We are approaching year-end (June 30) and it’s time to review the budget draft for next year. One thing that I’ve talked over with some staff is revenue. Fundamentally, courthouse law libraries have a single source of revenue. In California, it’s filing fees and, universally, these fees are a limiting factor on service delivery. But how to get more money? There is a balance between generating incremental revenue without undercutting your other services.
This is obvious but I’ll state it anyway: staff can only do one thing at a time. When we make a choice to provide a service, we are almost always making a choice to forego other opportunities. That’s why it’s called opportunity cost.
Your law library should be adhering to its mission or mandate. There’s a reason that academic law libraries close their space to university students who do not attend the law school. There’s a reason that law firm libraries are not circulating their collection or providing remote access to their databases to any lawyer who might want access, whether or not they work for the firm.
A courthouse law library is open to everyone. The ideal service is one that is tailored to meet everyone’s need. But we know that there are sub-groups and they may be better served with tailored content. It’s why there are faculty reference or liaison librarians in law school libraries. It’s why there are embedded librarians in law firm practice groups.
One challenge for a courthouse law library is to figure out when to focus on these sub-groups and when not to. Because each choice comes with resource challenges. It literally takes a dollar from one service and gives it to another service.
Service for Revenue
This can be challenging to explain to a governance board. The very things that the average courthouse law library excel at are the things that it gives away for free: reference, cataloging, collection access, space to research in. This leaves any law library looking for revenue opportunities with a couple of choices:
- generate revenue off specialized versions of their freely-available services, essentially a freemium model
- take on activities that they may not be suited for delivering, potentially moving into a market that is more competitive than the law library can meet
The first one is a constant discussion in courthouse law libraries. We want to find supplemental funding. We know how to do certain things well. But those things are the very ones that are supposed to be delivered for free.
The latter is harder and brings us into the question of “what is a law library?” Some law libraries will take on new activities because they happen to have someone who has a unique skill set that can be monetized. Without that, any shift to a service that strays from the core law library services may require new staff or expenses that need to compensate for the loss it creates to core services.
Freemium Law Library
Let’s deal with the easy one first. The obvious challenge to charging for your current services is that, well, they’re supposed to be free. In order to charge, you need to distinguish them in some way. And, in general, they need to be distinguishable for everyone.
This is not new ground. Museums have looked at the impact of charging, or not, as well as the impact charging has on goodwill. There is a sweet spot to pricing. Free is easy but there is a point at which people are unwilling to pay, perhaps particularly when they could get a lesser service for free (like the many freemium technology projects like Google Mail). To put this in perspective, commercial freemium products aim for conversion to paid (premium) customers of about 2%-5%.
This is not unique to courthouse law libraries. One reason I follow media news is because so many media platforms face the same issues. News that Quartz just dropped its paywall caught my eye. They’re not the first and won’t be the last.
The shift continues one where readers have gone from 100% free access to modified access (perhaps a few free before hitting a paywall) to a focus on membership. As this post points out, you don’t need to be either free or paywall. The question is how to find the right balance: how many readers do you need to monetize to enable free access?
I’ve been curious about the options for a premium tier for membership law libraries for some years. It is easy to do in a true membership or subscription law library but those are fewer than they have ever been. Most subscription-based law libraries are public law libraries that have added a membership level.
Law libraries who are funded to provide free access are coming at the problem from a different angle. How do we monetize resources that are funded to be free, to create monetized value? These monetized services can be tricky to create. It requires parsing the law for opportunities. You might charge for:
- circulating materials, since many law libraries do not circulate (and are not required to) in part because of the cost of the materials
- educational opportunities, like in-person training or online CE distribution
- reference librarian access that exceeds the unauthorized practice of law, and so is only available to legal professionals
- wider access, essentially for an access card to use the library beyond 40 hours a week
- space rentals, like a conference room, outside of the open study space available to anyone. Such a conference room could have added technology, like a virtual meeting rig or white board or whatever the local population might use
- email updates on practice area topics that are created by staff
Then there are the other barely there charges like selling used (discarded) books. These services are akin to a bake sale.
The benefit of the freemium approach is that it largely relies on services the library is already providing. Specialized reference? We already pay salaries for reference librarians who are qualified to provide the additional service. Circulating collection? We already buy materials or license remote access so we may need to make an investment but it’s not a brand new expense.
The challenge is that all of this is incremental funding. How much can you really raise from any one of the approaches above? $5,000? $10,000? $50,000? In my experience, premium services will rarely be worth the cost to deliver the premium version.
Let’s take an example. You have a law librarian providing reference. Lawyers pay to get premium reference. You have one law librarian doing the service, and their hourly fee is $34 (based on the $71,393 average in government law libraries identified in the AALL 2021 salary survey divided by 52 40-hour weeks).
For the law library to break even, it’s not just enough to charge the lawyer $34 an hour. Unless this is a core service – and it probably isn’t if you charge for it, since core services would be free – that service diverts that librarian. This is the opportunity cost: you choose to spend that $34 on one service as opposed to another. Since the service is not core but core-adjacent, you are diverting funds away from the core.
I sometimes think of this as twice the cost. So you’re really spending $68 dollars, not $34. Because to fully deliver your core services, you really need that original $34 back – to backfill a position, to provide additional staff, whatever. The likelihood is that you don’t have the resources to do that, making it more important that any diversion for revenue is not just a wash.
Just as with a lawyer who passes on legal research costs, the law library is leveraging its collection to provide the additional service. Let’s round that up to at least $40 if not $50 per hour, depending on the complexity of the average request. A competitive assessment would look at the savings to the lawyer in not buying the licenses or books that are used.
The reality is that not many lawyers would pay someone else to provide $50/hour for legal research. And the law libraries I know that have offered this service have found that the cost for legal reference tends to discourage usage. It may have a doubly deleterious effect if it damages goodwill towards the law library.
How many $50 hour legal research segments would you need to make up 1% of your current revenue? In our case, it would require 400 hours or roughly one librarian doing nothing else for 3 months a year. That’s assuming there’s 400 hours worth of interest.
It’s not just people costs. It’s the book that’s circulated that isn’t available for the next person. It’s the database license seat that blocks an additional user from accessing. Each service will have a similar associated cost.
This is true for most law library freemium services. Any decision to charge will, at best, create an incremental funding source while risking current services or goodwill. The funding will not amount to more than a rounding error on many courthouse law library budgets. In my experience, even the traditionally largest incremental funding source – photocopying – tends to be less than 1% of all revenue.
New Business Lines
What if your funder wants you to be more adventurous? There are new business lines that you can move into. It usually requires you to sub-group your audience, often by focusing on those with an incentive to pay for a service. In courthouse law libraries, that tends to be lawyers. I doubt that academic or law firm law libraries could venture in these directions, as this would require invading other professional areas.
One area that a lot of law libraries have branched into is CLE delivery. It’s relatively easy to get the regulatory body to approve CLE courses, especially if you give them regularly. It may feel like it’s a freemium service if you already deliver educational programming. I think of it is a new business line because (a) it’s not available to the entirety of the courthouse law library audience and (b) there are professional CLE providers.
It’s a great example of how we may be capable of doing something but it may not be a sensible use of resources. We do events but we do not offer ourselves as event planners. We work on complicated databases and web sites but we don’t necessarily offer ourselves as commercial alternatives to professionals who do that work daily.
How do you draw the line? I’ve watched public libraries veer towards 3D printers and crafter spaces, to tool libraries, seed libraries, and all sorts of adjacent lending. So it seems to depend on how you envision the law library’s mandate. A public library may lean towards information access or it may lean towards community space or a broader concept of access to useful objects, books being just one of them. It’s a balance. How fractured does your mission become? How holistic does your vision have to be?
The challenge for the law library is that we are surrounded by specialization. The content objects we buy and license are from specialized publishers and have associated costs. The people we provide access to have specialized needs, even if they don’t also have specialized education. The sub-groups we might sell new services to are already served by specialized providers: CLE publishers, legal technology vendors, courtroom and trial consultants.
It means that incremental revenue in this space is much harder to justify. It usually requires resources that we would not already be investing in. So not only are we pulling a resource off a current service, we may be diverting resources to the point of being unable to provide an alternative service.
Let’s go back to that reference librarian. They provide CLE courses each month. They find a speaker, organize marketing, meet any accreditation reporting, ensure the event occurs, and then provide post-event support like delivering certificates or report to the regulator. At $34 an hour, they might spend between half and a full day, cumulatively on each event (4-8 hours).
At 4 hours, the break even point is $136 (4 hours x $34). A new business line is different in my mind from an incremented core service. A new business line will entirely divert that $34 away from the core, where an incremented service will only partially do that. You could hire someone to run the new business line who isn’t a librarian and perhaps save money but you would still need to pay for the specialization. But let’s say that an hour of CLE will break even at $136 if it took 4 hours to coordinate and twice that, $272, if it took 8 hours.
You might consider that it should be funded separately, which would double your costs: $34 for the new business line per hours and $34 to maintain your core reference service with backfill (or by hiring new staff for the new business line). However, if you had that sort of extra money, you might not need to fund a new business line. But I digress.
Those are the break-even points. So that means your event needs to generate more income than that. In San Diego, the cost per hour of CLE is between $7 and $25 an hour from the county bar association. California Lawyers Association sells content from $45 to about $75 an hour. ABA members can access 600 sessions for free, with fee-based courses going for about $100 an hour. ALI-ABA courses range from $100-200 for an hour of webcast or online content.
Since you are competing in a market, you will need to know who the competition is. If your competitor is your local bar, it may be that you need to get 14 lawyers at $10 each to attend your event. If your content is at the ALI-ABA level of specialization, you need just 3 lawyers for an hour long program that took 8 hours to prepare. This will allow you to break even (a.k.a. cost recovery). It is not yet enough to create incremental revenue.
Then you need to figure out how many hours you can produce in a year. That will cap your income. Let’s say I want to generate 1% of our law library’s income with CLE. That would be $20,000, roughly. And let’s say I can get 50 lawyers to attend each program, so that I’m grossing $500 per program. If it takes us 4 hours per program, I’ll need to run 55 programs a year ($20,000 / ($500-136)); at 8 hours per program, I’d have to run 88 ($20,000 / ($500 – 272)).
And that’s assuming every event is attended by 50 lawyers, which is not something I’ve ever seen in a courthouse law library. We often lack the space for those sorts of events and my calculations above assume no additional expenses on software to manage events, or to deliver virtual meetings, or to rent event space, or to provide coffee and water, or to print or reproduce materials.
From that point on, it’s all numbers. Can you create that kind of reliable foot traffic for your events? Can you afford the tools to deliver professional online CLE and meet accreditation demands? It’s a commercial outlook: if you’re going to create a business line, you need to act like a business.
Another distinction: the law library is often the only provider in its primary services area. We don’t compete with bar associations or public libraries or anyone else for free legal information delivery. A freemium model builds on that specialization. New business lines take the law library into other markets where it has no specialization, no resources to leverage that make it unique.
It seems unlikely, even unreasonable, for the law library to expect to make anything more than a rounding figure in that sort of space. If law library directors are considering new business lines, it may require a serious look at how it will diminish mandate-centric services and for what purpose.
What to Do?
There is no reason not to look for new opportunities to find funding sources to supplement the primary source. But the ideal is to stay as close to doing your primary work as possible. Grants or gifts that support your mandate are the best. A freemium approach might create some additional opportunities. New business lines are almost certainly going to distract from your mandate and will draw resources away from it. They require a commitment that the law library is making a multi-year investment in a direction to compete with better known entities.
The other thing a law library director can do is have the conversation with funders and governance boards about these realities. They may not think of how much a law librarian costs the law library when they think of revenue. Since they are a sunk cost, our staff, who are our most important resource, can become invisible in calculations. This not only undermines our work, it undervalues our people.