th, 2017

I’m very pleased to welcome onto the show Ross Tew, who is one of our provider attorneys out of Dallas-Fort Worth, Texas area. He’s also one of our estate lawyers. We’ve had maybe two attorneys on the podcast so far that provide estate planning work for the estate clients that we send. We generate estate leads, family law, immigration, and very soon we’re going to be going into the bankruptcy arena so stay tuned for that. We’ll send a notification about bankruptcy leads becoming available in the near future.

Estate planning is an area that we haven’t had as much input and feedback on, and Ross has been very, very effective at working with these folks and finding ways, he cultivates a culture of what he would describe as being flexibility and willingness around finding ways to serve the clients. He has a very client-centered approach to the way he works with folks. He didn’t really have his numbers, but we looked into it, and he’s been converting about 50% or more of his leads into paying clients, so one out of two. Obviously, doing a really, really amazing job working with these folks.

On this episode, we really dive into what does that mean to be flexible? How is being flexible both with the location of the courts he’s willing to work with and, more importantly, with his fee structure and the way he’s offering what could be called pay as you go or basically breaking down all of the tasks that are involved in each thing that he’s going to be getting done for the clients into specific segments and then billing one segment at a time.

We talked a lot about why attorneys are resistant to work with clients in this way and why a lot of them feel like they have to get the money up front and for a lot of attorneys, as we talk about in this episode, it’s because they believe they’re not going to get paid or they believe it’s going to be less profitable to take payments one phase at a time as it is to pay the full amount. We kind of questioned that reality. We looked at his numbers and broke down how many cases he’s gotten, how many cases have defaulted on him and how many clients he’s been able to acquire in addition to the full-service cases that can pay him up front, how many additional clients he’s been able to acquire by being to work with folks on this type of pay as you go, broken up where he does not require the full amount of front.

The result and the numbers of this, which right here in this interview are astounding. This is kind of what this podcast is all about is having more and more examples of attorneys like yourselves that are offering these options in their practice and are not only helping a ton of people that otherwise would be going it alone, are stuck representing themselves, are not able to handle their legal matters at all to the point where they have quality representation from a compassionate attorney like yourself in a way that they can afford and also how profitable that is for attorneys to do that.

I think once we really get that message out to more and more attorneys that not only can you help a lot of people but you can also make a lot more money doing it, that we’ll start to shift the tides and offering unbundled services will be something that becomes more of a self-evident practice as opposed to something that’s ridiculed or not yet accepted. Really great interview, very transparent look at the economics and impact of unbundled services, even in the estate arena. Let’s get right into it. This interview with Ross Tew, again, one of our provider attorneys of the Dallas-Fort Worth, Texas area.

Below is the transcription of this episode from our Unbundled Attorney Mastermind Podcast. You can listen to the entire episode by clicking here.

Dave Aarons: Hey Ross, welcome to the show.

Ross Tew:   Hello.

Dave Aarons:   It is a real pleasure to have you on today. We’ve only had maybe a few, maybe two or three estate lawyers on the podcast so far and you’re one of our estate lawyers in the Dallas-Fort Worth, Texas metro area and have recently expanded to Austin as well. You’ve also been doing really well with the leads and so we’re looking forward to unpacking and diving into what’s been working so well for you. I just want to thank you for taking the time today to share what’s been going so well.

Ross Tew:   Absolutely. I appreciate you guys taking the time to recognize how all this is working. I’ve listened to the podcast a couple of times and taken some notes from there and it’s helped me make some moves in my practice that are starting to pay some dividends.

Dave Aarons:   Awesome, I’m glad to hear that the podcast has been helpful for you as well. Maybe a great place to start Ross is just to give folks who are just hearing you here a little background as to how you got your start in the practice of law, the reason you serve and why maybe you decided to provide services in estate law.

Ross Tew:   Sure. When I was going to law school, I was going to Texas Wesleyan back when it was Wesleyan, now it’s Texas A&M, and at the time it was literally real property law, and I was just fascinated with the springing interests and things of that sort and life estates and how all that operated. From there, I got into some doing some probate seminars and guardianship and things of that sort and then did an internship with the IRS in their estate tax section. It just kind of gripped me right from the beginning just how property sort of passes and what all you can do with it, where you can put it, trust planning, things of that sort.

It’s just really that’s kind of at the heart of it and then where that leads you to is writing wills for people, setting up trusts, and then they come back to you and want to get their wills probated. That’s really been the focus of my practice purely out of my own interest in the subject. There really wasn’t any reason why I had to go this route. It’s not like this was the first job offered to me or something like that. This was the topic that I nerded out on and enjoy practicing it now.

Dave Aarons:   From what we’ve been hearing as far as the clients, the clients enjoy working with you too from what I’ve heard from Graham is that you’ve been one of the highest converting estate lawyers in the network just sending you leads throughout Dallas. Now you’ve started to expand into Austin. We’ll kind of focus on your process, but it sounds like you’ve been starting to experiment with working with some folks on a little longer distance than Austin as well.

Ross Tew:   Yeah, part of what makes that feasible is just flexibility. That’s thinking about how my practice differentiates from say the firms that I’ve worked at and other attorneys that brought in, folks that refer cases to him. In probate, especially in Texas, there’s a tendency to create sort of an assembly line and I certainly, for the cases that are just straight down the middle, very straightforward, bring in the will, probate it, and get an independent executor appointed. Doing those types of real straightforward cases, of course you have basic systems in place that allow you to process those cases and handle them but then part of the willingness to go out to a county that’s two or three or five counties over and being willing to do a little bit of traveling around the state.

One of the leads that I was sent from down in Austin actually ended up the will needed to be probated in Texarkana. He and I have just been communicating by email and phone and doing a little of, you know, he has to send me the original will by mail that I’ve got to forward onto the court. But the first time we meet will be out in Texarkana when we go to prove up the will. Places that I worked previously, something like that, working with somebody so far away and then both of you having to travel so far to get the work finished, that just wasn’t a case that I could take when I was working there. Running my own practice, I like Texas, I like getting out and traveling around. I’ve got the family all over, so any excuse to get out and about, I’m willing to do that kind of work, and I get paid for it. It’s rewarding in its own right. Really, that flexibility and willingness to figure out a way to serve a client, that’s the basic jumping off point whenever I start working with folks.

Dave Aarons:   What I’d love to do is flesh that out, that flexibility. You mentioned that the way you work, you kind of differentiate yourself or what you’re doing is differentiated from the way a lot of other firms work. Maybe you could share what you see as being those specific differentiators. Obviously, there’s the philosophy, and the approach like you was talking about as far as being flexible with locations and courts and then obviously a willingness to try to serve the clients. I really like that philosophy and that approach because that’s certainly going to come through in the way you talk to your clients and focus on finding creative ways to serve them. Maybe we could start to explore what some of those ways are that maybe other firms aren’t typically employing.

Ross Tew:   There are several areas. One, and I think this is really fundamental, none of us are trying to run a nonprofit firm, is fee structure and how you structure the fees so that you can serve clients that maybe even have been to see other attorneys and just couldn’t come up with large upfront deposits or weren’t comfortable handing over a credit card and getting charged X amount every month and not really being able to backpedal out of it if they didn’t feel comfortable.

I actually, it’s kind of odd given how so much of what I do relies on technology, but I’ve gone away from even accepting credit cards. I do sometimes accept things through PayPal or something like that, but for the most part, I work on cash and check basis, so I’m waiting for the snail mail at times. One of the aspects of the fee structure, I do a lot of fixed fees and we really take the time to break down all the steps in the case and make sure that you know, if I’m ideally and I’ve submitted enough bills to the probate court, I know what a reasonable amount of time is to spend on each task.

Being very upfront with clients about here’s what’s actually entailed and being able to put a period at the end of that, I find that that’s something clients are really looking for is I don’t want you to just leave me with this open-ended, yeah I’m going to take your big deposit but then I may ask for even more than you’re paying me upfront whenever all of this is done. Certainly, there are cases where they’re either contested, or there’s pending litigation in a decedent’s estate, or there’s something going on that really does necessitate opening up the faucet and letting it run until you get the work done. In those kinds of cases, that’s how I handle it, and I’m just very direct with the client about that needing to take place.

Typically, in the cases where I can’t offer fixed fees or I can’t offer payment schedules or even … Working in decedent’s estates often if you have to go through dependent administration, my attorney’s fees are actually ordered by the court at the end of the case. Some of these, as long as I don’t have to be out of pocket any expenses, so I take a relatively small deposit from the client to cover filing fees and things of that sort.

Then it really motivates me to get the case pushed along and wrapped up so I can get the court to issue an order for me to get paid. That’s just a reality of dealing with decedent’s estates at least here in Texas. Attorney’s fees, the cost of administration are one of the first top-tier creditor claims in an estate, and they do that for a reason. I take advantage of it, and at times, clients pay me a big deposit, and I reimburse them. At other times, I’m dealing with a lot of folks that they just don’t have the means. They don’t have the money. They try to go to Legal Aid, Legal Aid says, yeah we could take your case, but we don’t have any probate attorneys that can do this on a pro bono basis and so, they’re left out in the cold. Once we meet, I’m able to show them that there’s a way that I can get paid, you can get good representation, and you can get your case dealt with, and everybody comes out whole at the end of it.

Flexibility and fees are one of those things. I just work with people where they’re at. Obviously, I have an idea of what I want to get paid in each case whenever it walks in the door. Often by taking the time to really explore … Okay, you’re bringing me a will but what are we actually trying to accomplish to get it probated. You start getting into the real issues that the clients are dealing with. What’s the practical problem that they have? Sometimes that actually leads to doing additional work that’s sort of tangential to the administration of the estate at times. You end up getting more fees for doing more work. It’s a good place to start being flexible enough to meet the client where they’re at, and sometimes it pays big to take, not really much of a gamble. Like I said, you’re a top-tier creditor. You’ll get paid out of the estate when everything is said and done.

That just comes to the willingness and recognizing … I think we’re all aware that there’s an access to justice gap. There are folks that are so indigent that Legal Aid steps in and they can actually get some representation. Then there are folks that have the money to pay the big deposits to bigger firms. But there’s a lot of folks that they don’t have $5,000 or $10,000 to put up for a will contest. I have been able to take some of those cases on and have some success with them and eventually get paid by the court. Part of that is just being able to wait and running my own shop that’s a bit of flexibility that I have that I get to take advantage of.

Another aspect of what differentiates how I operate from say a bigger firm is part of that is the geographic limitation. It doesn’t bother me a bit to spend a couple of hours on the road to get out to some far-flung county. I think we have 240 some odd counties here in Texas, it’s a big state. There are people all over that need help. They may live here but the person whose estate we need to settle is out ways, and so that’s where we need to go to get it done. My willingness to go and do that, and of course, my clients pay me for the cost of getting to and from.

My willingness to spend those hours to go out and do that is something that I think a lot of big firms, at least whenever I was working for other folks, that’s not really an option. I couldn’t take that case because they’d just look at that as purely wasted time. Well, once you get into it and it turns out there are some claims in that estate that you get to pursue and you end up with a good paying case, that couple of hours on the road just fades in the distance, and that ends up being time well spent because you get to take on a case that ends up being really worthwhile. In large part, I can really only answer myself. I can take on stuff, and I can approach it with a problem-solving standpoint rather than a money-making standpoint. The beauty part is I still make money. Clients get served, and it’s really what we’re supposed to be doing.

Dave Aarons:   I really appreciate that, that you recognize that access to justice gap and see it has a necessary part of your practice to find ways to work within people’s budgets and meet them where they’re at like you’re describing. That’s certainly been a theme and an underlying value of all the attorneys that come on this podcast and furthermore work with us across the United States. I’m really pleased to hear that you’ve been embodying that principle and that virtue. One of the things I’d love to ask you, is it unusual to some degree for estate attorneys to take cases in which they get paid out of the estate once it’s settled? Is that something that is not a normal practice? It seems like that would just make sense that if that’s an option, that you would work with people, but maybe there are some challenges as far as holding your costs in the meantime and waiting to get paid. Maybe you could just enlighten on that.

Ross Tew:   Here in Texas, one of the first things that are supposed to get paid out of an estate is burial expenses, things of that sort. But right up there at the top of the priority of creditor is the cost of administration. Especially independent administrations one of the steps that we take as we put a bow on the case is to ask for our attorney’s fees to be paid out of the estate. With dependent administration, the court has to authorize essentially every action that the administrator takes. Paying the attorney’s fees is one of those and the court auditor’s review your billing and make sure that you’re charging a reasonable rate based on your experience, the complexity, the novelty of the case, make sure that the time you spent is appropriate for the task.

Having submitted those bills to the court a time or two, you start to figure out here’s how much time it should take, here’s how much this should cost the client for you to handle a certain task. It gives you a better idea of how to prepare people for the fees that they should expect in cases. It’s fairly common that the attorneys get the bulk of their fees paid at some stopping point in the midst of the administration or at the very end whenever the final distributions of the estate are being made. To answer your questions, it’s fairly common.

However, my approach to it of being willing to wait until I actually get the job done before I see the bulk of my fees, I’ve had more than few clients come to me where they have been fired by their attorney because they couldn’t keep up with paying the attorney’s fees as they went. They’re $5-6,000 into a case, and they’re pretty much tapped out, and there’s still work to be done. Some of these firms, they need the cash flow to support the overhead right then, so they expect their clients to pay all of the costs of administration out of pocket. If they get awarded attorney’s fees by the court, then assuming they would reimburse the client at that point. I’ve been able to do that with some clients. They had the means to go ahead and make a substantial deposit, and I billed against that. Then whenever attorney’s fees are awarded by the client, reimburse the client and settle up with them at that point.

But for a lot of folks who don’t have the means to do that, that’s where my willingness to wait, my patience, I kind of view it as a long-term proposition. My practice is not just a month-to-month or a year-to-year thing. It’s something that I’ve built up fees in some of these estates where they’re contested, and we just keep going on and on with mediations and negotiations, trying to reach agreements on different issues. On those, what you end up with at the end of the day is well worth the time you spent on it, but it didn’t do anything to pay the rent for the last 12 or 14 months. Running a lean practice like I do really enable to absorb the time that I’ve spent on it that I know that I get paid for eventually. I think that’s one of the aspects that I think a bigger firm that has a lot more overhead can’t necessarily be as patient with cases like that as I can.

Dave Aarons:   Yeah, certainly I think it also has to do with the individual firms, how they’re running their practice. There’s a lot of sole practitioners that may not be able to manage that cash flow. Is there anything that you specifically do to be able to run a lean practice. Do you every time you get paid do you set a certain percentage aside? Are there certain things that you’re doing and the way you run your practice where revenues that come in, you don’t see them necessarily as, you put a portion aside or is there a way that you manage that so that you can continue to be able to offer that patient willingness as far as the way in which you’re getting paid on those long-term cases where you’re not running into a cashflow problem?

Ross Tew:   Yeah, in the way that I did that, I didn’t just start out my practice by taking on these bigger, long-term cases. Those were the result of having a reputation for being able to handle, what would you call it? Sort of quirky circumstances, things that don’t really fit on another attorney’s assembly line. That was a couple of years into my practice before I started taking on those cases. The cash flow for just my month-to-month operations comes from doing a lot of basic estate planning. Doing very down the middle probates of wills and things of that sort. For those types of cases, I would say in probably 80% or 90% of those, estate planning, of course, they pay for it all upfront whenever we bring them in and take care of their will drafting and signing. Often, I handle those in one office visit.

We correspond by email, I send questionnaires, get the client to provide me enough information, so whenever we sit down, I have a pretty good idea of exactly what it is that they need. Then we really dive into some of the details, make sure that there are not any other issues that their estate plan needs to take into consideration. Then we get things drafted and get them executed, and people walk out with good quality estate planning. I’m not the cheapest guy on the block, but it’s also a lot more reasonable than some of the folks really drilling folks on living trusts and things of that sort.

The way that I’m able to absorb these bigger cases that have bigger payouts down the road is by just being very efficient and having a good volume of both leads and referrals in estate planning and the more simple probate matters. I call it hitting singles. The bigger cases are home runs but I just hit a lot of singles each month, and that enables me to keep the lights on, keep the kids fed, the whole bit. Whenever these bigger cases finally pay out, a lot of that is what’s getting set aside to sort of build up the ability to take on more complex cases, to do more discovery, to bring in expert witnesses in the more complex litigation.

That’s really the way that I operate. I treat the bigger cases as not, I don’t rely on them or count on them as part of monthly cash flow, and they’re also unpredictable. The simple estate planning, the very straightforward probate work, those are very predictable, and I think that’s the assembly line that a lot of attorneys feel comfortable working in and then there are the other cases. Those I just count on them to pay off at any particular point, I just know that they do and whenever they do, it gives me plenty of breathing room to either invest in my practice or to set money aside for more complex cases down the road.

Dave Aarons:   I think that’s a really key point that you’re not counting on these home runs going through for you to keep your practice afloat. You keep your practice afloat by hitting singles and doubles all day long and have that be your operating capital and then when a home run happens to hit … Being able to be efficient in the way that you’ve described hitting singles, enables to swing for the home runs whenever those pitches, to keep with the analogy, come across the plate because you know that you can continue to operate because you’re so efficient and lean in your day-to-day operations that you can swing for the home runs and then those are kind of almost like bonus when they finally do hit.

Ross Tew:   Indeed.

Dave Aarons:   I’d like to circle back on some things you said earlier that I think is really important. Number one, first of all, I think you’re the first person that said that you were taking credit cards and then decided to not take credit cards anymore. Most attorneys are moving in the direction of they never took credit cards and now they’re realizing okay, I need to start taking credit cards. Can you just make a quick comment on why you’ve actually gone in the opposite direction because the first we’ve heard of that kind of moving away from this credit card and automated processing trend?

Ross Tew:   One of the items is just the processing fees. Maybe I just picked the wrong credit card processing company. I was looking at, just as a percentage of some of the deposit that I was taking and clients seemed fairly resistant to absorbing that cost. If it’s 3% out of a $5,000 deposit, they don’t want to pay that cost and so I end up eating that for nothing. I just kind of looked at as well, if you have the money, you have the money and if you don’t have the money, don’t go further into debt just to be able to hire me, especially if it’s a case where I know that there’s a payoff at the end. I’d prefer to steer clear of using credit cards altogether.

It was to the tune of several hundred dollars a month that I ended up saving by getting away from accepting credit cards in every case. That’s several hundred dollars that I can put towards acquiring more leads, towards marketing. I just think the money is better spent there. If a client comes to me and they simply can’t work with me unless I’m willing to accept a credit card, then it just sounds like we’re not going to be able to work together, which has happened one time out of probably north of 100 new client meetings that I’ve had since I stopped accepting credit cards. If that’s the tradeoff, I think it’s a good decision for me.

There are other folks they probably do have a system in place and they having people that are tracking billing and they’re doing these automated payments and things of that sort. That probably works really well for them but for me, it just never really took with me. I didn’t care for the automated payments each month. I prefer to bill clients for what work I’ve actually done and then to settle up with them either via check or with the understanding that I get paid down the road. That’s basically how I arrived where I was at where I just said, I’m not accepting them, I don’t want to pay for the privilege of accepting them whenever clients aren’t even paying me with them at times and so I just moved away from it and it seemed like it simplified things for me.

Dave Aarons:   I appreciate your comments on that. Certainly, credit cards can be very helpful as an acceptable payment option, especially when some of the attorneys are scaling up a practice and doing higher volume and expanding, higher volume of leads and higher volume of referrals. It gives that additional payment option to clients where if they’re taking a lot of payment plans or doing family law work where there are payments that are going on every month, it enables to remove some of the administrative work around accepting payments. While at the same time, I can see how this is totally working well for you where you’re doing a lot of fixed fees and working with folks as a solo practitioner and you’ve got a specific set number of clients you’re working with and it’s not worth the added expense. It’s good to hear both sides of that coin so attorneys can decide if it’s something worthwhile to implement in their practice or not.

What I’d love to explore a little bit further is you mentioned that you are offering a lot of fixed fees and basically unbundling in a lot of your services in your estate planning and litigation process. What would be helpful is if you could just lay out some of the different services that you offer fixed fees for. Obviously, you’re breaking certain cases down into specific tasks. I think it would be really helpful for attorneys who are looking into being to start unbundling services in the estate planning and estate litigation world to give a lot of ideas on ways they can start, so maybe you can share a little bit about that.

Ross Tew:   One of the tricks here in Texas is that if you are seeking to be appointed as the personal representative of an estate, you’d be acting as a fiduciary, and the court does not allow you to serve in that capacity without having an attorney of record on file. What I end up doing as far as unbundling estate administration work, probate work because the court requires that the person is represented, those in large part I actually represent the client start to finish and it is a full engagement of my services. The unbundling in that context really comes down to let’s look at all of the steps that we need to take and do you have a deposit up front that is going to cover all of this? Great, let me put that in my trust account and we’ll talk at least monthly to review what work has been done, what’s left to do, and how much money you have left from your deposit.

Other folks, they’re blue collar, they work hard. They do get paid well enough either doing construction or driving trucks or something like that but they’re not real big on saving, necessarily. They tend to have a lot of cash in hand but they’re very conscious of where they spend it and how they spend it. With those folks, we break down in the first four weeks, you’re going to be able for me to take steps one, two, and three. Then we’re going to need to get another payment that will cover these steps. I end up doing a full engagement with them, it just impacts the timing of the work, when the work gets done, what steps I actually take. They’re not keen on building up a really big bill. They’d rather pay for it as we go. It’s unbundled in a sense even though I’m essentially representing them throughout the entirety of the case. I never really just prepare a document for them and set them loose to do with it what they will. I am representing them throughout but it’s unbundling from that standpoint.

Estate planning, I’m trying to think if there was even a single estate planning client where I drafted something for them that I didn’t actually help them execute whenever we drafted it. The name of where my lead comes from doesn’t necessarily reflect itself in the type of work that I do for folks because the estate planning just gets done. They come in, we do what they need to be done, and they walk out with their documents finished. With probate, they have to have me representing and the same with [inaudible 00:39:13].

It doesn’t really turn into truly unbundled services but learning how to break down the steps in a case and then quantify that into what an hourly billing would be or what a fixed fee would be for each of those tasks definitely enables me to work with folks that may be, you know they’re always walking around with a certain amount of cash, they just never have anything saved up to put down a deposit. That’s part of the flexibility of me being able to show them exactly what it is that I’m going to be done and exactly what they need to be able to pay me. It’s the same skill set I would say, but it’s not a pure unbundled services like you may be able to offer in other areas of the law.

Dave Aarons:   In unbundling, the underlying intention behind it is to make your services more affordable by breaking things up into specific agreed upon tasks and going one step at the time so that, like you said, we have an access to justice problem and finding ways to work with people within their current budgets. Like you said, a lot of hardworking blue-collar families out there, they may be making a decent amount of cash in their job but just don’t have the savings. You need that form of flexibility. The way in which you’re working, unbundling doesn’t mean you have to remove yourself from the record or not become part of the record in order to provide these unbundled tasks.

It’s just like you said like you’re doing, is where you’re breaking it up into specific tasks. Whereas most attorneys would say, okay, to get this whole thing done, it’s going to be this amount of money to do all of it. Whereas what you’re doing is you’re saying, okay, let’s break down what needs to be done here into its component parts and then bill one phase at a time.

This is also the way that most of our attorneys are unbundling in the immigration arena as well. With immigration, there are some limitations on preparing documents for clients to go into federal court. That’s been shifting as well a little bit where attorneys are starting to have a little bit more freedom to be able to do the strict ghostwriting, essentially is what that will be called. For the majority, you don’t have to unbundle you being an attorney of record in order to be able to work with people in their budget by just simply doing it as a pay as you go would be a similar concept where you’re doing each set of tasks in phases if the time allows that.

That’s one of the things about immigration and it sounds like it’s pretty similar to be true in estate planning is that things don’t necessarily have to happen within two weeks. The whole case doesn’t have to get a file and resolved within one week whereas family law sometimes you do have these types of really critical time factors where maybe you can’t be as flexible with breaking things up over time. But similarly with immigration, if there’s time for these things to take place, then starting to break things down into its component parts enables people to afford to continue to have you as their attorney of record simply because you’re just not creating that huge upfront barrier that a lot of people are just not going to be in a position to climb when they’re first starting on a case.

Ross Tew: One area I think that the breaking your tasks down is a good practice because I have noted in several of the cases where the way that I did that was to go back to some of my bills from dependent administrations where I had to take a lot of steps and all of those had to be approved by the court and eventually my bill had to be approved by the court. I just went back to those bills and broke those down into essentially a checklist of all the tasks that might need to be done and then looked at how long it took me to handle those tasks in each of those, I think it was three cases that I used to do that.

Whenever I did that, you notice, I’m really efficient at getting these notices out and getting these letters out to creditors and things of that sort. I was really quite quick at doing those but then whenever it came time for accounting, I realized I was spending more time than the court was willing to pay me for. Going through the process of breaking that down and noticing here’s where the court is saying you shouldn’t need more than four or five hours to get this task done. The accounting part, I’m really not a numbers guy and so it was taking me a good bit longer than that.

What I found was that was a step where I could actually make better use of my time by getting the client to just get a bookkeeper to keep track of all the accounting so that it gets delivered to me in a format and now I’m spending way less time on it than the court would … Down to about two hours to get everything assembled, which is actually even less time than the court would probably allow me to the bill. They were allowing four and five hours and I’m actually getting it done faster than that. Is that good business? I don’t know but I think just providing as efficient and competent of service to the client is really the focus and it’ll pay dividends in the end. Just breaking things down, I think offers a lot of benefits apart from even the unbundling of services.

Dave Aarons: Exactly. Would you be able to, I think it might be helpful if you have any examples of a specific kind of case in which you would break up specific tasks and maybe up into its component parts and then how you would bill accordingly. Maybe you could give an example of one specific kind of case and some of the component parts that are part of it and then how you might bill that client to enable them to have a lot more likely that they’re able to afford that one step at a time.

Ross Tew: Whenever I’m probating a will and just doing a simple administration of the estate, there’s a couple of steps in there. There’s preparing the application, going over the will with the client, making sure he got the right part in interest there to actually file the application. I spend a couple of hours there with them. Usually, during that first meeting, I explain to them look, the time we’re spending together is going to be reflected on your bill because we’re doing some substantive work here, it’s not just like a free consultation. If we’re going to move forward with this, let’s get our engagement agreement in place early on in our meeting and then actually put together an application and get our ducks in a row for how we’re going to handle your case.

Then they go ahead and pay me a deposit that covers the time that we’ve spent getting that work done, the filing fees that are going to be needed by the county clerk, and then there’s some work I have to do, to do the prove-up documents and then set our hearing and get the original will delivered to the court. We start with, pay me enough to do the work today to get your application prepared and filed. Then the day of the hearing here’s the steps that I will have taken between now and the hearing and here’s the time that we’ll spend there. Here’s the dollar amount that you need to bring me. You need to give me this check at the courthouse or if we’re coming back to my office after, you can bring it then but I need to get paid that day.

Usually, between the citation period that has to run and then the court’s docket, usually, you’re a month out or so, sometimes more than that between the filing and the actual hearing. That gives people a little bit of breathing room to get a little more money in hand to be able to pay the next installment. Then we set a time. If they’re ready to do it, we can sit down and get all of our notices prepared and sent out and get their inventory of the estate put together. Sometimes they need some time to gather the backup documentation, bank statements, car titles, deeds to the house, etc. so that I can prepare that inventory of the estate. That’s another one of those really natural … It’s sworn so they need to come into my office and sign it anyway.

There’s the initial meeting, then there’s the meeting at the courthouse, and then we have another meeting after that a little bit further down the road. The inventories don’t need to be returned for 90 days and you can even ask for extensions, so that gives them a little more time to get a little more money in hand. I’ll end up accepting three or four payments over a six-month period. That works for the client and it reflects the work that I’m actually doing at the time that they’re paying me for it. It’s kind of a pay as you go and it seems to work out real naturally just because of the deadlines involved and the timeline in most cases.

Dave Aarons:   Exactly. It’s surprising when you lay it out. It isn’t really all that complicated to work with people in this manner. It just takes a little, like a little bit of flexibility, just some basic, you know hey, if you don’t have that upfront, let’s just break things up. Let’s look at all the things that are involved. It doesn’t even sound like it takes that long. If you’ve done a similar type of case a couple of times, you can pretty much break down what are all the different phases, how long are they are going to take, then you can come up specific barriers of time in which you need to collect each payment as you go.

It isn’t even that complicated, it’s almost baffling that more attorneys aren’t doing this type of unbundled, pay as you go type of approach to working with folks. I don’t know if it’s budget concerns. It just doesn’t seem to make much sense. They don’t believe that the client will pay it, so they feel like they have to get the money upfront. That must be the major reason. If you don’t pay me upfront, then I basically don’t have faith in you to make the payments. That must be one of their primary considerations. Do you ever have these conversations with other attorneys and hear their feedback on why they wouldn’t offer these types of options?

Ross Tew:   Yeah, and one of those conversations was with one of the attorneys that I used to work for. Attorneys, in general, are risk-averse. We all see the worst case scenario and that’s the deal that we work in. We’re dealing with other folks’ worst case scenarios. One of the problems, especially in litigation of okay, so you get your judgment but then you actually have to go and collect. We’re just programmed to get your money upfront, don’t put your faith in people actually doing what they say they’re going to do. I think that’s just part of what you experience working as an attorney is that people’s word is not their bond and so you’re just predisposed to not really trust your clients, I guess is the way to put it.

Part of that is I go out on a limb a little bit for some of these folks. There’s also a satisfaction I get out of doing that whenever I see folks that … Dealing with estates and dealing with a lot of widows and orphans at times and so, you kind of have a heart for that. Whenever they’ve gone to other attorneys who demand these larger fees, essentially those attorneys just don’t trust that these people will pay them at the end of the day. From a cash flow standpoint, it’s kind of odd because ethically, we put this in a trust account and we’re not supposed to draw from it until the work is done anyway.

If you’re demanding $5,000 and $10,000 retainers that you’re not going to finish drawing from until six or twelve months down the road and I’m demanding a much smaller amount upfront and I still get paid six to twelve months down the road, there’s a little bit more risk in the way that I handle it, I’ll acknowledge that, but I’ve yet to really have it come back to bite me. There have been one or two instances where the client just won’t follow through and pay but given the volume of clients that I’ve been able to take on that are so appreciative of the fact that I’ll even take their case and then they’re eager to pay me whenever they have the opportunity to do so.

Dave Aarons:   Exactly. We’ve talked about that before when attorneys have shared the payment plans they offer and their willingness to work with folks is how easy it is for attorneys to focus on the clients that don’t pay, like you said, you’ve got one or two. But they fail to take into account the upside, which is all the clients, the high volume of clients that they’ve been able to work with that like you said, are very appreciative of your willingness to work with them in that way.

Is there any way that you could ballpark off the top of your head what the amount of people, I mean this is really hard to do, but the amount of people that you’ve been able to acquire as clients because of the way you work with them versus the ones that ended up not paying you? To kind of set a contrast, is it like one out of every 30 clients that you work with on this basis doesn’t go through? So you’ve added on 30 more clients that otherwise wouldn’t be able to afford you but maybe you had one that didn’t pay. Is there any kind of ratio we could draw here just to set the contrast?

Ross Tew:   Yeah, I’d say it’s somewhere in the neighborhood of like 50 to one. If I take on 100 clients a year and two of them stiff me, it’s just not that many. It’s hard to just off the top of my head to weed out how many clients I have that are able to pay fees upfront versus clients I get because of my flexibility to wait on getting paid later. I would say better than half of the cases that I take on are folks that need some type of alternative arrangement whenever it comes to fees. It’s a pretty good proportion of folks, so 30 to one is probably pretty close to accurate as far as the number of clients that I’ve been able to take on because I didn’t demand the larger fee versus the one or two folks that end up not paying whenever the time comes.

Dave Aarons:   Okay. I just can’t help myself to go one step further here. If we just look at the financials of that, is there any way you could do like an estimation? Obviously, you’ve got a lot of different kinds of cases going on. You’ve got estates planning, you’ve got the planning side, you have litigation, but do you have some concept of maybe the average client value? Over the course of six to twelve months of working with them in the space, they still end up paying the same amount, they’re just doing it over time. Do you have an idea of what each client is worth on average if you were to kind of blend it with a really broad brush? Obviously, you have some people who just want a will and then you’ve got the far side of the contested litigation cases. Can you estimate what that is?

Ross Tew:   I’d say it’s somewhere, maybe this is a wild range, but somewhere in the $3-6,000 range because some of those, it’s kind of hard to quantify because some of the longer time contested cases, those go in the $15-20,000 worth of fees, sometimes higher than that and so those are really outliers. If you take those out of the mix, your probably average client average is at least $3,000 and probably closer to $5,000. Once you factor in the really long-term cases, the average client for me is pretty high.

Dave Aarons:   Okay, let’s just look at those numbers really. If it’s 30 to one conservatively, it was probably around that, that means out of 30 cases, he has one client that you do maybe … They don’t even pay for the whole thing, they might only just not pay you for part of it, right?

Ross Tew:   Mm-hmm (affirmative).

Dave Aarons:   Let’s just suppose they don’t pay you for the whole thing. You’re out $3,000 for the one client and then you’ve got 30 clients that you otherwise would have to turn away or couldn’t afford you because if you had been rigid about needing their upfront retainer, but instead, you were able to work with them and they ended up paying the $3-5,000 or so in services over the course of time that you were now able to acquire because of that. We’ve got 30 times $3,000, I think that’s about $90,000 almost $100,000 versus $6,000 lost. You’re basically profiting by being willing to work with people in this way and unbundle services and offer the pay as you go. You’re another $90,000 or so, may $87,000 more profitable a year. Obviously, we’re doing broad strokes but even if you were conservative, that’s an extra $50,000 or so.

Again, lawyers just aren’t doing the math. We can figure this out in 10 minutes but it just seems like … Not only that, just from a financial perspective is the only way we’re looking at it, but think about all the folks that, like you said, are just appreciative of the fact that you’re willing to work with them, help them out. Obviously, you’re talking orphans, you’re talking about windows, people who are going through a really difficult time in their lives. The last thing they want to worry about is how the heck they’re going to come up with the money to pay an attorney to handle these types of issues. Just the fact that you’re able to work with people in that way, you must get a lot out of that even with all that extra financial benefit aside.

Ross Tew:   Most people are fairly tapped out after having paid for the funeral. They come to you after having just paid $8,000, $10,000, $15,000 on services and all of that. By the time they come to you, they’re not just flush with cash necessarily. It’s rewarding in the sense that it comes down more to that interest in problem-solving. Some of the issues that people come to you with our legal and specifically require you to have a law license to be able to address those issues. There are other issues that they come to you with that are part of the mix that is not necessarily legal issues. They’re either financial issues, personality problems, a conflict between siblings, things of that sort. It all goes into that let’s figure out what the final result looks like and let’s work backward from there to figure out everything that needs to happen. What the steps we need to take now to get this process started?

You ultimately come down to a series of problems, legal and non-legal that I get the pleasure of trying to solve for people. I think that’s a lot of the satisfaction and reward out of it is it’s always a bit of a puzzle how you’re going to make things work for people that haven’t saved for a rainy day and don’t have the means to just shell out thousands of dollars at a clip and yet still be able to provide them good representation. It’s fairly rewarding to tell people there’s actually light at the end of the tunnel, there’s actually a solution to the bind that they find themselves in.

Dave Aarons:   This is really the underpinning of the solution to our access to justice problem is attorneys’ perception, I think this is one of the major false assumptions per se, is that attorneys assume that if they unbundle or offer these pay as go options, that it’s not profitable. It’s not beneficial to the firm to offer these types of options. I really appreciate you sharing how it is that you’re working with folks in this way, how profitable to your practice it has been. Because I think once we can get this message out there and have attorneys start to realize, start to calculate just for a minute the economics of unbundling.

If unbundling and the access to justice problem was something lawyers had to volunteer their way out of or go broke in the process doing, yeah, we would probably have a problem that’s unsustainable, that’s not fixable in this country. But the reality is that unbundling done properly can actually be very, very profitable for the attorney. Not only can they impact and serve a lot of other people that otherwise would be going unrepresented and unserved but they can also make a lot of money and even a lot more money doing that.

I don’t think there’s been any more clear layout of how that is the case with your examples here. I just really appreciate you being that example so that attorneys can start to really question the assumptions that maybe you’ve been trained for years and years and years and it’s understandable, that’s the culture of the law practice that there’s a natural distrust for the client and that you have to get the money upfront. But there’s a whole other way of looking at it, which is what you’re describing, a very client-centered approach where you’re looking at it from the standpoint of how can I serve this client? How can I make sure they’re getting [inaudible 01:03:06] to the process and come up with problem-solving solutions and flexible solutions that can work around their budget and as a result, it seems to be working really well.

Ross Tew:   Thank you.

Dave Aarons:   We’ll go ahead and wrap up there. Ross again, thank you so much for taking the time to share this stuff, it’s really, really, really helpful and we’ll be certain to share this episode to any estate lawyers that are coming onboard and maybe didn’t have a lot of experience offering these types of pay as you go, unbundled types of services in the estate world. I thank you for your insights and for sharing the process and the numbers with that.

To everyone else that’s listening, we certainly appreciate you tuning into the podcast, taking notes, and learning how to implement these types of unbundled options and more affordable approaches in your practice. It absolutely does make a difference in our ability to close the access to justice gap and it’s very doable. Spread the word, share the podcast with other attorneys that may not share the same ideology. I’ve had conversations with attorneys that didn’t originally believe that unbundling was something they could offer in their practice. Once they started to see the numbers and see the impact it could have on people’s lives and also the profitability behind it, began offering these types of services and the amount of people that are able to get served by attorneys that do is tremendous if we can duplicate that across the entire country. Thank you so much for participating in the podcast and being a part of that movement, and we will certainly see you all in the next episode.

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Episode 44: The Economics of Unbundling Your Estate Practice: Taking a Close Look at the Profitability of Flexible “Pay-As-You-Go” Fee Structures

Ross Tew is an estate attorney out of Dallas/Ft Worth, TX who believes in being flexible and taking a problem solving approach to the way he works for his clients. Today, Ross joins us to share the creative ways he works with clients. He describes how he breaks cases up into billable segments and allows clients to pay-as-they-go. He will also let clients in certain cases pay his fees out of the settlement of the estate. Let’s take a close look at how this degree of flexibility has improved the profitability of his practice. The results, as you will hear, are astounding.

To read a complete transcript of this interview, click here

In this episode, you’ll learn:

  • How Ross became interested in estate and property work
  • His philosophy of flexibility and willingness to find creative ways to serve his clients, and how this shows up in his practice
  • Why Ross has chosen to stop accepting credit card payments
  • His reasons for offering the majority of his services as a flat fee and why his clients appreciate that
  • How Ross is able to get his fees paid from the settlement of an estate in certain cases which allows him to limit the upfront cost of his services for his clients
  • How he manages cash flow from smaller cases which enables him to be patient about collecting fees that aren’t paid out until the estate is settled
  • Ross’s thoughts about the access to justice problem in this country, and why he believes it’s important for attorneys to find creative ways to work with clients within their budget
  • How being a solo practitioner enables him to take a client-centered, problem solving approach
  • The ways in which Ross can break up his case into specific billable segments so he doesn’t have to require clients to pay a large retainer up front
  • Examples of cases where he can offer “pay-as-you-go” options, and the types of separate billable segments he creates for some clients
  • Why so many lawyers don’t offer these unbundled and flexible payment options
  • The approximate numbers of additional clients he has been able to take on because of the flexible payment options he offers, and how this impacts the overall profitability of his practice
  • His feelings about being able to offer services to so many orphans and widows that would otherwise be unable to obtain the legal help they need at very emotional times in their lives
  • A broad vision for how just a few lawyers who share actual numbers on their profitability from unbundled legal services will gradually turn the tide on the number of attorneys introducing these options in their practice, and the impact this has on access to justice nationwide
  • And much more…

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