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April 14, 2021 Legal Rebels

How one firm is trying to convince technology clients to embrace subscription pricing

By Lyle Moran

When Joyce Tong Oelrich and her former Microsoft Corp. colleague Zohra Tejani discussed starting their own law firm two years ago, the experienced in-house lawyers agreed that they should take a subscription-pricing approach with clients.

They thought charging a set monthly fee would be appealing to in-house counsels at technology companies who were looking for consistency in billing, rather than wild fluctuations. Plus, she and Tejani knew that attorneys working in tech were already familiar with the subscription-pricing model, given that many of their companies charged their users in that fashion.

But Tong Oelrich says when she and Tejani began contacting potential clients as part of their “beta launch” of Tong Tejani in fall 2019, most indicated that they were not ready to commit to subscription pricing.

“Every single time we would bring up the idea of a subscription model, the responding question was: ‘But really, what’s your hourly rate?’” says Tong Oelrich, a former in-house lawyer at Facebook.

“I think the struggle they had is the scope of work,” she adds. “How do they justify paying an outside attorney a set amount of money every month without knowing what their needs are going to be?”

The founders of Tong Tejani, which specializes in government contracts and has mainly technology-sector clients, kept that initial client feedback about subscription pricing in mind when formally launching the firm in May 2020.

As a result, the Virginia-based firm decided to start off charging an hourly rate to some clients and fixed project fees to others. The hope was that after clients became comfortable with the firm’s work, they would consider transitioning to a subscription plan.

Tong Oelrich says that has happened, with a Fortune 50 technology company being among the clients who have switched from a more traditional billing approach to the subscription model.

“After doing a couple fixed fee projects for them, the attorney that we work with called us and said: ‘I have a set of seven projects that need to get done within the next year. Instead of having you quote all seven projects at a fixed fee, why don’t we agree upon a set amount every month and we will go with that?’” she says. “She came around to the subscription model after seeing our work for the fixed-fee projects.”

As for the firm, Tong Oelrich says the subscription model is beneficial because it provides regular income. She argues that it also better enables their firm to become trusted advisers to their clients and feel like they are a part of their clients’ businesses.

“In a normal situation when you are billing by the hour, you may not feel like you have the time or you don’t feel right in billing the customer when you are just trying to get to know them,” she says. “In this case with the subscription, our best interest is to understand what they do and how they do it, so we can provide the best advice.”

Tong Tejani offers different tiers of subscription pricing, with the most basic tier being answering client phone calls and providing email responses that do not involve generating work product. The firm also continues to offer clients hourly rates and fixed fee project pricing.

“We like to meet our clients where they are and with what they want,” Tong Oelrich says.

Tejani, the other founding partner of the firm, is the only other attorney. She led computer software company VMware’s public sector legal team prior to the launch of Tong Tejani.

To scale up for larger projects, Tong Tejani turns to outside legal help. Tong Oelrich says two platforms that the firm uses to bring on freelance lawyers, or what she calls “alliance attorneys,” are Latitude Legal and the Montage Legal Group.

Utilizing contract lawyers helps limit the small firm’s overhead, she says, and it allows the firm to bring on attorneys who are experienced in specialized areas.

“We don’t want to turn into the traditional law firm and hire a lot of associates and have to train them,” Tong Oelrich says. “We think that this is a more efficient and effective solution for our clients and for ourselves.”

In This Podcast

Joyce Tong Oelrich

Joyce Tong Oelrich is a founding partner of Tong Tejani, a boutique law firm specializing in government contracts. She previously worked as an in-house attorney at Facebook and the Microsoft Corp. for nearly a decade, focusing on government contract compliance. Before that, she practiced at the BigLaw firm Bryan Cave Leighton Paisner, in which she represented commercial companies conducting business with government entities.