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

Some colleagues asked me that other day if I knew whether Axiom is a law firm. I said I didn't really know, so I decided to find out. There has been much buzz lately about AxiomLaw .  The company recently raised $28,000,000 in private equity funding, after an initial round of $5,000,000.  Axiom has recently launched a new Web site call ReThinkLaw  - a kind of forum Web site that is designed to "provoke thought and drive innovation in the business of law—leading to greater efficiency and positive change for the benefit of clients, firms and lawyers alike."

The AxiomLaw Web site and ReThinkLaw site makes it look like Axiom is a law firm.

For example:

• A landing page on the Axiom Law Web site claims they do "legal work efficiently";
• Axiom calls the companies it works for its "clients", rather than customers.
• Axiom claims it is a "modern interpretation of a law firm" , implying that it is a law firm.
• Axiom compares itself to traditional law firm, and asserts that it is a law firm on diet.

AxiomLaw sounds like a law firm and has a domain name that makes it look like a law firm. When it describes itself it states that "it is not your father's law firm" or it is  "a new model legal services firm."

But its not a law firm at all. The company's real name is Axiom Global, Inc.,  It is organized as a "C" corporation, and incorporated in the State of Delaware, just like any other company. (This explains of course how it can have investors).

So if AxiomLaw is not a law firm - what does it actually do? It targets the General  Counsel's office of large corporation's and provides the following services:

• It's a high priced placement firm assigning lawyers to work for in-house General Counsel;
• It's an outsourcing firm working directly for General Counsel of major Fortune 500 corporations;
• It does "projects" directly for General Counsel of major Fortune 500 corporations.

Should any one care whether AxiomLaw is a law firm or not?

• Prospective attorney recruits might care whether they are being recruited by a law firm or something else;
   
• Prospective customers should understand that only a company with an in-house counsel who is a member of the bar where the legal matter is being conducted can qualify for AxiomLaw's services;
   
• If you don't have an in-house counsel, then you can't use Axiom's services. Not being a law firm. Axiom cannot provide services to the public (individuals or organizations) directly;
   
• Prospective corporate customers should understand that the traditional lawyer-client confidentiality privilege does not apply. Any confidentiality must result from the relationship between the company's general counsel and their outsourced lawyer workers by virtue of the agreement between Axiom and the corporation customer - but I wonder if that is sufficient.
   
• Competing law firms might care that Axiom suggests that its services are "legal services" competitive with the services of other law firms, when in fact they are are just "services" by definition. Actually contracted support services by in-house counsel. Otherwise Axiom would be violating Unauthorized Practice of Law (UPL) regulations in every state. Since Axiom is not really a law firm it can make claims about its services, that are not subject to bar regulation. Some of the statements that Axiom makes about its services, a law firm is prohibited from making because it would be in violation of the advertising and disclosure rules which are operative in every state.
   
• Law firms are prohibited from solicitation. AxiomLaw is not subject to the same constraints.
   
• Maybe state bar association officials should be concerned that the location of the disclaimer on the AxiomLaw web site that states that Axiom is not a law firm and cannot give legal advice. It is difficult to find. . I finally found it here.  and here.
  

Is AxiomLaw a positive development for the legal profession? Who knows?

General Counsel of major companies seem to think so. AxiomLaw is demonstrating that certain kinds of services can be delivered at a much lower price, without compromising quality. By enabling corporate counsel to get done certain kinds of legal work that ordinarily would be provided by outside counsel at a much higher price, Axiom has opened up a major market be simply segmenting the kind of work that can be done more efficiently in-house with help from Axiom.

It seems to me, however, that an in-house counsel assumes the risk of malpractice when they contract with Axiom. Axiom is not a law firm so it can't secure a law firm malpractice insurance policy. Moreover, the supervisor of the legal work is not Axiom, (technically it can't be), but in-house counsel. When in-house counsel contracts with a company like Axiom they give up the assurance of quality legal services and accountability that they get from a traditional law firm. 

In checking directly with Axiom on this point, Axiom states that:

"The individual lawyers don't carry their own malpractice, Axiom maintains a lawyer's professional liability insurance policy that provides coverage for all Axiom attorneys, regardless of W-2 or independent contractor status. Almost all of our lawyers in the US are W-2 employees. Axiom does not, because we cannot, have access to or supervise the substantive work of our lawyers."

One likely impact of these developments is to destabilize the business model of the Big Law firms by sucking out the more routine work from big law firms which results in decreasing overall profitability.  As the Axiom's of the world expand their services and their reach,  there will be less work for the large law firms resulting in a shrinkage of the market share of traditional law firms. (real law firms!). The firms that are left standing will offer the most high-end legal services but will probably raise their fees as they will be the only game in town as a supplier of complex legal services where law firm accountability is a necessity.

Do GC's have any interest in a vibrant independent and expanding legal profession, or do they prefer a world where there will be less traditional law firms offering their services at higher fees?

Two final questions for consideration:

1. Should AxiomLaw be more transparent on its Web site about what kind of an organization it really is by making clear that it is not a law firm, and should it avoid comparisons with traditional law firms?

2. Maybe non-law firms like Axiom, with their access to capital and superior management and technological resources, should be able to offer legal services like a real law firm, but just make these new organization's subject to the Rules of Professional Conduct like any other law firm.

Of course, private investment in a law firm is prohibited by Model Rule 5.4, but maybe it's time that state bar associations recognize that there is a new kind of organization moving into the legal industry any way, so why not simply subject these new players to the same regulatory scheme as traditional law firms?

Would that level the playing field? Would that provide better consumer protection for both individual consumers and corporate purchasers of legal services?

• Email This
• Print
• Comments (4)
• Trackbacks
• Share Link

I had the honor of speaking at ReInventLawSiliconValley, a conference on innovation and the legal system sponsored by the ReInvent Law Laboratory at Michigan State Law School, co-founded by Professors Dan Martin Katz and Renee Newman Knake. This was a great learning day for me and I suggest if you are interested in the subject of change in the legal profession and legal education that you watch the videos when they are published on the ReInventLaw Law Channel. See also on Twitter #ReInventLaw and my pre-conference post on this Conference.

Here are the slides from my ReInventLaw presentation.

I am interested in the subject of how to get private capital into law firms to spur innovation despite the prohibitions of 5.4 of the ABA Model Rule of Professional Conduct. This is the rule that prevents a non-lawyer from owning an equity interest n a law firm in all US states, except on a limited basis in the District of Columbia. This is a controversial issue in the US, and the the ABA Ethics 20/20 Commission decided not to address the subject in its recent deliberations. The ABA House of Delegates and almost all state bar associations are dead set against any change to this rule.

Jacoby & Meyers, the pioneering consumer law firm, has filed a suit against the judiciary in New York, New Jersey, and Connecticut  in Federal court to overturn the rule, but that's another story.

I am interested in finding out if clever lawyers have figured out away around the rule. I discovered at least two instances where law firms have created a business model that enables private capital to fund technology and management support that would be beyond the ability of the law partners to fund by themselves.

The law firms are Clearspire and RajPatent, recently re-branded as LegalForceLaw.  Both law firms are built around the same concept - a law firm that is supported by an independent management company that provides technology and management services to the law firm.

Clearspire invested over $5,000,000 in a technology and management platform to support the delivery of legal services to corporate legal clients. The firm is growing rapidly and recently opened a San Francisco Office.

LegalForceLaw was founded by a solo practitioner, Raj Abhyanker. The underlying company is called Trademarkia, Inc., which created the Trademarkia web site, the legal web site with the most traffic on the Internet. Like Clearspire, Trademarkia developed a technology to make it easy for non-lawyers to do a trademark search. The traffic to the Trademarkia site generates business for the law firm. [See previous post on LegalForce ].

In both cases, a separate management and independent management company provides services to the law firm. In theory the management company could serve other law firms, but in these cases the management company only has one client.

The arrangement raises more questions and the answers are not apparent.

I would like to learn more about how these management companies price their services to the law firms they serve. They can't take a percentage of the legal fees or it would be a violation of Rule 5.4 How much of the cash generated by the law firm can be siphoned off by the management contract between the management company and the law firm? What is the pricing mechanism between the management company and the law firm? Is it a cost plus contract or are market rates charged for the services provided?

Why would an investor put funds at risk within the management company as there would be no easy exit. The law firm can't go public and if the managing partners of the law firm were hit by a bus the law firm would go out of existence. The brand belongs to the law firm, not the management company. The financial return to the management company is limited because of the 5.4 prohibition. So where is the upside for the investors in the management company?

I think that these innovative law firms should be more transparent about the nature of the management agreement between their management company and their law firm, so that other law firms interested in replicating this business model can experiment.

Maybe these management agreement should be  scrutinized and approved by the ethics counsel from the bar associations in the jurisdictions where these law firms are located, so there is no question that there is no violation of 5.4?

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

ReinventLawSiliconValley is happening next Friday, March 8 at the Computer History Museum in Mountain View, California. The brain child of Professors Daniel Martin Katz and Renee Knake, co-founders and co-directors of the Reinvent Law Laboratory at Michigan State University Law School, the event promises to be quite a bash. The event is free, but attendance is limited to 400 participants and you have to register to get in. Over 40 innovators, founders, policymakers, venture capitalist and other change agents interested in reforming the legal services industry will be speaking in 6 - 10 minute presentations.

Think of this as a TED Talks event about innovation and change in the legal industry-- a crash course about disruption in the legal profession.

Here is the full detailed schedule with the speakers and the titles of their presentations.

Some of the speakers I am especially looking forward to listening to are:

• "ABA Journal LegalRebel" Stephanie Kimbro discussing her new book: The Consumer Law Revolution: The Lawyers’ Guide to Online Marketing Tools (2013).
   
• Colin Rule, CEO, Modria, Online Dispute Resolution: Improving Access to Justice
   
• Henry Jones, Managing Director of AxiomLaw (founded by Mark Harris, ABA  Journal Legal Rebel), discussing the Axiom business model. I am interested in how they were able to raise $28 million in a Series D Round from Carrick Capital.
   
• Karn Kerkonian, Principal at Velawsity --a new cloud-based practice management system that is launching at ReinventLaw. Velawsity is aiming at the same target market that CLIO and RocketMatter and other cloud-based practice management solution providers serve. I am interested in learning how they are different.
   
• Raj Abhyanker, founder of LegalForce about law firm redesign and the nationwide network of law firms he is creating under the Legalforce brand.
   
• Dan Lewis of Ravel Law, a spin out from Stanford Law School, that is creating a new visualization approach to legal research. Ravellaw is another start-up that looks like it is about to fully launch.
   
• ABA Jounral Legal Rebel Kingsley Martin, CEO and Founder of KMStandards about his company's unique and patented approach to contract analysis.
   
• ABA Journal Legal Rebel Bill Henderson, from Maurer School of Law, Indiana University, discussing his ideas about change in the legal profession.

This is just a sampling of the range of talks at ReinventLawSiliconValley - 2013.

Yours truly is giving a talk on Private Investment in US Legal Services: New Business Models.  I am interested in how to get private capital into law firms, given the restrictions of ABA Professional Rule 5.4 which prohibits non-lawyers from taking an equity interest in a law firm. Are there ways of getting around this rule? What kind of law firm structures can be created that enable private equity investment? Is it wise to enable private investment in law firms? Will it ever happen in the United States given the present position of the ABA and  state bar associations? What can small and medium size law firms do to access capital to make them more competitive? Are Clearspire and AxiomLaw ethically compliant models that can be replicated?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Ray Abyhanker, the entrepreneur lawyer behind the Trademarkia web site,  the highest traffic legal sites on the Web, opened a kind of Apple Store for legal stuff and other stuff (self-help law books, non-Apple tablets, tablet accessories, etc), right across from the Apple Store on University Avenue in Palo Alto. [See previous post on this company at: May the LegalForce Be With You! ]

Beautifully designed in a historic building the idea is to provide an  "third place" where lawyers can meet and mingle with potential clients, provide community law classes, and generally demystify the law by creating an accessible and friendly legal environment.

The ultimate goal is to create a branded network of law firms that promises a high value client experience for the broad range of consumers and small business that are also attracted to pure online ventures such as LegalZoom and RocketLawyer, but want something more.

There is a lot to be said for a "click and mortar" strategy which involves lawyers working with clients in their offices, and interacting as well online,  but also meeting and interacting in a neutral physical space that is a retail environment. Sort of like having a  "Genius Bar" for legal problems where you can ask a question and get a quick legal answer or get assistance in knowing how to start out to solve a legal problem.

Where do I start? Do I need a legal form or a self-help law book? An "unbundled"  legal service, or full service representation? What's the lowest cost solution to my legal problem?

The LegalForce lawyer store staff call themselves  "Concierges" and I believe that is an apt title. We need more legal concierges, on the web, and in the real world.

Legal services, particularly the more complex the legal service, depends on the presence of a skilled trusted adviser. Sometimes the lawyer presence can be virtual, but sometimes the legal problem requires a face to face meeting with a client so that a thorough exploration of the facts of the case can be fully understood.  For lawyers, the ideal strategy is one that combines an off-line practice with an online presence and a brand that expresses both dimensions of the practice.

The term "Click and Mortar" is attributed to David Pottruck, then CEO of Charles Schwab Corp, in a July, 1999 speech at a conference sponsored by the Industry Standard. Pottruck is quoted as saying:

 "Schwab's vision has always been designed around customer needs and the company is engaged in constant reinvention to stay ahead of these powerful investors. Schwab believes that it is the combination of people and technology that investors want -- a "high-tech and high-touch" approach. As such, Schwab is redefining the full-service business around the integration of "clicks and mortar."

Pottruck subsequently wrote a book about the strategy.  A brokerage firm is more like a law firm, than a law firm is to a ecommerce web site with no human touch. It might be fine to buy your shoes online from Zappos, but I am not so sure that in the fullness of time will clients want a purely virtual experience with their law firms. As someone who runs a company ( DirecttLaw) that provides a virtual law firm platform to law firms, and has operated my own virtual law firm since 2003,  I have experienced both the advantages and the  disadvantages of a pure legal service without any human meeting.

By linking together an online experience with an off-line, real work experience, Abyhanker may have come with a legal service concept that is unique. Trademarkia is being re-branded under the LegalForce brand and recruiting  law firms for the network, first in California and then nationwide has begun..To be clear this is not a franchise, but more of a marketing network with productivity benefits for its law firm members.

Disclosure: Our company created an interactive legal form portal under the LegalForce brand and a "legal form kiosk" for the store.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Burton-Law, a virtual law firm based in Ohio and North Carolina has been selected by Law Technology News for the most Innovative Use of Technology in a Small Law Firm. This small law firm is a good case study on how a law firm can leverage virtual law firm technology to serve a diverse group of clients over a wider geographical area.

We are proud that the Burton-Law has selected DirectLaw as their client portal with embedded document automation capabilities. Burton-Law also uses CLIO as their web-based practice management solution which integrates seamlessly with DirectLaw through the use of an API.

Stephanie Kimbro,  formerly co-founder of Virtual Law Office Technology which was acquired by TotalAttorneys several years ago, helped make the decision to adopt DirectLaw as Burton-Law's virtual law firm platform. Stephanie is no longer with TotalAttorneys.  Stephanie joined Burton-Law last March to expand their operations in North Carolina. Stephanie is a pioneer in the development of the virtual lawyering concept, having written the book  on the topic.

Stephanie has also just released a new ebook on the Consumer Law Revolution which is the best description and analysis of online marketing platforms that I have seen. You can download it here.

Stephanie also blogs at Virtual Law Practice, and you can follow her on Twitter @StephKimbro.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

We are pleased to announce that the Editors of the ABA Journal have selected the eLawyering Blog as one of the top 100 best blogs for a legal audience.

In addition, the magazine has introduced the inaugural Blawg 100 Hall of Fame,
featuring 10 of the very best law blogs, known for crafting high-quality, engaging posts
day in and day out.

The  ABA Journal is asking readers to weigh in and vote on their favorites in each of the 6th Annual Blawg 100's 15 categories. Go to http://www.abajournal.com/blawg100 to register and vote. Voting ends at close of business on Dec. 21, 2012.

The ABA Journal, in announcing this year's selection, said:

"Each year, our choices become tougher. Blogging has become such a staple of
professional communication that keeping up with our own directory of more than 3,500 blogs by lawyers, judges, law professors or even law students is more formidable than it's ever been," said ABA Journal Editor and Publisher Allen Pusey. "Some of them have become such permanent, even required, fixtures in our everyday reading that we're introducing the ABA Journal Blawg 100 Hall of Fame to recognize those blogs and bloggers that have set the standards for this vast, vibrant network for legal news and commentary."

The ABA Journal is the flagship magazine of the American Bar Association, and it is read
by half of the nation's 1.1 million lawyers every month. It covers the trends, people and
finances of the legal profession from Wall Street to Main Street to Pennsylvania Avenue.

ABAJournal.com features breaking legal news updated as it happens by staff reporters
throughout every business day, a directory of more than 3,500 lawyer blogs, and the full
contents of the magazine.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

• Email This
• Print
• Comments
• Trackbacks
• Share Link

The American Bar Association’s eLawyering Task Force has compiled a draft set of best practice guidelines for legal document providers, which can be downloaded here*.  

An increasingly popular – and controversial – category of service providers are those that supply customer-specific documents over the Internet, using interactive software and/or human resources, without purporting to be engaged in the practice of law. There are literally hundreds of these legal documents Web sites. More of these legal document Web sites launch every month, of not every week on the Internet.

These Web sites include for example:

• courts and government agencies
• physical form suppliers, such as Blumberg
• packaged software, such as Quicken’s Will Maker or Broderbund’s WillWriter
• online form sites, such as US Legal Forms, SmartLegalForms, DivorceLawInfo, or CompleteCase.com
• free online document repositories such as Docracy
• organizations, such as the Association of Corporate Counsel
• commercial online document preparation services, such as Koncision, LegalZoom, RocketLawyer, and WhichDraft
• nonprofit and governmental sites, such as LawHelp Interactive
• free online document generation services by law firms such as Goodwin Procter, Orrick, Perkins Coie, and Wilson Sonsini
• contract analysis sites, such as KIIAC,
• independent licensed notaries public or legal document assistants or technicians in states such as Arizona, California, and Florida
• conventional private law practices and corporate law departments
• virtual law practices, with secure client portals

The Task Force believes that there are common principles that ought to guide these legal document sites, and practices that consumers should be able to expect.  The  eLawyering Task Force  also recognizes that consumers have different levels of knowledge in meeting their documentation needs.  Some believe, for instance, that it is simply a matter of getting “the” right form, and pay little attention to careful drafting and appropriate execution.  Others have a more sophisticated understanding of options and implications. Nevertheless there should be baseline expectations that meets the needs of all kinds of users. The goal is not to issue a "seal off approval" of these legal document Web sites. The objective is to encourage these Web sites to use acknowledged "best practices" in the development and delivery of their services.

These guidelines do not take a position on whether certain document services may constitute the unauthorized practice of law in certain jurisdictions if not performed by a licensed attorney, other than to urge providers to know and observe applicable law on that thorny subject.

The primary purpose is to aid consumers in making informed decisions about what they are buying.

Comments on these Guidelines are invited. They can be submitted on the eLawyering Task Force ListServ which any lawyer can join, Click here.

The eLawyering Task Force is having a Quarterly Meeting at he Hyatt Regency Lake Tahoe Resort, Spa and Casino on Friday, October 19, 2012 between 9:00 - 11:00 A,M,

This is an open meeting and individuals who want to submit comments on these Guidelines are invited to attend and participate.

Additional Conference details can be found here.

*(Disclosure: I am Co-Chair of the eLawyering Task Force. The Co-Chair of the Task Force is Marc Lauitsen, of Capstone Practice Systems, who is providing leadership to this project.)

------------------------------------------------------------------------------------------------------------------------------

In accordance with the   FTC 16 CFR, Part 255: "Guidelines Concerning Use of Endorsements and Testimonial in Advertising" I am disclosing that I have a material connection to some of the companies referred to in this Post. I am the Founder/CEO of  DirectLaw, a virtual law firm platform provider and SmartLegalForms, a web-based legal document provider. The opinions expressed here are my own. I did not receive any compensation from any source for writing this post. DirectLaw sponsors this blog by paying for the costs of hosting.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

I have noticed recently the launch of many lead generation Web sites for lawyers.

In a previous blog post  , I noted that lead generation sites for lawyers as one category of legal start-ups were increasing and entering into an already crowded market space. By a "lead generation Web site" I mean a third party Web site whose primary purpose is to provide qualified leads to law firms. The site may be free to users, or sell legal advice to users for a fixed fee, but the purpose is still to generate leads for lawyers. A "lead generation web site" is typically what I call a multi-sided platform - one side involves users looking for a lawyer,  and other side are the providers who offer legal services. The lawyers who subscribe to the Web site typically pay a "marketing" or "advertising" fee to get access to the leads generated by the Web site.

More mature legal generation sites are expanding their features and depth of offerings TotalAttorneys recently received of infusion of $15 million in new venture capital from Bain Capital Ventures of Mitt Romney fame. A new CEO, Paul Ford, with expertise in developing lead generation Web sites is in place providing leadership.  TotalAttorneys now gives away their Web-based practice management system for a $1 a month, to attract attorneys to their more expensive legal generation services.  At $1.00 a month this is really good value for a web-based practice management application. However, for TotalAttorneys this web-based practice management solution that was originally developed by Stephanie Kimbro, now with Burton-Law,  and her husband and acquired by TotalAttorneys, is now just a marketing strategy for their lead generation services.  TotalAttorneys now claims that it is," the leading US company providing customer acquisition for lawyers"

I am not sure that ExpertHub, owned by InternetBrands, which acquired Nolo last year,  would agree with this assessment, with its broad network of practice specific legal sites now being reinvigorated with content from Nolo. [ See previous blog post on this acquisition ]. 

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link

Just Answer is a question and answer platform that provides answers to users questions for a flat fee of approximately $30.00 per question. It turns out that one of the fastest growing categories within JustAnswer is the answering of legal questions by lawyers.  

Here are other the JustAnswer terms and conditions that apply to lawyers that participate in this service:

"Experts in the Legal categories must be attorneys licensed to practice law, and be
in good standing in at least one jurisdiction in the United States or foreign
country. Such Experts shall provide general information only, such as providing
descriptions of general principles of law, and shall not provide legal advice. In
responding to questions, Experts in the Legal Category shall not apply their legal knowledge or skills to resolve or advise on the Customer's specific factual circumstances described in the question, such as by proposing a specific course of action (other than advising the User to seek the advice of an attorney licensed to practice in the relevant jurisdiction). Experts in the Legal Category shall not form an attorney-client relationship on the Site."

To be qualified to answer questions as a lawyer within the JustAnswer platform, the lawyer has to take a test in the practice area and meet other qualification standards.

Disclosure: I answer legal questions on the JustAnswer.com website in my capacity as an attorney and a member of the Maryland Bar.

The Website is very well executed. Users can select from a panel of lawyers that are online at the time that the question is asked. You can name your price - indicate what you are willing to pay for an answer. You can see the credentials of the lawyers and their track record in answering questions, communications are secure and confidential, and the user can indicate the urgency of the answer, and the level of detail required. Answers are 100% guaranteed. If you are not satisfied you get your money back. You can select the State that you are located in, so answers can be state specific. Most questions are answered within minutes.

I have yet to see a state bar association offer such a service with the same level of Website sophistication and quality control.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

David R. Johnson, a Visiting Professor at the Institute for Information Law and Policy and New York Law School, has written a new thought piece for the World Future Society on how the digitization of law changes the nature of law. Building on a theme first articulated by Ethan Katsh in his seminal work on The Electronic Media and the Transformation of Law (Oxford University Press, 1991).  Katsh speculated that digital technologies would change our ideas about what the law actually is. Johnson extends the analysis and notes that "Katsh's speculations are only now becoming right-in ways that not even he predicted." I am indebted to Katsh as when I first read his book in 1991, in pre-internet days, it set me off on a journey and a path that I am still pursuing to this day. I underestimated that time that it would take for these predictions to become a reality by about two decades!

Johnson envisions a future where there will be a proliferation of expert systems developed by lawyers that will enter into dialogues with clients and consumers that will provide answers to legal questions at low cost and at scale. He sees law becoming conversational and dynamic, rather than static. Legal documents becoming wholly interactive. Statutes will also become dynamic with interpretations of language build into the code itself.

In an environment where law is conversational, the meaning of a term or rule will become less obscure and ambiguous, so that disputes will be resolved based on the facts, rather than what a particular term means.

Johnson predicts that that:

"As law becomes conversational code, we will talk to it directly. Some people may not get the answer they like. so lawyers will always need to be around to provide comfort or help formulate alternative plans for those who can afford them."

The tools to create such "expert systems" are getting to be easier to use. Neota Logic, an expert systems authoring tool company, collaborated this year with New York Law School and Georgetown Law School in a project to train law students to help students build expert legal systems in the context of  courses offered by both law schools. I have reviewed these student projects and I can tell you that they are quite good and useful aids to decision-making. Here is a video that describes these projects. These students are learning skills that will enable them to become a new kind of legal professional that creates systems that can have wide distribution, and as Johnson points out a potentially a new kind profitable law practice.

(Richard Susskind , another one of my mentors to whom I owe a great intellectual debt, also predicts the rise of a new class of legal software engineers, in his seminal book on The End of Lawyers).

It will be interesting to see how long it will take for Johnson's predictions to become a reality. (Probably another two decades!) One constraint  that we know of, is that it takes capital to build any kind of a digital application, because it takes time to build, and if you are spending time building a digital application, you are not billing hours to clients.

It is for this reason for example. that although we make our document authoring system available for free when a lawyer subscribes to our DirectLaw virtual law firm platform , less than 5 lawyers out of hundreds of law firm subscribers have elected to automate their own legal documents.

Perhaps the current generation of lawyers simply don't possess the skills to do this kind work - a problem that some law schools are trying to address. See Reinvent Law at Michigan State Law School. Change comes very slowly to the academy, so I would not expect a new cadre of legal software engineers to available soon.

For those that acquire these new skills, I think they will find themselves in demand - not by law firms - but by disruptive law start-ups, privately-financed companies, that will be the source of these new legal expert system applications.

You can download the entire Johnson article here.

-------------------------------------------------------------------------------------------------------------------------------

In accordance with the   FTC 16 CFR, Part 255: "Guidelines Concerning Use of Endorsements and Testimonial in Advertising" I am disclosing that I have a material connection to some of the companies referred to in this Post. I am the Founder/CEO of  DirectLaw, a virtual law firm platform provider.. The opinions expressed here are my own. I did not receive any compensation from any source for writing this post. DirectLaw sponsors this blog by paying for the costs of hosting.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

LawPivot, is a Silicon Valley legal industry start-up,  a new breed of online legal advice Web site that provides legal answers through a network of attorneys. Sometimes the legal advice or legal information is free like AVVO and LAWQA,  and sometimes you pay a fee, which LawPivot and JustAnswer require. See more:  American Bar Association Journal article on LawPivot.

I had a technical, corporate legal question that I needed a quick answer to, so I decided to try LawPivot's Confidential Question and Answer Service, pay their fee, and see how well it worked. I knew that LawPivot has a pretty extensive panel of corporate lawyers, so I thought this would be a good starting place. Because my question involved a technical question, I think  if I had asked our regular outside counsel I probably would have generated a $450.00 legal fee and a long memo -- which I really didn't need at this point.

Instead for  $49.00, I received within 24 hours 8 answers from as many lawyers.  Of the 8 answers I received, I marked 5 as not helpful for my purposes. But 3 were very much on target, and one answer was exactly what I was looking for.

This service is "Confidential", but no attorney/client relationship is created, and the answers are supposed to be "legal information" rather than "legal advice",  The reality is that what I received was pretty good legal advice that applied to the particular facts of my situation.

Overall the site was very easy to use and I was very satisfied with the result. I think that even if I were not an attorney with experience in corporate law, I would have been able to recognize which answer to my question was the correct one. I am not sure that this would always be the case, so my conclusion is that this kind of online service for the average user is a starting point for more research, not an end point. The service helps you make a decision whether you need to retain an attorney for additional assistance. This is a good example of the use of the Internet to deliver "unbundled" legal services at an affordable fee.

The Ethical Issues

LawPivot makes clear that they do not share any fees with an attorney. The site also makes clear that it is not a legal referral service and that it does not promote any particular attorney. LawPivot properly avoids making claims about the lawyers in their network such as they are "the best", highly specialized in their fields", or the most experienced lawyers in their specialty.

Apparently, lawyers are ranked by an algorithm  on how well and promptly they answer questions. Whether this technology violates traditional legal referral rules, which prohibits profit-making organizations to be in the legal referral business, is the subject of a future blog post. 

Is LawPivot, as a non-law firm, permitted to charge a fee for legal advice? Is this the unauthorized practice if law? Not if the fee is paid by the user for the use of the Web site, and not for the legal answer or legal advice itself. There is a bar association opinion that holds that a Web site may charge a user for the user of the Website, when purchasing a legal service, and that this fee is not a fee for the legal service itself. See for example, Nassau County OK's Tie with Americounsel.

In the AmeriCounsel scheme, which dates back to 2000, the Nassau County Bar concluded that:

"[S[ince AmeriCounsel does not charge attorneys any fee and since AmeriCounsel does not "recommend" or "promote" the use  of any particular lawyer's services, it does not fall within the purview of DR 2-103(B) or (D). Rather, AmeriCounsel is a form of group advertising permitted by the Cod of Professional Responsibility, and by ethics opinions interpreting the Code."

I think this opinion is still good law.

However, LawPivot has been forced to create a business model, based on a work-around of a Rule of Professional Conduct that no longer serves any useful purpose.

In my opinion,  a regulatory scheme that enables private companies to take a share of the legal fee for referring client work to law firms would have a positive benefit.  It would result in providing more resources to the Web provider so that it could develop more nuanced quality control systems, more extensive marketing programs,and invest in innovative client referral systems. The prohibition on splitting fees between non-law firms and law firms doesn't serve the purpose for which the rule was originally designed -- to discourage "ambulance-chasing."

In fact, the ABA's Standing Committee on the Delivery of Legal Services most recently sent a letter to the ABA Ethics 20/20 Commission recommending that Rule 7 (2) (b) be eliminated. 

Model Professional Rule (7) (2) (b) states:

(b) A lawyer shall not give anything of value for the recommendation of the lawyer’s
services except that the lawyer may: (my emphasis).
(1) pay the reasonable costs of advertisements or communications permitted by this Rule;
(2) pay the usual charges of a legal service plan or a not-for-profit or qualified lawyer
referral service. A qualified lawyer referral service is a lawyer referral service that has been
approved by an appropriate regulatory authority;
(3) pay for a law practice in accordance with Rule 1.17;

Comment [5] to the Rule merely states, “Lawyers are not permitted to pay others for channeling professional work."

The Standing Committee's letter to the Ethics 20/20 Commission states: 

"The comment provides no rationale for this conclusion, which frankly is a position swallowed by the Rule’s exceptions. Law directories have channeled legal services for well over a hundred years. Lawyer referral services have channeled work to lawyers since the mid-twentieth century. Prepaid legal services have channeled work to lawyers for nearly 50 years. Public relations and marketing have joined lawyer advertising as vehicles that channel work since the Supreme Court ruled that states could not prohibit lawyer advertisements in 1977. Law firms providing services to corporations and institutions have in-house marketing staff, some of whom are paid well into six-figures, for the purpose of channeling professional work to their firms. And most recently, we have seen a proliferation of online third-party intermediaries that in some instances defy categorization as advertisements or referral services. Intermediaries are discussed in detail below, but suffice it to say here that the channeling of professional services in the marketplace in and of itself is not inherently inappropriate. Collectively, these mechanisms create access to legal services for potential clients of all economic strata. They are, however, most important for those of moderate or middle class individuals who infrequently use of the services of a lawyer and need the information provided by these resources to help them make the decisions about the legal services most appropriate for them. "

The Ethics 20/20 Commission gave no serious consideration to the Standing Committee's proposal so this reform is dead for the foreseeable future -- unfortunately. 

The problem with Rule (7)(2)(b) is that it has been made irrelevant by the Internet and arguably is a deterrent to innovation in devising new ways of enabling consumers to access legal services. This is a Professional Rule that chills innovation, rather than preventing consumer harm.

AmeriCounsel failed as a company because it could not generate sufficient cash flow as it was limited to charging a relatively small administrative fees for use of the Web site, as distinguished from earning larger fees that could result from channeling work to lawyer's in their network.

I hope that LawPivot does not suffer the same fate as AmeriCounsel.
 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

For those of you following the LegalZoom IPO, which was scheduled for Friday, August 2, 2012, it was postponed for the usual stated reason that market conditions were not suitable. This really means that the offering could not get off at the $10-$12 price per share that the selling shareholders wanted. Instead the maximum price institutional buyers were willing to pay was reportedly $7-$8 a share, which would have reduced the valuation of the company by one-third. The reasons that were given for this lower valuation were comparisons with other transactional-based companies like www,ancestry.com which is selling at a price to earnings ratio of 21.73, compared to a projected price to earnings ratio for LegalZoom of over 40x.

Perhaps the research analysts on the buy side perceived a more fundamental flaw in LegalZoom's business model.

The LegalZoom product offering at its core is still the provision of legal forms offered up to recently, without the option of the legal advice from an attorney. The pricing for these legal forms are comparable to the pricing of paralegal prepared  legal forms offered for example by the many legal technicians in the State of California who work with consumers off line in face-to-face meetings, like lawyers.  

Thus for example LegalZoom charges $299  for no-fault divorce forms, and $139 for name change forms. Many virtual law firms now offer comparable legal form services but bundled with legal advice. See for example www.morrisfamilylaw.com  where a no-fault divorce is offered with the full accountability and the backing of an attorney for a fee of $275. For another example see FlashDivorce a virtual law firm service that offers  no-fault divorce in four states for $199.

Law firms are going virtual and are finally figuring out ways to compete against LegalZoom on its own playing field. To be sure, these small law firms don't have the capital and marketing budgets of a LegalZoom, but as thousands of these law firms eventually migrate to delivering online legal services they will not only offer a better value to consumers, but they will constrain LegalZoom's growth and dominance.

The problem with the LegalZoom pricing model is that automated legal forms are digital goods whose marginal cost is zero. Eventually a pure digital good has a marginal cost of zero and will be made available a price which is either free or close to free. It is for this reason that a song, for example, on iTunes cost only .99. [I wrote about this idea previously at Legal Forms for the Price of a Song on iTunes? which identifies other legal start-ups moving into the free legal forms market space.]

LegalZoom itself has aggressively argued that it services are essentially software-powered and its document assembly processes are publications entitled to the same First Amendment protections as other kinds of commercial speech. Its products are therefore, it argues, immune from organized bar claims that their services constitute the unauthorized practice of law. By its own admission, the professional review of legal documents by LegalZoom is very limited and does not constitute legal advice.

If this is the case, once consumers figure out that the product that they get from LegalZoom is essentially the same digital form that can be purchased from many automated legal form websites at a price which is 10% of LegalZoom’s existing selling prices,  -LZ's revenue should implode, in theory. I say, "in theory", because LegalZoom has done an excellent job in persuading consumers that what they have to offer is a better service than what they get from the typical lawyer.

Because of the overwhelming advertising that LegalZoom pushes into multiple channels the LegalZoom brand  is likely to remain intact, because the truth about the nature of LegalZoom's product offering is obscured by their aggressive advertising messaging.

For many consumers,  if a service does not appear on page one of a Google search, they will look no further, and the opportunity to avoid using a lawyer in solving a legal problem is often the controlling decision factor.

For example, many consumers are still unaware of the fact that the US Legal Services Corporation has subsidized the creation of free automated legal forms available to people of all income levels that are available for  free from a network of state-based legal information and legal document web sites. These free legal form services have no budget for marketing, certainly nothing like the $40 million a year that LegalZoom's spends on marketing and advertising.

These legal forms are  fully automated, web-enabled, automated,easy to use, and often employ a visual graphical interface to help users navigate through online questions and courthouse procedures. The program is not limited to low- income people.

Even without a marketing budget, last year more than 500,000 legal forms were downloaded by users in 34 states using this program. This transactional volume already exceeds LegalZoom's annual volume and it is increasing as more legal forms are automated and the number of states participating in this program increases.

State courts have also jumped into the free legal forms market in response to the demands of pro se filers looking for free legal help. See for example Online Court Assistance in Utah and Maryland Family Law Forms.

Even the US Bankruptcy courts are prototyping a free online set of Chapter 7 bankruptcy forms to be used by self-filers. This service will eventually be rolled out nationwide to every US Bankruptcy Court Website.

I can think of other ways that the development and distribution of free automated legal forms can be monetized, without the need to charge a transactional fee to the consumer. (This is the subject of a future blog post).

Free legal forms are here and the supply is expanding. Lawyer's won't like the fact, any more than LegalZoom, that this development will disrupt their business models. The reality is that both kinds of suppliers of legal solutions will have to accept the challenge of the accelerated pace of technological change.

-------------------------------------------------------------------------------------------------------------------------------------

In accordance with the   FTC 16 CFR, Part 255: "Guidelines Concerning Use of Endorsements and Testimonial in Advertising" I am disclosing that I have a material connection to some of the companies referred to in this Post. I am the Founder/CEO of MyLawyer.com, a smart legal forms Website, and Founder/CEO of DirectLaw, a virtual law firm platform provider. The opinions expressed here are my own. I did not receive any compensation from any source for writing this post. DirectLaw sponsors this blog by paying for the costs of hosting.

LegalZoom is a trademark of LegalZoom, Inc.

• Email This
• Print
• Comments (3)
• Trackbacks
• Share Link

The ABA Commission on Ethics 20/20 Working Group on Uniformity, Choice of Law, and Conflict of Interest has identified some issues related to defining limits on Virtual Practice under Rule 5.5. Model Rule 5.5 (b) (1) requires a lawyer to obtain a license in a jurisdiction if the lawyer has an office or a “systematic and continuous” presence there, unless the lawyer’s work falls within one of the exception identified in Rule 5.5 (d). The Commission has identified as a potential problem the situation where lawyers are physically present in one jurisdiction, yet have a substantial virtual practice in another. The problem is “that it is not always clear when this virtual practice in a jurisdiction is sufficiently “systematic and continuous” to require a license in that jurisdiction.”

This comment could be interpreted to mean that lawyers who have a virtual law practice, mostly solos and small law firms, may have an issue about whether they need to “secure a license” in the other jurisdiction.

This is a solution looking for a problem where none exists as far as the typical virtual law practice is concerned.

A virtual law practice is commonly associated with the online delivery of legal services. Lawyers engaging in virtual practice are only able to provide legal work that pertains to the laws of the state(s) in which they are licensed or they are in violation of 5.5. Whether or not their delivery methods or work with the clients takes place in a physical location other than where the lawyer is licensed, the key factor is that the lawyer is practicing the law of the jurisdiction they are licensed in and to which the client’s legal needs pertain. A law firm will have a website that anyone in any jurisdiction may find and read online. The lawyer places the appropriate disclaimers on the website and makes it clear in any registration process for a client portal that the law firm is only permitted to practice the laws of a certain jurisdiction. This is not misleading to the public nor is it the unauthorized practice of law.

For example, a client living in Florida who owns real estate in Maryland should be able to work online with a lawyer licensed in Maryland to handle the matter. That lawyer licensed in Maryland, whether he or she lives in Florida or New York, is not creating a “systematic or continuous presence” in the state of Florida to subject the lawyer to Rule 5.5(b). Contacts for the purpose of determining “systematic and continuous presence” in the context of determining “personal jurisdiction” have nothing to do with a virtual law firm that limits its practice to residents of the state in which it is primarily located, or serving out of state residents who have matters that are within the state where the attorney is licensed.

When an attorney creates a virtual law office, the gateway to the virtual law office is a Website that any other law firm would create and which is available for viewing by anyone in the world. The difference is the addition of a secure client portal where the prospective client and existing clients will register for assistance. The virtual law office Website states throughout where the attorney is licensed to practice law. The terms and conditions or disclaimers on the site should clearly explain where the attorney is licensed to practice law. This is no different than a traditional law firm Website.

Only residents of the state where the attorney is licensed, or out of state residents who have a legal matter within the state are permitted to register as clients of the law firm. Often the attorney may have the online client sign a traditional or digital engagement agreement that provides notice of which state’s law will apply should there be any dispute.

In addition, some virtual law office platforms have jurisdiction checks so that in order to register, the prospective client must provide their address. If the client is not physically located in the state, a notice is sent to the attorney reminding the attorney that before the client can be accepted as a client of the firm the attorney has to determined that the matter to be handled is a legal matter within the attorney’s jurisdiction. A notice is also sent to the client, reminding the client that the attorney is only licensed to practice law in the state in which the attorney is located. A client’s presence in a different geographic location than his or her attorney does not mean that a state’s ethics rules should come into play for the attorney handling a project that is unrelated to that state’s laws. Just because an attorney’s Website can be viewed in another state, doesn’t mean that a state should have disciplinary authority over that attorney because the Website and the law firm are not offering to provide “legal services” in that state. The alternative logic would suggest that a law firm should be available to be viewed only in the state in which the lawyer is a member of the bar – a truly absurd result – not worthy of further discussion.

To summarize: There are two separate questions about when a UPL claim would arise. First, what contacts does a state require to establish presence when the lawyer is not admitted there but is working with a client who physically resides in that state? Second, in the situation where the lawyer is admitted to practice in that state, but the lawyer physically wants to reside outside of that jurisdiction, what are the contacts that would need to be required to establish presence in the state where the lawyer is licensed? Again, the answer to both questions should be that the legal work that the lawyer provides to the client is what matters rather than where either the client or the lawyer is physically located. 

Stephanie Kimbro contributed to this post and see:  What constitutes virtual presence?  see also Carolyn Elefant's post on this subject on her MyShingle Blog.

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link