In the latest episode of the Polestar Podcast by VELA Wealth, host Jason Boudreau speaks with Digby R. Leigh about the challenges in the current legal system. They explore solutions Digby has initiated that put clients first, providing price certainty by switching away from the standard hourly model and implementing an alternative fee structure.
Podcast Highlights:
- The inspiring journey of tenured Lawyer Digby Leigh and his family.
- Dive into Digby’s remarkable 40+ year legal career and his visionary quest to revolutionize efficiency and pricing structures in the legal industry.
- The creation of the “Frank Fee” model – a step away from the traditional hourly legal pricing model.
- How the Frank Fee model has built confidence and transparency for clients that are looking for legal services.
- The AltFee platform’s evolution and its transformative impact on digital pricing models in the global legal industry.
- AltFee’s victory in the start-up tech award at the Legal Tech Conference, one of the largest conferences in the United States hosted by the American Bar Association, marks a significant milestone for this innovative idea.
About the Guest – Digby R. Leigh
Digby started his 40+ year career at a large downtown Vancouver law firm. When the time was right, he opened his first law firm with his partner in 1992 and then founded Digby Leigh & Co in 2005.
He’s passionate about making things around him a little bit better every day. Life and the practice of law have been varied and exciting for Digby over the last years, but no matter what the issue, Digby brings a practical, cut-to-the-chase, people-oriented approach to any solution. The experience of acting on very significant transactions lends itself to solving any issue.
Digby is focused on building and maintaining relationships as he genuinely enjoys meeting new people and learning about what makes them unique. Learn more about Digby, his work and follow his newsletter Let’s Be Frank on LinkedIn.
About the Host – Jason Boudreau
Jason has built VELA Wealth into an established life and estate planning firm, guiding families as they make meaningful choices at the intersection of life and wealth. Jason’s areas of expertise include intergenerational wealth transfer and estate planning with a focus on advanced insurance-based solutions that incorporate philanthropy and legacy planning. Leveraging these specialties, Jason brings a fresh perspective and outside-the-box thinking to the strategic planning process. To read more, please visit the VELA team page.
The episode is also available on:
The Podcast Transcript:
Jason Boudreau:
Welcome everybody to the Polestar podcast by VELA Wealth. I’m your host, Jason Boudreau, and I’m excited to have a longtime friend and our trusted legal counsel, Digby Leigh, on the call today. Debbie, thanks for being here.
Digby R. Leigh:
My pleasure. Looking forward to it, Jason.
Jason Boudreau:
We go back quite a ways, I guess, 13 years or so. We met and connected through the UBC football community. I’m excited as today we get to talk about you, your profession, and in particular the experience you’ve had being a lawyer for decades, and how you’ve taken this approach towards the future of the legal profession. What I’m hoping we could start with, Dig, is you taking us back from when you sort of had this “aha” moment about the legal industry itself and what led you to get to where you are today with the current offering at Digby Leigh and Co., I know it’s called Frank Fee. So, we’ll talk a little bit about that and then lead of course, into AltFee as well.
Digby R. Leigh:
That’s well. It’s a topic that I have spoken about many times and I’m passionate about it, believing that it is fundamentally changing the legal industry. Let me take you back even further than where Jason started. I’ve been practicing law for 41 years as of May 11th of this year [2024] and that’s actually a long time. For a guy in his 40s, it’s incredible.
Jason Boudreau:
You started practicing the year after I was born!
Digby R. Leigh:
Isn’t that crazy? Just to start with when you called me “Dig”, it took me back to my youthful days. I’m not called “Dig” so much anymore, I get “Pops” now, as I have grandchildren! So, it puts a big smile on my face, and it shows how close we are.
Jason Boudreau:
Definitely!
Digby R. Leigh:
So, I started my career practicing law at a large traditional downtown Vancouver firm with just about 100 lawyers and I had a great experience. And that was a traditional hourly model system. Then I went and started another business called Hobbs and Leigh in 1992 with a friend of mine, just after Jason was born!
And then again, I started another business a third time in 2005 called Digby Leigh & Co. So, I’ve had a few iterations in my profession, and I was always one who was not doing things the way others have done it, just trying to be thoughtful and forward-looking.
So that takes us to the current matter; I’ll go back to maybe 10 years ago. I came to the conclusion that the legal industry was broken. And I felt it was broken because of the hourly billing model, which is simple math: You figure out how many hours everybody works plus what their hourly rates are, add it up at the end to charge the service. This traditional model means a client should pay based on how long it took you and how senior you were. To me, that didn’t make sense at all.
And it didn’t make sense for all three stakeholders; 1) clients had no price certainty; they never knew what they were going to end up paying, estimates were not promises, 2) I feel like it didn’t make sense for the people working into the industry either, lawyers and paralegals especially. Because when your financial worth is only determined by how many hours you put in, it’s not scalable! It’s a grind-away way to exist. And 3) I believe even for the law firm as the third stakeholder, it doesn’t make sense. Because if you went away from the hourly model, you would be incentivized to create efficiencies which would make you more profitable in the end. And in turn, clients are going to pay for what they get, you’ll build great systems, and you’ll have the advantage because of these great systems.
So, I believed in my idea, even though I didn’t know it would be good at the time, and I had a student do some research for me on what firms worldwide were doing this.
We found one in Australia that was out there, it was a firm called Moores, and they continue to do it. So, I saw a video on their website, and it was the staff speaking about how much they enjoyed it [the new fee system]. They spoke about how the conversations with the clients were so good now and that really caught me.
And then I did what we often do as entrepreneurs or business people. I put the idea in a drawer and left it in a drawer!
I get back to everyday life thinking: “What am I going to do today”? “What tasks are more important”? “What do my clients need”? “What do I actually have to do”? It wasn’t until March 16th of 2020 that I was flying back from our place down in the desert at the very start of COVID-19. Everybody was being told to come back to Vancouver!
So, I’m sitting on an airplane with my wife and I’m talking to myself and the moment is still so crystal clear in my mind, and I say “You know, now’s the right time. Now’s the right time to convert away from hourly billing. Now is the right time to give price certainty.”
And what a great sound bite for clients, to be honest, so much certainty in these uncertain times. So, I did what a lot of entrepreneurs will do in times like those – I just decided to change. At that moment, in seconds, I was determined to go and do that.
Jason Boudreau:
And that was the start of Frank Fee, right?
Digby R. Leigh:
Exactly! But, of course, it wasn’t quite the birth of Frank Fee. It was the idea, the concept. There was not a manual on how to do it, so I made it up.
I guess that’s what entrepreneurs do, right? I knew what it was to practice, I knew a lot about pricing, and I knew about market rates. So, I had a really good starting point just with all my experience. But I didn’t know how we were going to convert the firm away from one that was primarily based on an hourly model into one that was not going to do any hourly billing any longer.
So that’s when the Frank Fee came along, and it was part of what happened in the next six months. I was lucky in some ways that my son Scott was leaving the legal industry as a practicing lawyer – because of the grind. So, even though he worked for a great boss, apparently not good enough!
Jason Boudreau:
Yes! I bet.
Digby R. Leigh:
So, with that, Scott had experience in the legal industry, he practiced law for five years. We decided that he would come and work for us and create the manual to implement this model shift.
This was a paper manual. Of course, we had it digitally as well. It was 40 pages long, and it took us six months to produce.
The first thing we did was move away from the traditional concept of billing and we set out to divide all our work into practice areas. Because there’s a ton of different work you do under corporate law or real estate, family law, etc. we divided it into 40 different project types.
Jason Boudreau:
Wow!
Digby R. Leigh:
We then created base amounts for each of those project types – which were basically what a person should pay for the simplest of these types of transactions – then we considered factors that were intended to be mostly value-based factors depending on a client vantage point considering a little bit about the work that has to be done at our end to produce the result at the end of the day.
So, I like to use corporations as a simple example because it’s just got a few things in there that are worth pointing out. So if you’re a single person with a numbered company and you’re incorporating one class of shares, one director, etc. It’s going to be the base price. But if you’re going to have three or four shareholders, if you’re going to have a name that you need to reserve, a trademark for example, etc. Those are all factors that increase the price slightly.
Jason Boudreau:
Right.
Digby R. Leigh:
It’s a different value you’re delivering, and if you have a robust class of shares as opposed to a simple “plain Jane” set of common shares, there’s value being delivered for that, therefore the price is a little bit more. So that’s the whole concept.
Jason, you mentioned the name “Frank Fee”, so I wanted to touch on that really quickly.
Jason Boudreau:
Yes.
Digby R. Leigh:
So, we decided a couple of things early on. We decided that first of all, we had to own it. We had to jump into the pool, and really go for it. We also needed it to be internally messaged and externally messaged. This was a very top-down driven initiative, and we had to go for it.
Jason Boudreau:
Yes, definitely. And how was it received when you guys communicated it?
Digby R. Leigh:
We hired a branding company that we’ve done a lot of work with to help us name the new initiative. They came up with about 40 names, and we ended up settling on Frank Fee because we thought it was partially descriptive – it was about fees and it was about being honest and frank, but it was also kind of cute. Now, many years later our client phones up and says, “Can I get the frank fee for that?” Like it’s second nature.
I laugh because that didn’t exist five years ago! So, we launched on the day after the Labour Day in 2020 with our manual and we just flipped the switch and started to do things differently.
The other thing I really believed in was that this had to be data-driven. So, we initially created an “outlier” program. This was where every file would go to that was over or under a certain dollar amount every month. These were the “outliers”. These were cases where either our billing realization rate was greater than we might expect or less than we might expect.
We then would debrief the people that worked on it and say, “This is why we think it happened”. The billing realization rate is the time cost of doing a project, so that’s all the old hourly billing model, who worked on it, what was the hourly rate, etc.
We wanted to know, percentage-wise, what the billing realization rate was, so we had demarcation points. As I recall they were between 110% and under 80%. So, we started thinking and we noticed that 84% was the industry average at the time (84% recovery on time cost), so we picked a middle point thinking 90% was a good middle point after looking at both sides. So, we really studied that data so that we could also have sort of a continuous learning and a dynamic process to how we looked at [creating the new fee structure].
Jason Boudreau:
Interesting! And obviously, we’ve done a lot of work together over the years as clients and with mutual clients. I can speak about our experience of it [as clients] in a minute, but I’m curious about how the client response was and did you pilot anything ahead of the launch with clients to get some feedback in real-time as you were refining the model?
Digby R. Leigh:
Yes, that’s a really interesting question. Because of course, you should pilot things!
Well, we flipped the switch from the get-go, and I think it was because I was so confident from a client perspective that certainty would be better and that we would be collaborative in our approach that it wouldn’t be an issue.
I think there are a few people who feel like they’re paying more for the price certainty, but it is so rare t. I think people value price certainty and they find our prices are mainly dictated by the market and we understand the market. So, we understand what’s an acceptable rate for a transaction, what’s an acceptable rate for an incorporation, and so forth.
So, the pricing really hasn’t been an issue. The real business issue at our end is just to keep getting more efficient and be able to produce the results we want and find ways to spend less time doing it. That’s how we become more profitable.
As of today, I have not had any pushback. And we rarely lose new engagements because of the price. If we lose it, it’s because it’s not a good fit on both ends; for example, somebody’s looking for something we don’t provide.
To answer your question, Jason. No. We didn’t pilot it. But we were very mindful of the client’s response, and right out of the gate, the response was positive. It couldn’t have been any better than it is.
Jason Boudreau:
I would say when I think about it from our perspective [as clients] and working with you on some recent engagements, as you know, having certainty around the pricing, there’s definitely value to that. It allows us to do budgeting and do it accurately, which is important for us, especially as we’re growing the company at the pace we are. We want to be as tight as we can be on our numbers and our forecasting. So, it helps with that.
One of the things that I was sort of comparable to when you have that dialogue where you say; “Hey listen, here’s our Frank Fee for this engagement. If you were to do this traditional way with the hourly rate in the market, it should end up being in the X, Y, Z price range.” I’m asking this because this is a new concept for people and it’s what they have to compare to. So how do you tackle that conversation?
Digby R. Leigh:
Right, so I don’t do it quite that way. I do tell people that we’re being fair to everybody. In other words, if we’re doing a project for the first time, it’s going to be billed at the same amount as if we do it the second time, even though the first time we’re investing more of ourselves. Our prices are based on the market. We have lots of conversations about what success looks like for the client. Those types of conversations are scoping. It’s funny, I was just talking to Maddy, one of our lawyers, today – We have a very small transaction that we’re doing, but it’s got a fair amount of complexity and what we’ve done is we’ve built a model where we review the scope and say “We can do A, B, and C. We could do these other things, you tell us, and we’ll make the price work accordingly.” So, I feel like because of the collaborative nature and because people have choices, that starts to dictate the market to some extent. I haven’t had hardly any conversations where people are saying, “Boy, if I went and got that done on an hourly basis, I think it would be a lot less.” It just doesn’t happen.
Jason Boudreau:
Right. Well, then there would be the uncertainty that comes with that, which is, like you said, a big part of the value prop, right?
Digby R. Leigh:
Yes. From a customer’s point of view, it seems to be only positive responses. The point you’ve made that price certainty is valuable, well, I think we’re also dictated by the market. In our minds, we don’t charge just for price certainty even though that has value for the client.
We’re dictated by the market, and we create our base amounts around the market, and we create most of our factors around a client-centric basis to be value delivered. We think about deliverables a lot, we think very little about inputs; how much and how long it’s going to take to run a business. You need to understand that.
Jason Boudreau:
What about the legal industry? How has this approach been received from other lawyers that you either are on shared engagements with or know about it or know you and what you guys are up to?
Digby R. Leigh:
That is such a cool question because I thought that I would get pushback. So, I write a regular article on LinkedIn called “Let’s Be Frank”. Anybody who doesn’t listen is welcome to sign up. I look at pricing from every different perspective and I’m very careful on how I do it. I try not to tell people that the bill by the hour is wrong. I try to be more of a thought sharer instead of a thought leader, and because I’m just trying to get the idea out there and share what I’ve learned, I invite people to disagree with me but nobody ever wants to disagree with me because I think what they’re thinking and doing makes sense!
They think, “I don’t think I want to do it. I’m too late in my career. Why would I want to fix something that isn’t broken in my mind and seems to be okay”. And I think in that part is where we’re a little bit forward of where the industry is.
But I’m going to tell you, and this is me being strong in my opinion, you better get on board. Because I go to a lot of conferences and I speak at a lot of places. One thing that everybody in the legal industry knows is that AI is a buzz.
Legal tech is a buzz and not a lot of people are talking about this yet. We’re unique in talking about it. And that’s something we’ll get to later and why it’s more than just me.
They’re all about using AI and becoming more efficient. But if you do that, what does that mean? Is it going to affect compensation models within large firms at some point? Why should somebody be paid less money because they have built great systems and invested in all that?
So, I think the compensation model is going to change, but so is the pricing of legal services. Why would somebody that’s competing with other people, doing the same work, don’t adopt a different pricing model, bill by the hour, take way longer, and pay more? Why should you be paid a lot less?
One of the themes that we feel since we started, is that the vision we had is like a big heavy ball we’re pushing up a mountain and people were saying, “I don’t know if what you’re doing sounds great”. But now it feels like we’re more on the crest of a wave, an AI wave, if you will. And the amount of people that want to talk about it is completely different than it was even a year ago.
Jason Boudreau:
Amazing. On the pricing side then, I’ll segue that into the creation of AltFee.
This is unique and we use it as a firm. It helps us price our planning engagements with the flat fee value-based model. With all these nuances underneath as you’ve talked about, our team has done a cool job of utilizing that tool and customizing it to what we need, which is great.
Tell us about AltFee and how you guys developed that. I’m sure that’s part of the “we” story, and I know you’re a legacy-focused guy, which is why you think a lot about this kind of stuff, part of that legacy is, of course, involving two of your three kids in it, I’m sure everybody’s involved to some extent, but I know Scott and Dig Junior are heavily involved in that. So, talk to us about AltFee and what you guys are up to there.
Digby R. Leigh:
So, I’ll go back chronologically. In September of 2020, we launched our new manual system. Just before that, maybe a couple of months before that, I had another client, a friend, a colleague who’s in the tech industry and he said to me, “Digby, you are going to turn this into an SAS product, right”?
I almost wanted to say, “What is an SAS product?” But I didn’t say that. Instead, I said, “Of course”! So, the idea was really generated by somebody who said it to me almost as the most obvious thing that you will do. So once we launched manually, Scott converted from working in our firm and helping our firm launch Frank Fee to incorporate a company called AltFee Solutions in October 2020. We embarked on turning this manual system into a SaaS product, a software product, where it would be available for the entire legal industry. That has been an incredible journey and what we had was a very unique experience in the industry, but what we didn’t have is tech. Most of the startup software companies have great technicians and developers, and they can do all that stuff, but they don’t understand the industry. We understood the industry at a deep level, but we didn’t have the tech support, so there’s been many pros and cons in that. We hired a lot of developers along the way. We’ve had our CTO from close to day one, which is great. So, between October of 2020 and October of 2021, we developed the beta version and the pilot – we did pilot this one.
Now it’s a very interactive program called AltFee and there’s all kinds of data in there about prices, projects, how many, and which projects. It’s a tool that works inner dynamically and interactively within our firm to price projects. So as an example, most of our pricing now is done by paralegals and junior lawyers. They’ll get the project, they’ll dig in on it, they’ll have conversations with the client perhaps, and then they’ll put it into AltFee by the project type and by factors. Then they can share that with whoever they want. I often don’t get very involved in pricing projects unless there’s a uniqueness to it or there are large sums of money involved or people want my input.
But it reminds me of a family lawyer that I was speaking to when we introduced the product several years ago, she said, “It’s always kind of hard because someone says how much is that going to cost?” And she says that for a divorce that’s going to be $5,000, it doesn’t become very granular. It doesn’t get broken down into, you know, what are non-resident properties, etc.
Jason, remember a transaction we did for you recently which was very long, had a whole bunch of things we’re going to do, and AltFee had all those things in there. What we find is people go, “Oh yes, that’s right”, like they can see what we bring to life. The value of what we’re going to do, and that is all generated from the thinking process and the recording process that we go through in putting the project into AltFee, allows us to communicate the start of our proposal.
We often have different scoping and pricing choices and one of the fundamental differences that’s come up as a result of this change is that it is a highly collaborative process. Clients have a huge say in what they’re going to pay. We don’t use terminology such as “we charge for our services.” It’s agreed-upon pricing upfront. Our whole language has changed. Our relationship with our clients has changed, and all for the better. Now we have been at it for a few years and it’s being used in 4 different countries, we’ve had people invest in our company, which is amazing! Very brave of them, to be honest, as we still have a lot of startup qualities.
To watch Dig [Junior] and Scott, my two boys, be in business and to learn and grow, to fall on their faces a bunch and pick themselves up, has been very rewarding. It’s not failure, it’s just another learning opportunity. I’m a big believer in the expression “action, learning, recalibration, action. Rinse and repeat.”
Life isn’t about failing or winning. It’s about really learning from the opportunities that arise.
Another expression for that in sports is relaxed focus. That means that you should be very focused on preparation, execution, and everything you’re about to do but relaxed about the outcome. If you’re Michael Jordan and you’re taking the last shot, it’s going to go in less than half the time. But you’re going to want to know you’ve done everything to prepare. You’re ready to take that shot. You believe in your preparation and then you go, oh, it went in. We should celebrate. We just won the NBA! Or we take a step back and think that it didn’t go in. That is okay, could I learn anything from that?
Jason Boudreau:
Of course!
Well, we got a couple of minutes left, and I just wanted to wrap up where you’re at now with all this. I know you got great recognition recently. So, please tell us about where you believe they’re headed, just overall in the legal industry and also in particular with what you are doing with AltFee.
Digby R. Leigh:
So, I’m going to go back again, because it makes me reflect on why we do this and so many people listening who are entrepreneurial feel this, and we all have balances of it. Sometimes we get into the “I don’t know if that’s going to work, I better research it” and sometimes we get more over to the other end of the continuum where we think we’re just going to go for it.
I have lots of good people around me that slow me down a bit, but I never realized where it came from [the entrepreneurial spirit], it probably comes from my father, who I didn’t know well for all kinds of reasons. Both parents split up and he died fairly early in life. But he was someone who believed that anesthesiology at the time needed to be reinvented and he brought certification of anesthesiology out to VGH here in Vancouver. Then they couldn’t keep up with him, so he moved down to LA to Children’s Hospital, and he invented new values.
He actually was incredibly entrepreneurial and I didn’t get to know him really well, but I know more of him. It sounds kind of funny to talk about it that way, but that’s true. And I think I have that in spades. I’m a believer in making decisions, assessing pros and cons, and just going for it, I don’t have a fear of failure and I feel very fortunate. You just have to be mindful of the downfall or the downside to what you’re doing. So, that all goes back to where the journey started and how we ended up right now.
So, we’re now in 2024, you heard me say we launched in 2021. We’ve sold to several firms worldwide. Our data is starting to get really good. And we’re starting to see ways of using the data for our client’s benefit. So that’s where we are in the product.
I already alluded to the fact that this is so topical right now and the boys went to the legal tech conference in Chicago that the American Bar Association (ABA) puts on, and we’re in the startup category. We started competing with 25 other businesses for the Startup award, I don’t remember exactly what it’s called, but we competed for that award.
That got narrowed down to 15 companies that were at the Chicago Conference, and we ended up pitching at that. We did a 3-minute pitch and we really focused on the AI equals efficiency, which doesn’t equal the hourly model, etc. That was our theme.
And we won!
We won! And apparently going away, I think what people were intrigued about was a lot of people were thinking about AI and trying to incorporate it into what they’re doing. But very few people are thinking then what? And we stood out as the ones that were thinking about then what? And it was really cool.
Have that happen, the recognition, the number of connections and relationships, as well as being a start-up in business is hard and it’s like you’re always looking for the moment where you think, how did that all happen? This will be one of those things that happen in our journey that we’ll look back at and that was one of our demarcation points.
Jason Boudreau:
Amazing validation point for you guys!
Digby R. Leigh:
Yes! And validation by a huge organization too! All the lawyers in the United States, well not all were there, but there were lots of people and it’s their legal tech gathering that they have every year and to be recognized there, was a big win.
One interesting thing for those of you in Vancouver is that several of the top firms were from Vancouver. It seems like it must be the water we’re drinking here like we are producing legal tax products at a rate like nowhere else in North America. It’s interesting.
Jason Boudreau:
Really? Wow!
Digby R. Leigh:
And out of that, we’ve created a community in Vancouver of legal tech entrepreneurs and now we’re all communicating because we’re not competitive, we’re more aligned. If one does well, then the others probably do well, and somebody can be a referral source for us just like we can for them. So, it’s a real community.
Jason Boudreau:
Totally! Support the ecosystem.
Well, Dig, why don’t we leave it at that? That’s a high note for sure. And I appreciate you taking the time to be here today and sharing your story and the story of Frank Fee and AltFee. I’m looking forward to seeing how this all unfolds, and we’ll continue to use it and continue to experience that as clients of the firm as well. We’ll definitely have you back on in the next while for an update.
Digby R. Leigh:
Sounds great. I’m in. Always great to chat with you, Jason. Thank you for including me in your podcast. I’m looking forward to seeing how it turns out.
Jason Boudreau:
Happy to have you here and thanks again, Dig, for being here.
Digby R. Leigh:
My pleasure.