When WealthCounsel recently asked estate planners what practice areas they would like to add to their business model, the number two vote-getter was "client maintenance programs." Nearly one-third (29 percent) of respondents picked this option. (See WealthCounsel's 3rd Annual Industry Trends Survey.)
Clearly, interest is growing in these programs, in which clients receive certain services on an annual basis, either for a set annual fee or at no extra charge. The programs are usually undertaken as a way to keep clients engaged with the firm, much like an annual dental or medical checkup.
But what benefits should such programs offer, what price (if any) should be charged, and how can a firm set limits so it isn't setting itself up for hours of work at low compensation? To find out, ElderLawAnswers recently surveyed elder law attorneys about their use of these programs, and then followed up with interviews with individual firms. We learned that elder law firms' results with these programs have been mixed and that the programs account for only a small fraction of firm revenues. Nevertheless, most firms that have established a client maintenance program plan to continue it and expect future growth.
Results of the General Survey
At this point, it appears that only a minority of firms have implemented a client maintenance program. Of the 20 firms that responded to our general survey, only nine had set one up. (To respond to the survey yourself, click here; to see full survey results, click here.) Of those nine, eight offer program enrollees free phone calls, seven offer an annual review of their estate plan, workshops and a newsletter. (One firm offers free phone calls for one year after a trust is funded.) Six of the firms also offer minor amendments to documents at no cost and four provide a DocuBank membership.
Six of the responding firms charge a fee for the benefits they offer and three do not. The fees range from $295 to $700 annually.
Asked how many clients have signed up for the program, respondents said "All clients are automatically enrolled," "23," "100," "All who have living trusts," "All clients who have trusts," "25," "90 percent of new clients," and "67".
Six of the nine firms that have programs think the program is worth the time expenditure, one reported that it isn't worth it, and two are undecided.
One respondent commented that "The firms I know that are offering it on a fee basis indicate they sign everyone up for the first year at no cost, and they have only had about a 5% renewal rate. They also said the first year cost was around $25,000 and only after 4-5 years of offering the program have they begun to (perhaps) see a light at the end of the tunnel."
Another commenter reported: "We had 60 client families last year. That was $30,000 that came in during December and January. This next year we will bill out over 100 client families, and so we expect $50,000 to come in from maintenance renewals in December and January, a time of the year when there is usually not a lot of income coming in. Our goal is to have 300 client families in the maintenance program, which will generate $150,000 per year in annual fees paid. That will pay our overhead for the firm for the year.
"The settlements for clients in the maintenance program are also more profitable, even though we charge a lower percentage than for settlements of non-maintenance clients, because the estate plans of the maintenance clients stay up to date, are fully funded, and we track all assets annually in a spread sheet format, which makes the information readily available as to what they owned, how much it was worth, and where it is located, at disability or death."
One respondent who hasn't tried a program yet volunteered that "it could be a great program to offer as a nice way to tell clients that, if they want to call from time to time, the calls won't be for free, but there is this client maintenance program that for only $X per year will handle questions like that. I am weary of calls re: various details from clients as well as CPAs, financial planners, relatives, etc. My staff's first response to a question could then be 'Are you a member of our client maintenance program?' "
Individual Firm Programs
Littman Krooks LLP
The client maintenance program of the New York ElderLawAnswers member firm of Littman Krooks LLP has been operating for a decade. Firm partner Bernard Krooks reported that clients pay $1,000 every two years and for this they receive unlimited phone calls, an annual meeting with an attorney to review the client's estate plan and related issues, simple changes to estate planning documents, and calls with an accountant regarding trust tax issues. He said the firm has avoided setting itself up for a lot of work at low compensation by being clear about what is and is not included in the program.
Krooks said the program was established because "we wanted more contact with our existing clients." Otherwise, he says, for many clients the firm is "out of sight, out of mind."
Nevertheless, Krooks is unsure whether the program has been worth it. "Not a lot of people have signed up," he said, noting that the program accounts for less than 1 percent of the firm's revenue. "Apparently, having annual contact with their lawyer is not the same as going to the doctor or dentist," Krooks lamented.
Still, his firm plans on continuing the program despite the low subscriber rate. "We just are not promoting it as much as we used to," Krooks said. "We think it is important to stay in touch with existing clients."
Gilfix & La Poll Associates
Like Littman Krooks, the Palo Alto, California, ElderLawAnswers member firm of Gilfix & La Poll Associates has been operating its client maintenance program for about 10 years. The firm charges enrollees $475 every two years. For this they receive a number of free services, including and annual meeting and plan check-up, a special newsletter and seminars, and discounts on all other services.
Principal Michael Gilfix told us the program was set up as a way to stay in contact with clients and make it easy for the firm to address their needs. "We learn of health and other developments sooner, so we can more efficiently plan for them," Gilfix said.
Gilfix estimated that the program accounts for about 2 percent of firm revenue. Still, he said the program is worth doing "but it is not easy." Client expectations can be too high and unrealistic. But generally clients enrolled in the program are highly satisfied with it.
Gilfix said that clarity, both in writing and in verbal explanation of the program's benefits, has been the key to avoid setting the firm up for a lot of work for low compensation.
Margolis & Bloom
The Boston ElderLawAnswers member firm of Margolis & Bloom has had a client maintenance program up and running for three years. Membership is free and is available to any client. Plan members receive an annual review of their estate plan. At the beginning of each year, the firm sends members a two-page questionnaire. About half send it back, at which point staff reviews the client's existing plan based on the answers to the questionnaire and any changes in the law. The firm then sends the client a one- or two-page letter informing the client whether or not any changes in the plan are recommended and, if so, what the charge would be to carry them out.
Firm founder Harry Margolis said the plan aims to meet several needs: 1) it forms a stronger bond with clients; 2) it protects the firm from potential claims that it may not have updated clients on changes in the law, since they all have the opportunity to sign up for the program; 3) it generates some new business each year; and 4) the beginning of the new year has sometimes been a slow period for the practice. "This seemed like a good use of staff that may have some time on its hands and is aimed to generate work and revenue," Margolis said.
Margolis & Bloom made the decision not to charge for these annual estate plan reviews, in part out of a fear that clients might expect too much.
"When we started, we thought we'd try it for free for a few years and then decide whether to start charging and what more to offer for the charge," Margolis explained. "We were very concerned about charging and the slippery slope we could slide down with clients expecting a lot of work for their annual fee. If we ran into disagreements or didn't deliver what the client expected, we would be creating bad will rather than good will. By not charging, everything we do is a bonus for the clients. It's just not clear it's worth the trouble for us."
Margolis said the firm is now considering charging $250 a year for the annual review but making that payment a credit toward any further legal work needed during the year.
Margolis said the program's main drawback is the amount of time it takes to review all the estate plans. He noted that "staff does not complete the reviews as quickly as I would like because they do paying work first. It does not bring in as much new business as I would like."
Layman, D'Atri & Associates, LLC
Elder law and estates attorney Brian Layman of Layman, D'Atri & Associates, LLC, in Canton, Ohio, believes that client maintenance/membership programs "are the wave of the future," but reported that the program his firm implemented in May 2008 has so far cost "more time and effort than the program is worth." However, Layman said he fully expects that the program will become profitable over time as it gains critical mass.
The program, called the Life Plan, is currently limited to revocable living trust clients who implement an upgraded revocable living trust package. Program benefits include necessary or requested amendments to estate planning documents, periodic workshops on relevant topics, "reasonable" phone calls to the office, a free simple will package for children after the first annual renewal, a meeting with the attorney every other year, and notary services and transfer of Ohio and Florida real estate. (For a complete list of the program's benefits, click here.) In exchange for these benefits, clients are charged $395 a year.
"We implemented it because so many clients would not come back to see us, and it could be eight to 10 years or more between reviews," Layman said. "Over time things change laws, assets, families, etc. If the plan remains static, it simply won't work. Clients aren't happy in that situation. Now, we can proactively communicate law changes with clients, they are not afraid to call us if they have a question or change, and we can make sure that their plan remains updated."
The program currently has 50 members. The firm has particularly good success with new clients, who are simply told the maintenance program is part of the firm's system and the fee is waived for the first year. The firm has had difficulty in transitioning existing clients because it charges a fee to upgrade.
At the moment, the program represents less than 5 percent of the firm's revenue. "Unless we increase the annual fee and/or significantly increase the number of members, it will never be a large part of revenue," said Layman. "However, it keeps us in touch with our clients, gives us an opportunity to be the first call for other legal work, and solidifies the relationship when it is time to administer the estate/trust."
Law Office of Roberta S. Kuriloff
Ellsworth, Maine, ElderLawAnswers member attorney Roberta S. Kuriloff started a maintenance program for clients who plan with living trusts about 13 years ago. She said her membership in the National Network of Estate Planning Attorneys was instrumental in teaching her "the importance of maintaining an ongoing relationship with clients to ensure that they and their successor trustees/agents are educated, their documents up to date, and their trusts properly funded." She said she could not have developed her maintenance program without the organization's ongoing experience and help.
The yearly fee for the 125 clients enrolled in her LifeChoice Maintenance Program is $385 for a couple and $325 for a single individual, although Kuriloff said she intends to increase the fee for new clients to around $450, and probably for current clients as well. She called the program "not a major part of my business, but a very important part." She said it has resulted in many referrals, such as doing work for clients' children. She also finds it a great way to keep clients' documents and funding up to date. "When a client becomes disabled or dies, administration is much easier and less costly for clients," she said. "It is also easier for my office. Every January we send out an asset list to clients, and they update the list for us. Then I can review the current assets and know whether to advise changes in their funding structure."
Although she noted that she could possibly earn more if she handled the maintenance work on an hourly basis, Kuriloff said wouldn't have the other benefits, such as referrals, and possibly not as many trust clients.
Links to Other Firms' Programs
Below are links to descriptions of other firm's client maintenance programs:
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