Knowing what a startup will spend on lawyers and legal fees can be one of the most difficult things to predict for an early-statge company. Many put off legal services to handle it down the road, only to find that they eventually need to pay thens of thousands of dollars. And a couple phone calls and emails back and forth with lawyers can result in big bills at the end of the month.
But openlegal, a service of Chicago-based Pasky, Gruber, Scatchell law firm, wants to change the law firm business model and bring more predictability to startups. The openlegal platform allows companies to purchase flat fee general counsel legal services, intellectual property and patent services, and litigation services, effectively eliminating the surprise astronomical legal bill at the end of the month.
The fixed fee model results in the average company saving between 30-50% compared to hiring a typical law firm, said Jonathan Pasky, CEO of Pasky, Gruber, Scatchell and the co-founder of Techweek.
“A law firm will start and say the price is ‘X’ and then they start seeing the startup client getting some money in the door, and then monthly you start getting $2,000-$3,000 bills, and it jumps up from there,” Pasky said. “That’s a huge pain point. [Startups] don’t like it, and it puts lawyers and clients on opposite sides of the fence.”
The openlegal platform allows companies to complete a lot of the legal processes and paper work online, which cuts down on overhead costs. But unlike other online legal tools, openlegal still gives clients access to real lawyers. They’re just used more efficiently, said COO Ric Gruber.
“We’re not discount lawyers. We’re not 30-50% less than any other law firm. We’re just 30-50% more efficient,” Gruber said. “Our rates are comparable because of our skill and experience, but we are able to eliminate the waste and inefficiency on our own side and push those savings onto our clients.”
Openlegal is intended for early to mid-stage startups that aren’t ready to hire legal council full-time, Pasky said. The flat fee pricing includes $2,500 for LLC formation, $900 for trademark service, and $750 a month for 10 hours of general council work, along with other packages.
High fees and unpredictable pricing can create an adversarial relationship between lawyer and client, Pasky said, and he thinks the openlegal model can reduce the stress of attorney costs, and maybe even cut down on the lawyer jokes.
“You get one side pitted against the other, and all of a sudden the client and lawyers aren’t partners.”