eLawyering Blog : Online Legal Services : DirectLaw : Document Automation, Web-Enabled Document Assembly, Virtual Lawyering

Legal Zoom has been challenged by the North Carolina which claims that Legal Zoom is violating the unauthorized practice of law statute in North Carolina. The essence of the Bar's complaint is that even though Legal Zoom asserts that their legal documents are created by a web-based software system this constitutes the practice of law because Legal Zoom selects the content that is incorporated into the system. The Unauthorized Committee of the Bar cites  In re Reynoso, 477 F.3d 1117 (9th Cir. 2007) , a case that was decided by a Federal court in California on a different set of facts. In fact, in the case of Legal Zoom, a paralegal or legal technician, conducts something called a "review" , which Legal Zoom uses as a rationale to charge a higher fee. This review is not supposed to be "legal advice", but apparently this gives the North Bar UPL Committee problems as well. We think the In re Reynoso decision is limited to the particular facts of that case, which the Court notes, so for the North Carolina UPL Committee to cite this as precedent, we think is a bit of a stretch. We also that in California that are many non-lawyer providers who provide alternatives to lawyers, including Legal Zoom itself, which is based in Hollywood, California, and they are not being hounded by the bar in their home jurisdiction.

This is an ominous development as it indicates that the organized bar will go to any  length to maintain its monopoly over the delivery of legal services, even redefining what is essentially a "legal information service" as a the practice of law between a client and an attorney.  The legislature of the State of Texas was faced with a similar situation several years ago, when the Bar was trying to shut down a legal software publisher on the theory that the purchase of a  legal software program from Staples was the practice of law, and responded by passing a statute in response to consumer demand that exempted legal software programs as falling within the definition of the practice of law.

This is not an issue that will stir North Carolina's citizens to rise up in anger at the organized bar for restricting their choices and keeping legal fees unnecessarily excessive, but they should. They should follow the path of Texas's citizen's and put the North Carolina bar in its place.

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 I am offering an on-line course on "unbundling legal services" with a particular focus on how to offer limited legal services over the Internet.  "Limited legal services" is another name for "unbundled legal services."The course begins the week of June 1, 2009 and there will be 7 sessions over a 12 week period. By the end of the course participants will have developed a design for an "unbundled legal service" that can be integrated with their traditional law practice. Topics include: how to "unbundle" legal services by task or by issue; how to create and price an on-line service; marketing of on-line "unbundled legal services"; and ethical and regulatory requirements for offering "unbundled legal services."

For a detailed syllabus go to: Solo Practice University

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We had an eLawyering Task Force meeting at the ABA/Law Practice Management meeting in New Orleans this weekend. We decided to start publishing "best practices" for delivering legal services on-line to the eLawyering web site, and these "best practices" would be available for comment by others. Another project is to develop one or more tele-seminars on eLawyering in cooperation with LPM's Educational Board. A third project, under development is to work with ABA's public relations team to develop a Public Service Announcement that would inform consumers of the risks in using non-lawyer alternatives on the Internet as compared with an on-line or virtual lawyer which offers advantages that a non-lawyer cannot, such as legal advice.

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The Rimon Law Group, based in Israel, is a virtual law firm of lawyers who are members of various U.S. bars but who live in Israel and offer their services to lawyers and corporate legal departments in the United States at fees which are less than half U.S.-based legal fees.  The Group claims that its attorneys all have experience in complex legal matters and can deliver legal services that are comparable to legal services offered by U.S. based lawyers for much less cost because of the different cost structures between the U.S. and Israel. I think this is an interesting example of a law firm building a virtual business based on identifying a niche market and maximizing a comparative economic advantage.

With today's connectivity, some  kinds of legal work no longer require face to face interaction. This  results in a kind of economic leverage based on geographic location. It is interesting to note that the Rimon Law Group has as its clients other law firms and corporate legal departments, rather than working with clients directly.

To take this model even further, one could envision a virtual law firm of attorneys who are members of various U.S. state bars, and who are active members of those bars, but serving clients directly by telephone and email, and using virtual tools that are now being developed that facilitate the delivery of online legal services directly to consumers. These attorneys, for various reasons may live in locations that are lower in cost, than our major metropolitan areas, such as downtown Chicago or New York, and and are able to translate lower costs into reduced fees. Such lawyers don't have to live in Israel. They could live where ever it is possible to leverage a lower cost of living into reduced legal fees particularly, for the same commodity transactions that traditional face-to-face lawyers, with dedicated expensive offices, charge out at a much higher rate.

After all, I operate a virtual law firm in Maryland, where I am an active member of the bar, from my home in Palm Beach Gardens, Florida. Not a bad life style if you make it work.

I predict we will see many more "virtual networks" of lawyers emerge in the coming decade, some based in the United States, and some based in other parts of the world, serving not only client law firms in the U.S., but U.S. consumers directly.

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LegalZoom has a clever plan to create an Attorney Directory for visitors to its web site that supports its market position. LegalZoom now attracts the most web traffic of any legal web site so this is an attempt to squeeze more value from this traffic.  Attorneys who enroll in the Directory, which is free except of a $99.00 set-up fee, are required to give users who are sent their way, a free 30 minute consultation. This enables LegalZoom to provide legal advice to augment its legal form document preparation services. The only lawyers who would participate in this Directory are those who are hoping to capture a case with a large fee, for either a complex matter or a personal injury matter --- cases which LegalZoom can't service with its legal form business.

These lawyers are not threatened by the fact that LegalZoom is offering an alternative, non-lawyer service that is eating away at the market share of solos and small law firms that provide legal services to the broad middle class in such areas as wills, incorporation, no-fault divorce, trademark, and name change, to name only a few. The reality is that these common transactions also require the legal advice of an attorney, but if lawyers are to keep their fees low, how can they give legal advice away for free?

Attorneys who are offering lower cost "unbundled legal services" which consist of legal forms together with legal advice for a fixed fee would not be motivated to provide 30 minutes of free advice. Many of these firms can charge a small fee for this legal advice. 

Nolo, one of LegalZoom's competitors, also offers an Attorney Directory, but these attorneys are not required to provide a free 30 minute consultation. As a result law firm's in the Nolo Directory are more oriented towards providing limited legal services to clients of moderate means. Nolo is the second highest traffic legal web site.

Disclosure: My Maryland-based virtual law firm which offers limited legal services for a fixed fee is a member of the Nolo Lawyer Directory. We are pleased with the results we are getting, even though we pay advertising fees to participate.

With this move, venture-backed LegalZoom, with its superior market position, will continue to increase its market share of common legal services at the expense of the legal profession.

With this new Lawyer Directory, LegalZoom can buttress its claim that it "puts the law on your side."

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Stephanie Kimbro, a solo practitioner who operates Kimbrolaw.com, a virtual law firm in North Carolina, has been selected as this year's winner of the James Keane Memorial Award for Excellence in eLawyering. This award is given annually by the eLawyering Task Force of the Law Practice Management Section of the American Bar Association, a group which was founded by Jim Keane an active and long-standing member of the ABA/LPM section who died tragically from lung cancer several years ago. I am the present Co-Chair with Marc Lauritsen.

Ms. Kimbro's law firm is a completely virtual law firm that serves individuals and small business over the Web. Our group concluded that Kimbrolaw.com  met the criteria for the Award perfectly as it demonstrates an innovative online model for delivering services to the broad middle class. Clients access their own individual web space where they can consult with their attorney, have their documents reviewed, and conduct other legal tasks -- all online.

The Award will be formally given to Ms. Kimbro at the American Bar Association's TECHSHOW on April 2, 2009, immediately before the key note speech by Richard Susskind, who will discuss his new book: The End of Lawyers: The Rethinking the Nature of Legal Services.

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 I joined up as faculty with Solo Practice University last week. This is a new online educational venture started by Susan Carter Liebel , a coach and consultant to solo practices. Law schools really don't teach law students how to open a solo practice -- they are too busy training students for large law practice for which many of their students aspire but very few achieve. This program will be a welcome addition to bar association CLE courses as it focuses on the needs of solos, who still make up the largest percentage of practicing lawyers. I am going to develop a course on how to offer what is known as limited legal services or "unbundled legal services" both online and offline. My plan is to use pre-recorded video, discussion groups, an online blog, and email to help course participants develop a business plan for increasing and diversifying their revenue base. I am looking forward to this learning experience in how to deliver legal services online.

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There is a blog post at For Connecticut Lawyers which analyzes LegalZoom's deceptive advertising practices that are designed to persuade consumers that purchasing legal documents from LegalZoom is the same as a service from an attorney. The post examines the hidden nature of the disclaimer notice that LegalZoom cannot give legal advice, and questions what "Put the Law on Your Side" - [ Legal Zoom's tagline] means when proclaimed by a non-lawyer, legal document preparation services organization. Since LegalZoom's staff members cannot provide legal advice  when they review a document one could ask the question:  What they really do and what justifies the relatively high cost of a LegalZoom's services? How are LegalZoom's services different from a legal form that is purchased from an on-line legal form web site such as US Legal Forms, which are available at much less cost?

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Last week we participated as an Exhibitor at LEGALTECH, New York. This is the largest legal technology show in the world, attracting over 13,000 visitors. The seminar program is excellent and if you want to keep in touch with emerging legal trends in Big Law, this is the place to be.

What is notable about  LEGALTECH , from our point view is how focused it is on ediscovery, litigation support, and the legal technology challenges facing large law firms and corporate legal departments. Our offering - the DirectLaw web service is specifically designed for the needs of solos and small law firms.  Out of the hundreds of technology vendors a very small percentage were targeted to the needs of solos and small law firms. And the number of visitors to the exhibits from solos and small law firms were a relatively small percentage when compared to the number of visitors from larger law firms, corporate legal departments, and technology consultants serving larger organizations.

From passing through the exhibit hall (at the New York Hilton), one would think that the world of legal technology consists of primarily ediscovery vendors. There were so many ediscovery and litigation support vendors that I began to wonder whether the market was either so enormous, or that half these vendors were going broke as they all seemed to be chasing the same business and the same large corporate clients.

To be fair to Incisive Media, the promoter of LEGALTECH, they disclosed that attendees from solos and small law firms would be a smaller percentage would compared to representatives from other sectors of the legal technology community. We didn't realize how small this percentage would be.

We did pick up enough new clients for DirectLaw to cover our direct expenses, but the time cost of our team doesn't justify the investment . So we won't be back next year and we don't recommend LEGALTECH to legal technology vendors if you are trying to reach solos and small law firms.

We are also exhibiting at ABA TECHSHOW in Chicago in April and we think this is a much better venue for reaching solos and small law firms. The seminar program is much more diverse and there are many sessions that would appeal to the smaller law firm. If you plan on attending ABA TECHSHOW in April, stop in see us at Booth #210.

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