LegalZoom is a California-based company that offers on-line paralegal document preparation services on a nationwide basis. A nationwide advertising program, financed in part by a relatively large capital investment from Polaris Venture Partners, is now underway in major national media markets with the goal of branding LegalZoom as the leading legal services web site on the Internet. With Robert Shapiro of OJ fame, as the company’s leading spokesperson, LegalZoom uses the tag line: "We Put the Law on Your Side", a claim that the company could not make if it were a law firm under the marketing roles that govern the legal profession in all states. LegalZoom, as it is not a law firm, is not bound by these rules, Nevertheless, the company claims to be the leading legal web site. Is there something wrong with this picture?
When a customer arrives at the LegalZoom web site they are presented with a menu of legal documents that are sold for a fixed price. The documents are common legal documents that range from wills, powers of attorney, living wills, and no-fault divorce, on hand to business documents such as incorporation, trademark, and copyright on the other. The customer completes a web form and pays with a credit card. From the data inserted by the customer into the web form, a paralegal aided by document assembly software of some kind, generates a legal document or form, which is returned to the customer in paper format by regular mail.
Under long standing bar rules that are operative in every jurisdiction in the U.S, LegalZoom as a non law firm, cannot give legal advice of any kind, cannot modify a customer’s answers in any way, and cannot do any custom drafting that is responsive to a customer’s particular set of facts. The company in a very fine print disclaimer makes clear that it is not a law firm and that" "LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies. " The company does do a review which has to be limited to making sure that all answers are completed in the Questionnaire, that the spelling is correct, and minor tasks that are limited to very narrow role of being a proof-reader of the customer’s data entries.
The company claims that: "With LegalZoom’s lawyer-free service, you can save up to 85% off the rates an attorney would charge for the same procedure. " This comparison misrepresents the contribution that an attorney makes when serving a client. It suggests that the LegalZoom service is equivalent to the services of an attorney, when it clearly isn’t. The representation suggests that a consumer will receive the same result that they would get if they went to an attorney, which is clearly not the case. Moreover, there are many attorneys who charge fees which compare favorably with LegalZoom’s fee structure, so the fees that lawyers charge for comparable transactions which are published on the LegalZoom web site are true of some law firms, but not all solo and small firms.
LegalZoom’s prices are in fact not cheap, when you consider that with a bit of effort searching on Google a customer can find identical forms on the Internet that are either free, or which are sold for a modest fee, when compared to the "document preparation fees" that LegalZoom charges for very common legal documents.
But if the role of LegalZoom is really limited to data input and some minor editing and proofing, where’s the beef?
There is no doubt that this service concept has been successful, because the company has claimed to have served 500,000 customers. LegalZoom’s customers may believe that they are getting a service that is equivalent to the service that they would get from an attorney.
As a disruptive innovation, LegalZoom is demonstrating that there is room for competition in the delivery of legal services and that there are other way’s to solve people’s legal problems than going to an attorney, despite the very real limitations of the LegalZoom service.
It will be interesting to see how the organized bar responds to LegalZoom as the company becomes more dominant and continues to eat away at the legal profession’s dominance in helping people solve their everyday legal problems.