As the legal marketplace evolves, so do billing expectations. Many attorneys are experimenting with subscription or “maintenance” models, flat-rate projects, and AI-assisted billing systems. Advancements in AI-driven efficiencies are expected to bring increased value and quality to legal representation, contributing to the importance of reevaluating ethical alternative fee models. Earlier this month, our article “Getting Paid: Retainer or Flat Fee?” addressed flat fee basics. This article delves deeper into the best practices and ethical requirements associated with subscription fees. 

Fee model innovations offer predictability and access for clients. But they also raise key questions under the Ohio Rules of Professional Conduct, especially Rule 1.5 (reasonable fees, written communication), Rule 1.15 (safekeeping of client funds) and Rule 1.16 (returning unearned fees at the conclusion of representation). 

The challenge presented to attorneys: modernize your billing without crossing ethical lines.  

What is an Alternative Fee Model? 

Alternative fee models (AFMs) go beyond hourly billing. Common examples include: 

• Subscription plans: recurring monthly or annual payments for defined legal access.  

• Flat or project-based fees: one set price for a specific deliverable. 

• Value-based pricing: compensation linked to outcome or value, not time. One example of common “value-based pricing” in the legal field is the contingency fee.  

• Hybrid: utilizing more than one model of billing, such as hourly rate billing for work beyond a defined scope for a flat fee project, or a reduced hourly rate combined with a negotiated contingency fee. 

Properly implemented, these approaches can improve transparency and client trust, but lawyers must still handle both funds and disclosures with precision.  

Ethical Framework: Lessons from D.C. Bar Ethics Opinion 389 (August 2025) 

The D.C. Bar Legal Ethics Committee’s Opinion 389 (Aug. 2025), Flat Fees, Subscription Fees, and Disbarment, digs into the obligations contained in DC Professional Conduct Rule 1.15 to hold funds in trust as they pertain to flat fees and subscription fees. Its guidance is generally aligned with obligations Ohio lawyers face under Ohio Professional Conduct Rules 1.5, 1.15, and 1.16, and best practices that exceed or are more explicit than the rules require on their face.  

In addition, Opinion 389 layers in analysis of three modern disciplinary cases from the District of Columbia. 

1. In re Mance, 980 A.2d 1196 (D.C. 2009), stands for the proposition that prepaid flat fees and prepaid costs are subject to the same requirements to deposit the funds into a proper trust account as standard hourly rate retainers; absent clear consent, prepaid fees and costs belong in trust, until earned by performance of the associated work. 
2. In re Ponds, 279 A.3d 357 (D.C. 2022), clarifies requirements for a lawyer to provide verbal and written disclosures to a client before the client can consent to an “earned on receipt” flat fee that bypasses a trust account.
3. In re Alexei, 319 A.3d 404 (D.C. 2024), holds that flat fees aren’t earned in part or in whole until all legal services associated with the defined scope of representation have been completed unless the client gives informed consent to the contrary (e.g., clearly defined milestones or tasks). Simply put, a lawyer does not earn any part of a flat fee until the work associated with that fee is done. 

Ohio attorneys may wish to compare Cleveland Metro. Bar Assn. V. Heller, 2021-Ohio-2211, in which an attorney received a suspension for failing to deposit funds into trust and failing to make required disclosures to a flat fee client as the analysis is similar as in the D.C. cases. 

The Ethics Opinion winds through a holistic review of the three cases, covering “reasonableness” of fees, prohibitions on comingling, and the dangers of “earned on receipt” and “availability” fees. Following thorough analysis of Alexei and some suggested best practices related to communicating the completion of milestones or tasks in a flat fee scenario, the Opinion spends a few paragraphs discussing “Monthly Recurring Fees or Subscription Arrangements.” Connecting the three discussed cases to subscription fees, the Opinion’s recommendations are summarized as follows: 

1. Define Scope & Deliverables and Zoom Out to Determine Reasonableness 

Opinion 389 emphasizes that a subscription or flat fee is ethical when (1) the scope and deliverables are communicated and (2) the fee is reasonable.  

First, the lawyer must clearly communicate the scope of services and what the payment covers. “When and how prepaid fees will be earned during the representation should be defined in a written engagement agreement with the client.” This means detailing what is included in the subscription plan, when and how the client avails themselves of the service, and what triggers an attorney earning the fee. If the subscription payment is tantamount to an “availability fee” (“a fee paid, apart from any other compensation, to ensure that a lawyer will be available for the client if required”) (see, Mance at 1202), attorneys should take caution as to the reasonableness of that fee discussed below. 

Second, the reasonableness of a subscription plan must be taken as a whole, over time, and not assessed due to an abnormally low- or high- effort month (or period):

It is the nature of such arrangements that more work may be done in some months than in others during the term of the contract. The flat fee period allows the parties to share the risk and smooth out the expected payments. […] So long as the agreement is reviewed and adjusted from time to time to assure that it has not become “unreasonable,” we do not believe that the client is entitled to a refund of monthly (or periodic) fee for odd months (or periods) in which little or no actual work was done. 

However, it is critical to note that the Opinion further cautions: “Lawyers should be aware that, if an unsophisticated client uses no services for several months, Disciplinary Counsel may assert that the trilogy [Mance, Ponds, and Alexei] require a return of some or all of the funds to the client.” Similar holdings can be found in Ohio including recent disciplinary case 2023-Ohio-1768 where the attorney was found to have charged “unreasonable” fees for failing to complete the work and failing to refund unearned fees, in addition to violating trust requirements. 

2. Unearned Funds Must Stay in Trust

Perhaps the Opinion’s most critical point reflects on Ohio Rule 1.15: 

(c)  A lawyer shall deposit into a client trust account legal fees and expenses that have been paid in advance, to be withdrawn by the lawyer only as fees are earned or expenses incurred. 

That means monthly or annual subscription payments shouldn’t automatically be swept into the operating account. The fee becomes the lawyer’s only as it is earned — typically at the end of each covered period. The Opinion posits two options: either the fee is billed in arrears (e.g., payment due after the defined period has expired) or the periodic fee is held in IOLTA until the period (e.g., month) for which it was paid ends. 

3. Refund Obligations and Early Termination

This brings the discussion to the topic of what is to be done if a client terminates representation in the middle of a billing period. Opinion 389 reinforces that any unearned portion must be refunded if representation ends early, aligning with Ohio Rule 1.16(e). 
A best practice is to specify in writing the earning schedule, refund procedure, and what happens if the client cancels mid-cycle. 

Guidance from Other Jurisdictions 

Other bar authorities echo D.C.’s reasoning: 

• Texas Professional Ethics Opinion 701 (2024): The Committee determined that subscription models are permissible when services are clearly defined, fees are not unconscionable and held in trust until the end of the payment period, and upon cancellation at any time, unearned fees are returned. 

• Maryland State Bar Association Ethics Docket No. 2020-01: In addition to discussing similar issues identified above, this opinion wrestled with the distinction between an “availability fee” (which is earned on receipt) and the subscription fee, which may be a combination of “availability” and prepayment for service. The majority opinion landed on nine topics that must be covered with the client who participates in a subscription plan — but note the dissenting opinion. 

Together with D.C. Opinion 389, these sources confirm that ethics rules are flexible enough to allow innovation — but only with clarity, fairness, and accountability. 

Use of AI and the Future of Billing 

The ABA’s Formal Opinion 512 (July 2024) cautions that emerging technologies including generative AI can streamline billing but also invite scrutiny: fees must still reflect actual value and time reasonably spent. Lawyers must not inflate hours or charge as if AI work took human time. Some speculate that due to these new efficiencies, value-based billing, flat fees, and subscription models may necessarily replace hourly billing. It is also important to note that this Opinion advises that attorneys must disclose material use of AI that affects cost or confidentiality. 

Practical Tips for Ethical AFMs 

1. Define the scope — specify exactly what the subscription covers and what the client must do to utilize the available services. 
2. Document timing — state when the fee is earned and moved from trust, not just at the outset but as services are rendered. 
3. Provide written cancellation terms — outline (the lawyer’s) refund obligations, remembering that there’s really no such thing as “nonrefundable” fees. 
4. Keep contemporaneous records — track earned vs. unearned portions monthly. 
5. Reconcile regularly — consistent IOLTA reconciliation is your strongest defense. 

 Final Takeaway 

Subscription-based and alternative fee models can expand access and stabilize revenue  but they must respect the same ethical pillars that govern all billing: reasonableness, transparency, and protection of client funds. The ethical considerations are not new; they are the same as those that apply whenever a lawyer receives payment for legal services. 

Innovation in billing is welcome – so long as it is accompanied by integrity and clarity. 

See related articles:
Getting Paid: Retainer or Flat Fee (11/19/25)
Withdrawing from Representation (8/31/22)
IOLTA Reminders & Resources (4/6/22)
Flat Fee Agreements (5/6/21)

As always, if you have any questions, we’re here to help. 

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