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1. The Decision

2. Option A: Contingency Fee

How It Works

UPHELD identifies a denied claim via FHIR API, generates and files an appeal on the user's behalf, and takes X% (typically 15%) of recovered funds as a fee. If appeal fails, user pays nothing.

UPL Risk Analysis

Does taking a contingency fee on insurance appeals constitute unauthorized practice of law?

Source	Finding	Relevance
DoNotPay settlement ($193K, 2024)	Settled allegations of UPL and "substandard legal services"	Direct precedent: AI company charged with UPL
Florida Bar v. TIKD Services	Florida Supreme Court enjoined app providing legal assistance	State-level enforcement precedent
SF Bar Opinion 2021	Technology-assisted legal services should not violate UPL in California	State-specific permissive opinion

Confidence: Medium — state bar opinions evolve, enforcement is fact-specific

State-by-State Risk

State	Risk Level	Reasoning
Florida	High	Active enforcement (TIKD case), aggressive bar
California	Low	SF Bar Opinion 2021 is favorable
New York	Medium	Active bar, no clear safe harbor
Texas	Medium	Strong bar, some tech-friendly signals
Illinois	Medium	DoNotPay lawsuit originated here

Pros & Cons

• ✅ Aligns incentives: UPHELD only gets paid if user gets paid
• ✅ Reduces consumer acquisition friction: "no win, no fee" is compelling
• ✅ Higher perceived value: user shares upside, not just buying a tool
• ✅ Better unit economics: 15% of $14K average claim = $2,100
• ❌ UPL legal risk — may require lawyer partnership
• ❌ Revenue is variable and lumpy
• ❌ May face consumer lawsuits (like DoNotPay)

Math at Scale (1,000 users)

Input	Value
Users with denials	100 (10% of 1,000)
Users who appeal	50 (50% of denials)
Successful appeals	25 (50% success rate)
Average claim value	$14,000
UPHELD fee (15%)	$2,100 per success
Annual Revenue	$52,500

Confidence: Low-Medium — depends heavily on user behavior, success rate assumptions

3. Option B: Flat Fee Subscription

How It Works

Users pay $9-29/month or $99-299/year. UPHELD monitors insurance via FHIR, alerts to denials, generates appeal letters. User submits the appeal. Subscription continues regardless of outcomes.

UPL Risk Analysis

Materially lower risk because: fee is not tied to legal outcome, user remains in control of submission, UPHELD is providing a tool/service not legal representation.

Key Insight

"Zero consumer-facing insurance appeal companies at scale use contingency fee. Every competitor uses flat fee, per-transaction, or B2B model."

Pros & Cons

• ✅ Legally cleaner: fee is for a service, not legal outcome
• ✅ Predictable recurring revenue (MRR)
• ✅ Lower consumer friction for signup
• ✅ Easier to scale: no claim-outcome tracking
• ✅ Market validated: all competitors use this
• ❌ User pays even if never denied
• ❌ Lower perceived value
• ❌ May limit willingness to pay

Math at Scale (1,000 users)

Tier	Monthly	Annual	1K Users (at 10% conversion)
Budget	$9	$90	$9,000
Mid-tier	$19	$190	$19,000
Premium	$29	$290	$29,000

4. Option C: Hybrid (Brief Assessment)

Base subscription ($9-15/month) + optional 5-10% success bonus if user recovers funds.

Verdict: Adds complexity. Legal risk of success bonus may outweigh benefit. Recommend starting with pure flat fee.

5. Legal Risk Matrix

State	Contingency Risk	Flat Fee Risk	Notes
Florida	High	Low	Active enforcement, TIKD precedent
California	Low	Low	SF Bar Opinion favorable
New York	Medium	Low	No clear safe harbor
Texas	Medium	Low	Business-friendly
Illinois	Medium	Low	DoNotPay lawsuit was here

6. Comparable Company Precedents

Company	Pricing	Revenue Model	Notes
Claimable	$39.95/appeal	Per-transaction	Seed funding
Fight Health Insurance	Free	Freemium	Open-source
Counterforce Health	Free	Grant-funded	Non-profit, 70% reversal
Alaffia	Enterprise	Platform fee	$73M Series B
Rightway	Per employee	PBM pass-through	B2B
Garner Health	B2B	Savings share	$118M Series D

7. Revenue Comparison

Metric	Contingency (15%)	Flat Fee ($19/mo)
Annual Rev (1K users)	$52,500	$19,000
Revenue per user	$52.50	$22.80
Predictability	Low	High
Legal risk	High	Low

8. Max's Researcher Note

What the Data Shows

1. Contingency fees are legally risky. DoNotPay settlement ($193K), Florida TIKD injunction — this isn't theoretical.
2. The market has already decided. Every competitor uses flat fee/per-transaction. Zero use contingency at scale.
3. Consumer awareness is the bottleneck. Only 1% appeal. The opportunity is awareness, not just appeals.
4. Appeal success rates are favorable. 50-60% internal appeals succeed.

What Remains Uncertain

• State-by-state enforcement (which state targets AI appeal services first?)
• Consumer willingness to pay (no direct survey data found)
• Success rate with AI vs. traditional (unknown)
• Churn on subscription model

The Conundrum

Contingency wins on unit economics ($52K vs $23K per 1,000 users) but introduces legal tail risk. Flat fee is safer but may underwhelm on revenue per user.

If UPHELD succeeds and becomes visible, it will attract legal scrutiny. The contingency model makes UPHELD a more obvious target (taking a cut = practicing law for profit). Flat fee model makes UPHELD look more like a software tool.

9. Questions for a Lawyer

1. If we charge a monthly subscription but users submit appeals themselves, is that UPL?
2. Does charging 15% of recovered funds change the UPL analysis?
3. Which states are most likely to enforce UPL against AI appeal services?
4. Would forming a law firm subsidiary mitigate UPL risk?
5. DoNotPay settled for $193K — should we expect similar exposure?
6. What disclaimers reduce our exposure?
7. Does legal malpractice insurance cover UPL claims for non-lawyers?

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QC Sign-Off: Research methodology — Web search (Brave API), web fetch (KFF, competitive websites). Independent sources only. Confidence levels applied throughout. Key sources: KFF (claims data), AHA (denial costs), DoNotPay settlement (Reuters, ABA Journal), Florida TIKD, SF Bar Opinion 2021.