Greedy LawyersUnder the guise of consumer protection, North Carolina has passed new legislation, at the direction of the North Carolina Bar, that imposes restrictions on distributing self-help legal software over the Web.  Rather than protecting consumers, this legislation is a frightened response by the North Carolina Bar to protect their incomes from the impact of advances in Internet technology that provide new ways for people to solve their legal problems at low cost.

The restrictions are so severe that the result is to deprive North Carolina’s citizens of low cost solutions to solving many legal problems, inhibits innovation in developing legal solutions by an emerging self-help legal software industry, stifles competition to attorneys from self-help legal software publishers in the State of North Carolina, and will eliminate any possibility of private investment in self-help legal software development.

The new legislation can be found here: http://www.ncleg.net/Sessions/2015/Bills/House/PDF/H436v5.pdf

Also see also previous blog post on efforts by the North Carolina Bar to stifle competition..

Continue Reading North Carolina Restricts the Distribution of Legal Self-Help Software to Consumers

Legal Start-Ups and the ABA Commission on the Future of Legal ServicesThe American Bar Association Commission on the Future of Legal Services was created last year by then ABA President William C. Hubbard to explore ways to meet the legal needs of the underserved. The Commission does its work by holding public hearings on an issue, creating discussions and conversations among different stakeholders, issuing Issues Papers, soliciting comments on these papers, and depending on the issue  —  proposing new rules or policy approaches sometimes approved by the ABA’s House of Delegates where they become “official”. Some policies will be adopted by State Bar Associations which govern the conduct of lawyers and which regulate the legal profession and the legal services industry. As discussed below I believe that the ideas discussed within the Issue Papers will have an immediate impact on the ability of some “legal start-ups” to raise investment funds for their companies.

Issue Paper on Unregulated LSP Entities and “Legal Start-Ups”.

An Issues Paper was released  by the Commission on the Future of Legal Services on March 31 which solicits comments from the public and the profession on an approach to impose a regulatory regime on “non-regulated legal service providers entities” such as independent legal technician and document preparers serving the public directly, on-line automated legal document preparation service companies, legal software publication companies, and other “non-lawyer” entities that provide legal solutions to consumer. Many “legal start-ups” fall within the scope of the Issues Paper. The Issues Paper can be viewed here.  The deadline for submitting comments is April 28, 2016.

The way the paper is written it could include in its concept of an “unregulated LSP entity,” legal software application providers (“legal software publishing companies”)  that provide legal solutions directly to the consumer as an alternative to the services that could be purchased from a lawyer. Examples might include: automated document assembly companies, legal expert systems developers, intelligent calculators, legal decision tools, intelligent data bases, consumer- centric legal analysis tools, and automated legal advice applications.  New rules could apply to many legal software publishing entities from larger companies such as http://www.nolo.com; http://www.avvo.com; and http://www.rocketlawyer.com to smaller publishers and providers such as http://www.neotalogic.comhttp://www.shakelaw.com,  http://www.completecase.com; and http://www.lawgeex.com.  Our market research indicates there are hundreds of these new entrants to the legal service marketplace offering legal software applications that enable consumers to do legal tasks themselves.

There are also important developments within the courts, government agencies, and the national legal services program designed to provide software powered legal solutions for use directly by consumers.

All of these entities provide “software only solutions” – not services, so as a category I consider them to be “software publishers”.  [ Disclosure: I am the CEO of SmartLegalForms, Inc., which is a legal software publisher ].

Services vs. Legal Software Applications

My colleague, Marc Lauritsen, has written extensively and in-depth about how regulating legal software publishers would be unwise, and probably unconstitutional as a prior restraint under the First Amendment of the Constitution. His analysis of the wisdom and the right of the state regulation of legal software publishers and software developers can be found in these law review articles:  Liberty, Justice, and Legal Automata, 88 Chi-Kent L. Rev. 917 (2013)  and Are We Free to Code the Law? – August 2013 Communications of the Association for Computing Machinery . Other commentators have cautioned about extending the regulation of legal services beyond the legal profession itself.

The Role of Private Capital in Legal Service Innovation

One bright spot in the move towards innovation in the delivery of legal services has been the interest by private investment and the venture capital community in legal start-ups.  See:
http://www.lawsitesblog.com/2016/04/number-legal-startups-nearly-triples-two-years.html. Legal software application development is a capital intensive process. Very few solos and small law firm have access to capital that can be dedicated to creating new applications that translate into low cost solutions for the under-served.  It is for this reason that most innovation in the delivery of legal solutions to consumers has been outside of law firms and within private companies or the public sector. (except within Big Law firms where internal capital resources are available). Capital is the fuel of innovation.

Regulation is a Barrier to Innovation: Bye Bye Legal Start-Ups

I predict that if the ideas proposed in the Issues Paper are translated into policies and regulations the impact will be to dry up sources of investment capital for legal start-ups. The regulatory constraints that are being discussed to protect the consumer, would make it impossible for one category of legal service provider – legal software companies that serve the public directly – to operate a sustainable business. These requirements include among others:

  • registration by the legal software publishing company in every state that the company serves in;
  • waiver of “as-is” liability in Terms and Conditions Statements;
  • enabling consumers to sue the publishing company in the state where the consumer lives;
  • prohibitive insurance coverage to cover potential claims;
  • requirements that legal software companies disclose whether a lawyer is involved in the production of the software product, the name of the lawyer, and the jurisdiction where the lawyer is licensed to practice;

If I were a venture capitalist thinking about investing in a legal software publisher that intends to serve the public directly, I would be hesitant to invest now because these ideas are being floated by the Commission  and could become a reality in the not to distant future.

“Legal Start-Ups” – Speak Out

If the authors of the Commission’s Issue Paper did not intend that “unregulated LSP entities” should include legal software publishers, I suggest that they make this clarification now. If they authors intended  that”unregulated LSP entities” include legal software publishers and legal application develolpers then this is alarming.

If you are a legal software publisher that serves the public directly with a legal solution, I suggest that you make your views known by commenting on their Issues Paper directly.

 

 

 

 

Th

AVVOAvvo – the world’s largest online legal directory –  now enables lawyers to offer legal services directly to consumers through their platform. Beginning last year, Avvo  offered the opportunity to consumers to get legal advice by telephone for a flat fee of $39.00 per telephone call.

Now Avvo has launched a “law store” that offers many fixed fee legal services from legal document review to no-fault divorce that ranges in price from $149.00 to $995.00. The legal fee is passed to the lawyer through the Avvo platform and Avvo charges the law firm a marketing fee for connecting the firm with a client. [For a detailed discussion of how this service works see Robert Ambrogi’s blog post on this subject at LawSites].

Today’s legal consumer’s want legal services from their lawyers on demand. In a previous post I discussed the coming Uberization of Legal Services a trend that now seems to accelerate with the launch of this service.

Consumers want from their lawyers:

  • fixed and affordable fees;
  • the opportunity to have more control over the relationship between lawyer and client;
  • purchasing just the legal services they want and no more- often called the “unbundling of legal services”;
  • speed and convenience;
  • transparency.

Solos and small law firms need help in identifying prospects and converting them to clients without spending a fortune on client acquisition.

The new Avvo Legal Service offers these benefits to both the consumer on the demand side, and the law firm on the supply side.

The Avvo Business Model

Avvo is evolving into a classic platform business model like UBER, Facebook, Airbnb, and eBay:

A platform is a plug-and-play business model that allows multiple participants (producers and consumers) to connect to it, interact with each other, and create and exchange value.” –Platform Thinking.

It’s important to note that the single most important attribute of a platform business: a platform does not partake in any transactions or interactions with its customers. This differs greatly from the traditional “pipe” model, where businesses ( e.g., the law firm) transact directly with customers, and and services flow from law firm to client. In the Avvo model lawyers still deal directly with their clients, but the entire relationship, including the payment of legal fees, is facilitated by the platform technology.

The platform business model can help with two major problems facing solos and small law firms: (1) liquidity; and (2) efficiency. By providing a large source of potential clients with legal issues that must be solved quickly, solos and small law firms can convert dead time into revenue. The platform can also provide on-line tools to law firms that enable them to provide legal services efficiently and still maintain reasonable profit margins. Solos and small law firms are challenged to develop these on-line tools and applications on their own. The platform provider can provide these tools at a cost which is much less than the firm can develop on their own.

We know from our experience in working with solos and small law firm’s through our own DirectLaw Virtual Law Firm Service that the pain point for many law firms is client acquisition.  Most law firms don’t have enough clients. Marketing directly to clients online —the pipe business model — has proved to be a challenge. Now comes AVVO with its huge base of consumer traffic. Avvo claims that over 8 million visitors to its web site a month with 50% having an urgent legal problem. Solos and small law firm can tap into this huge potential market with no up-front cost. Prospects and clients acquired through the Avvo platform through the consumption of fixed price legal services can result in building trusted relationships with clients that lead to the purchase of additional legal services outside of the Avvo platform. Law firms should think of the Avvo on-line fixed fee legal service as a way to market their full-service practice.

Solos and small should explore testing out the new Avvo Service as another low cost route to market. Lawyers typically wait until early adopters in the legal profession try out a new service or technology first before leaping in with both feet. Here is a good example where being early, getting good reviews, and becoming experienced with providing services over the Avvo platform can cause higher platform visibility resulting in more powerful market positioning.

access_to_justivceOne of the obstacles to the development of innovative software solutions that automate part of the legal service delivery process resulting in lower, more affordable legal fees is the absence of capital. Traditional methods of legal service delivery based on hourly billing rates out of reach for low and moderate income clients.  Capital investment is required to create innovative web-based software solutions that can enable low and moderate income clients to either solve legal problems on their own as pro-se litigants, or to enable law firms to offer legal solutions at a more affordable price point.

The major obstacle to making more capital available to law firms, is the prohibition on investment in law firms by non-lawyers enshrined in the ABA’s Model Rules of Professional Responsibility and replicated in the state rules of professional responsibility that regulate lawyers in their state. [ See Rule 5.4 – Professional Independence of a Lawyer ].

There has been little innovation within solo and smaller law firms to develop client-centered, web-based applications that provide a low cost solution to low and moderate income clients. Instead innovation is centered in the vendor community that provides tools to law firms, usually as a SaaS service for a monthly subscription fee. A good example is our own DirectLaw virtual law firm platform that provides a client-centered document automation application, and other tools that enables a law firm to unbundled legal services for a fixed fee to clients online. While the value of innovation outside of the law firm, within the vendor sector of the legal industry, is not to minimized, it is the lawyer within the law firm that has the most nuanced view about what their clients need and want. The lawyer within the law firm also has the primary interest in figuring out how to develop and manage the delivery of legal services so that for certain kinds of legal problems a scalable, volume-based business model can be implemented.

Innovation requires capital. It is capital intensive to develop software applications and new delivery systems for legal services. Solos and small law firms that serve individuals and families do not have access to capital. Whatever innovation is taking place in the delivery of legal services is happening outside of the legal profession in organizations like LegalZoom financed by venture capital, or the within legal aid programs funded in part by the Technology grant program within the Legal Services Program, or outside of the United States. [See also, blog post from Lexicata – How Law Firms Can be More Like LegalZoom ].

There has been much controversial discussion with the legal profession on modifying the ownership rules that apply to law firms, with little result. For example, the American Bar Association created last year a Commission on the Future of Legal Services to address the access to justice problem, under the under the leadership of then ABA-President William C. Hubbard.   The Commission convened a National Summit on Innovation in Legal Services, in May, 2015 where private investment in law firms as a prerequisite to innovation was on the agenda. But I have yet to see any progress on this issue within the American Bar Association. Unlike other countries, private investment in law firms as a way to develop new ways of serving a latent market for legal services is dead on arrival when it reaches the ABA’s House of Delegates, although 80% of the U.S. population can’t afford the cost of legal services and is unserved by the legal profession.

The evidence we have seen in the United Kingdom, where the legal profession has moved towards de-regulation, and where capital can flow freely into law firms, suggests that the United States will remain a laggard in innovation in the delivery of legal services until this problem can be fixed. In the UK, LegalZoom is taking advantage of this de-regulation by becoming an ABS [ Alternative Business Structure ].  As a private company, operating in the UK, LegalZoom can offer legal services directly to the public. LegalZoom plans to use this opportunity to develop and experiment with new end-to-end legal services for consumers with the idea that in the far distant future these innovations can be imported into the U.S. legal market.

The bottom line is that you can’t really innovate without access to capital – it is the fuel of innovation. For solo and small law firms that serve people, rather than large corporations, capital is not available for innovation unless the lawyer or law firm has generated capital from their practice and makes a conscious decision to invest in software automation and web-based solutions.

An example of a law firm that has accumulated capital because of litigation against the mortgage servicing companies and the banks in the robo-signing scandal during the U.S foreclosure crisis, is IceLegal, P.A., a small law firm based in Florida. IceLegal under the leadership of Thomas Ice,  is launching its own access to justice initiative at: http://www.legalyou.com.  The firm has also created its own LegalYou video channel for educating pro-se litigants.  This is a project of the law firm (not of a private company), and will  provide low cost legal solutions to Florida residents. If LegalYou is a success it will serve a new latent market ignored by most of Florida’s law firms. LegalYou is the exception rather than the rule.

One would think that Internet-savvy, recent law school graduates would be motivated to serve a latent market for legal services by developing innovative solutions, but handicapped by large student loans they are forced into career roles that provide sufficient cash flow to amortize those loans. Risk-taking is not an option for them.

A Proposal Safe Harbor for Law Firms Serving Low and Moderate Income Clients

To increase the flow of capital to law solos and small law firms who wish to serve just low and moderate income clients with automated legal solutions I propose that:

  • The American Bar Association amend Rule 5.4 to permit private investment in just those law firms that serve low and moderate income clients exclusively.
  • Personal injury and other contingent fee practices would be excluded from this exception as capital is self-generating for successful firms in these practice areas.
  • To comfort to those who are concerned that the independence of the lawyer is compromised by this proposal, the law firm must remain at least a 51% owner of the law firm. Private investors can be minority shareholders only.
  • It is relatively easy to create an income generation screen to capture just low and moderate income clients for the law firm, and exclude those of higher income. The data from this intake process can be archived and audited to comply with the exception to the rule.

Creating this exception opens up the opportunity for smaller law firms to take advantage of crowd-funding opportunities, the angel investor community, and the new SEC rules that permit crowd-funding investment. Further, the rich relatives and friends (if they exist) of a young lawyer could fund the new lawyer’s law firm, and get a return on investment, without the lawyer risking disbarment because of violation of the 5.4.

An argument can also be made that enabling law firms that serve primarily corporate entities can create capital on their own without additional incentives and should not be able to take advantage of this safe harbor. Most large law firms represent corporate entities (banks, insurance companies, health care organizations, drug companies,  manufacturers, financial organizations) whose legal positions are opposed to many consumer interests.  These firms should have to use their own capital to become more efficient so as not to tip the balances against the consumer even more than it is.

One would think that this modest proposal to enable innovation designed to increase access to the legal system for clients who can’t afford the high cost of legal fees would be an idea that that American Bar Association and state bar associations might entertain or even discuss.

However, given that the structure of regulation of the legal profession is controlled by the legal profession, this idea will probably be dead on arrival.

 

SOFTWARE_EATS_

Marc Andreessen quipped in 2011: “Software is eating the world”.

We are already seeing how Andreesen’s prediction is working its way through the legal profession.

Predictive coding continues to make inroads in eDiscovery demonstrating that software analysis is more accurate and faster that hordes of associate lawyers clicking on documents on screens. Companies such as Recommind are leading the way.

Last week I attended  Conference at Georgetown Law School, co-sponsored by the ABA Journal, called: From Revolution to Evolution: Digital Tools in Legal Practice where a variety of new legal applications were discussed that replace the labor of an attorney.  In the hands of an attorney , this software results in faster, cheaper, and better legal work.

One panel, that I was honored to participate in featured Kingsley Martin from KMStandards and Noah Waisberg from KiraSystems formerly DiligenceEngine. Both demonstrated software applications that expedited the document review process in transactional work and rationalized the document creation process. Like predictive coding in eDiscovery these software tools will replace some of the work of associate lawyers in larger law firms leading to a smaller employment force that works more effectively. As Mr. Martin points out — legal software can be good, and lawyers can be good, but lawyers using legal software are best.

The day before this conference,  Georgetown Law School, under the leadership of Tanina Rostain , held their Iron Tech Lawyer competition, for the third year in a row.  Law students show case legal expert systems that have created using the NeotaLogic legal expert systems platform .This student work is impressive as I witnessed software applications generating legal advice to complex questions with more accuracy that your average lawyer and at the speed of light.

We are still at the beginning of the beginning of these developments, but the pace of change is likely to be more rapid than we think. If you want to become more aware of an impending tsunami of legal disruption read John O. McGinnis and  Russell G. Pearces’ law review article in Fordham Law Review, titled, The Great Disruption: How Machine Intelligence Will Transform the Role of Lawyers in the Delivery of Legal Services

On the other end of the legal spectrum from Big Law, there is an estimated $40 billion latent market for consumer legal services yet to be served by lawyers. In 2013, two-thirds (66%) of a random sample of adults in a middle-sized American city reported experiencing at least one of 12 categories of civil justice situations in the previous 18 months. The most commonly reported kinds of situations involved bread and butter issues with far-reaching impacts: problems with employment, money (finances, government benefits, and debts), insurance, and housing.  Most consumers handle these problems on their own, or do nothing.  Moderate income people rarely seek assistance from lawyers to deal with these legal problems. Either legal fees are too high or they do not understand their problems to be legal.  80% of the U.S. consuming public can’t afford legal fees.  This is the often discussed Justice Gap in America that is the subject of an ABA Presidential Commission on the Future of Legal Services and a National Summit on Innovation in Legal Services to be held at Stanford Law School next week on May 2-4, 2015. [See Agenda and Schedule Here. ]

Figuring out ways to have more lawyers serve this latent market at affordable prices has proved to be a challenge. My own view is that scalable solutions must be software solutions. There is ample evidence that software alone can solve the legal problems of everyday consumers. Last year 600,000 users assemble legal documents and resolved their problems without lawyer assistance in over 40 states with the support of the U.S. Legal Services Corporation through Law Help Interactive and legal services programs in those states. This number will continue to increase. Other private legal software companies, such as ShakeLaw, continue to enter the market that offer pure software solutions to the resolution of legal problems at low or no cost.

I often hear lawyers say these solutions are inferior. Last week I also attended in Chicago, an American Bar Association School on UPL and participated in a panel on UPL and new technology. I argued that since the legal profession wasn’t serving 80% of consumers anyway so we should continue to experiment with legal software solutions. There was push back from this group, with some participants arguing that automated legal advice could be the unauthorized practice of law. I argued that in the interest of access to justice we should have a safe harbor that encourages legal software development for consumers, if there were sufficient warnings to the consumer they were not dealing with a lawyer, but a software application.

One state, Texas, has famously passed such an exception to their definition of the practice of law which reads:

In this chapter, the “practice of law” does not include the design, creation, publication, distribution, display, or sale, including publication, distribution, display, or sale by means of an Internet web site, of written materials, books, forms, computer software, or similar products if the products clearly and conspicuously state that the products are not a substitute for the advice of an attorney.’

I pitched to this group of UPL officials the idea I would like to see this exception to the definition of the practice of adopted in every state. My rationale is that it would remove a potential barrier to innovation and encourage the development of Internet-based software applications that could help close the Justice Gap. The response was underwhelming.

ibm_watsonDespite these constraints, legal software will continue to eat away at the lawyer’s market share. Where there is demand, entrepreneurs will find a way.  IBM’s Watson has demonstrated that it could beat the two world Jeopardy champions- not a trivial matter.

 

jeopardy_2

More relevant a team of law students at the University of Toronto students has created ROSS on the Watson platform to conduct legal research.  ROSS is not only for lawyers. It can be used by consumers to do their own legal research.

Lawyers who deny the power of these software applications to solve legal problems, and the exponential rate of change, have their heads in the sand,

heads

 

H&R Block launched an experimental and innovative service in Texas in January to assist immigrants in completing H&R BlockUSCIS forms. The forms were powered by software and H&R Block’s role was to provide a service to assist users in completing the forms within their offices– , but no legal advice was to be provided.

It didn’t take long for the organized immigration bar to shut this service down.

Here is a report from Crystal Williams, Executive Director of the American Immigration Lawyers Association to the Board of Directors of AILA about their efforts to make sure that H&R Block would not compete with the immigration bar:

“H&R BlockAs many of you are aware, this large national tax preparer had been advertising an “immigration document service,” apparently as a pilot program in Houston. After some quiet diplomacy, H&R Block has agreed to cancel the program and remove any advertising related to it.  They are in the process of removing what is out there on it.  If, after another week, you or other members still see anything at a physical site, on the internet, or elsewhere about it, please let me know.”

“In addition, we had a meeting with another large national accounting firm that had been contemplating something similar, and it appears that they too will not be pursuing it.  We will continue to work on this issue with other firms that seem poised to cross the UPL line.  Chapter chairs, please feel free to share this with your members.”

It’s not clear where there is any UPL violation, as the Immigrant Assistants were simply helping users navigate through the software rather than provide any legal advice.  It is well documented there is a huge demand for legal assistance and that the immigration bar only serves a small proportion of the total demand as most immigrants can’t afford the fees that immigration lawyers charge. For this reason that there is well documented fraud abuse by “notarios”, as scam artists move to service immigrants with services that are over-priced, fraudulent, and inadequate.

On the other hand, we have a Fortune 500 company that attempts to provide a needed service to fulfill this gap in service with the idea that evaluation and assessment would in the fullness of time result in a limited and valuable service that is software-powered, not unlike the tax preparation service that H&R Block provides to millions of Americans. Rather than permit this experiment, the organized bar moved quickly to intimidate Block into shutting this service down.

ftcNo wonder there is little innovation in the delivery of legal services to consumers. No wonder consumers hate lawyers. Non-lawyers helping pro se litigants navigate through intelligent and smart software is hardly the practice of law, and it is, as Prof. Renee Knake argues, a protected First Amendment right.

Where are you —  U.S. Federal Trade Commission?

Surely there must be opportunities to experiment in the use software technologies to close the access to justice gap in America without interference by the organized bar. Regulation of legal services is too important to be left only to the lawyers. It is time to think about alternative schemes to regulate the delivery of legal services that involved interests other than protecting the income of the legal profession – despite the continued claim by the legal profession that their only interest is protecting the public from harm. There is little evidence to support that claim.

 

In a previous post, I discussed the North Carolina’s Bar fight against an amendment to the definition of the practice of law that stated:

“(b) The phrase “practice law” does not encompass any of the following:” … (2) the design, creation, assembly, completion, publication, distribution, display, or sale, including by means of an Internet Web site, of self-help legal written materials, books, documents, templates, forms, computer software, or similar products if the products clearly and conspicuously state that the products are not a substitute for the advice of an attorney. “

The moving force behind this amendment to the definition of the practice of law is LegalZoom which is also engaged in litigation with the North Carolina Bar over the same issue

For now, the North Carolina Bar has won this battle. Mobilizing the entire lobbying energy of the North Carolina Bar, the proposed amendment was side-tracked into Committee for further discussion and will die there in this legislative session.

In a confidential communication to bar members, one of the officers of the bar stated that:

“As I am sure you know, LZ has sued the State Bar in an effort to prevent the State Bar from continuing its ongoing efforts intended to halt LZ’s efforts to engage in the unauthorized practice of law.

I think it is important to understand that not all of the products currently offered by Legal Zoom violate the existing prohibition against the unauthorized practice of law. Merely producing and selling legal forms does not violate the prohibition against UPL. Consumers have always been able to purchase legal forms from bookstores, office supply stores and other outlets. The fact that LZ, and others, offer consumers the opportunity to purchase such forms over the Internet rather than from a brick and mortar business does not place them in violation of the prohibition against the unauthorized practice of law.”

“However, LZ’s use of “decision trees” and other such algorithms to create legal documents tailor-made to the individual consumer does present significant concerns and the State Bar has endeavored to prevent LZ from engaging in these activities.”

Talk about a “luddite” mentality — now North Carolina Bar wants to prohibit interactive legal software on the theory this is same as getting as advice from a lawyer. Maybe in the fullness of time getting legal advice and legal forms will be better than getting services from a lawyer. So what is the real justification — full employment for lawyers. The Bar argues that they are protecting the interests of the consumer. But  lawyers in North Carolina only serve the to 25% or so of the population with the remaining the 75% left to their devices. The argument doesn’t hold up. You can’t argue that you are protecting the safety of consumers when you are only serving a small proportion of the addressable market.

The North Carolina Bar has an answer to this.  Realizing that total resistance will expose the Bar to liability (Federal Trade Commission, U.S. Department of Justice, class action suits),  the Bar has proposed this amendment to the definition of the unauthorized practice of law.

Apart from the very narrow scope of this exception, the language kills innovation and access to justice for consumers who can’t afford lawyers is this language:

“The provider does not disclaim any warranties or liability and does not limit the
recovery of damages or other remedies by the consumer; “

This language would apply to any self-help legal materials including self-help law books, legal software on CD/ROM, and web-based interactive legal forms. I don’t know of any legal software publisher that would waive a disclaimer of warranties of liability.

Would TurboTax withdraw its Tax and Legal Products from retailers?
Would Nolo withdraw its self-help books from North Carolina?
Would web services such as http://www.completecase.com stop operating in North Carolina?
Would Amazon stop selling Quicken WillMaker?
Will LawHelpInteractive withdraw its interactive child custody forms?
Will ShakeLaw withdraw its products from North Carolina?
Would our company (SmartLegalForms), close down our North Carolina Divorce Web Site?

An argument can be made that self-help materials (books, software) are publications, and therefore this requirement to waive a disclaimer of liability is a prior restraint on speech and also an attempt to restriction competition. This requirement is a law suit waiting to happen.

Another requirement of the proposed legislation is that:

“The provider does not provide any individualized legal advice to or exercise any legal judgment for the consumer; provided, however, that publishing general information about the law and describing the products offered, when not done to address the consumer’s particular legal situation and when the general information published to every consumer is identical, does not constitute legal advice or the exercise of legal judgment.”

What does this mean? If the North Carolina Bar thinks that interactive software is a form of legal advice, as it appears to be the case, then can’t this language to be interpreted to mean that all interactive legal software that generates a set of legal forms in response to a consumer’s particular set of facts is this practice of law?

The proposed amendment at the beginning of this post is almost identical to the exception to the definition of the practice law passed by the Texas legislature almost 20 years ago. There has been apparently no harmful effect to consumers from this exception to the practice of law. The burden is on the North Carolina Bar to demonstrate with empirical evidence that consumers are harmed by these practices and publications.  The real justification is protecting the incomes of North Carolina lawyers afraid of losing market share to alternative providers.

 

The eLawyering Task Force of the Law Practice Management Section of the ABA was created in 2000 by then President of the ABA, William Paul. At that initial meeting Gary Munneke, a founding member of the Task Force and the leading law school educator and author on the subject of law practice management and then Chair of the Law Practice Management Section of the ABA (now deceased),  recommended that law schools update their law practice management courses to reflect the impact that the Internet would have on the practice of law.

13 years later there are few law schools that have made a sustained commitment to teaching what the Task Force calls "law practice technology". By "law practice technology" the Task Force does not mean technology and law courses such as Intellectual property courses, patent law courses, courses in copyright, etc.

Instead the Task Force means the intersection of internet technologies and the practice of law.  It is no longer possible to teach law practice management without taking into account the impact of information technology on law practice. We include within this category courses that train law students in document automation, legal expert systems, and other course work that has an impact on the nature, productivity and profitability of law firms.

The Task members believe that to educate law students to be "practice ready",  particularly for law schools where the majority of graduates will end up in solo and small law firm practice, understanding the principles of law practice technology are essential.

The Top Legal Practice Technology Schools Project

In honor and in memory of Gary Munneke, the eLawyering Task Force is working on a project to identify the top law schools teaching legal practice technology today. Our methodology is to review law schools web site catalogs and also seek input and recommendations from law schools themselves through a self-nomination process.

The criteria for inclusion on the list is:

 

1. A full-time faculty member dedicated to teaching and coordinating a program in law practice technology.  This subject matter should be the focus of serious research, including the development of innovations in law practice.

2. At least two credit courses in this subject matter such as law practice management, law practice technology, ediscovery and big data, outcome prediction,  legal project management, virtual lawyering,  expert legal systems development, document automation, and/or other coursework which deal with innovation in the delivery of legal services and law practice.

3. Non-credit courses taught by adjunct instructors don’t quality.

4. Law schools sponsoring incubator programs are interesting, but these programs involve lawyers who have already graduated, not law students.

The initial list includes the following law schools, in alphabetical order:

 Brigham Young University Law School for their ground-breaking work in teaching computer-based practice systems under the leadership of Larry Farmer and Blair Janis.
 

Chicago Kent Law School‘s Center for Justice and Technology under the leadership of Ronald Staudt and CALI for their work in piloting law school clinical programs and for their innovative On-Line Course on Digital Law Practice under the leadership of John Mayer.


Columbia University School of Law, Lawyering in the Digital Age Clinic, under the leadership of Professor Conrad Johnson, Professor Mary Marsh Zulack, and Brian Donnelly, Lecturer in Law. Conrad Johnson is chosen as 2013 Professor of the Year.

 

Georgetown Law SchoolGeorgetown Law School’s Iron Tech Competition and Technology, Innovation and Law Practice Seminar   under the leadership of Tanina Rostain and Roger Skalbeck.

 

 

 

Maurer School of Law at Indiana University under the leadership of William D. Henderson for his courses on Legal Project Management and the Law Firm As a Business Organization and for Directing the Center on the Global Legal Profession.

 

Reinvent Law LabopratoryMichigan State Law School‘s Reinvent Law Laboratory, under the leadership of Dan Martin Katz and Renee Newman Knake.

 


New York Law SchoolNew York Law School’s Certificate Program in Mastery of Law Practice Technology under the leadership of Dan Hunter.

 

We are adding today, (May 17, 2013) a 13th school to our list – the Northern Kentucky University Chase College of Law because of a $1,000,000 grant made just last week by W. Bruce Lunsford to establish and support the W. Bruce Lunsford Academy for Law, Business + Technology. Lunsford, is  a 1974 graduate of Chase College of Law, and is chairman and CEO of Lunsford Capital, LLC, a private investment company headquartered in Louisville, Ky. The Academy will be operated by the NKU Chase & Informatics Institute under the leadership of Professor Jon Garon Click here for the full press release.
 

University of Miami Law School’s LawWithWithoutWalls Project under the leadership of Michelle DeStefano and Michael Bossone and the Apps for Justice Project within the Law School’s Clinical Program.

Stanford Law School Codex Center for Legal InformaticsThe CodeX – Stanford Law School Center for Legal Informatics – under the leadership of Mark A Lemley and Roland Vogl. See course on Legal Technology and Informatics by Ron Dolin.

 

Institute for Law Practice Technology and Innovation

Suffolk Law School‘s new Institute for Law Practice Technology and Innovation under the leadership of Andrew Perlman.  Co-Chair of Advisory Committee are Jordon Furlong and Marc Lauritsen.

University of the Pacific McGeorge School of Law for their course on Computer-Assisted Litigation under the leadership of Professor Fred Galves and Tim Pignatelli, CEO, Legal Technology Consulting.

 
 

Vermont Law School‘s new Technology of Law Curriculum and their course on "Digital Lawyering" under the leadership of Oliver Goodenough, Jeane Eicks, and  Brock Rutter.

 

This is a preliminary list. The eLawyering Task Force is inviting self-nominations from law schools and recommendations by others either commenting the Task Force’s list serve or for convenience by simply adding comments to this blog post. Our plan is to publish a more complete list by the Annual Meeting of the America Association of Law Schools in January, 2014 in New York City.

Disclosure: I am Co-Chair if the eLawyering Task Force. Any opinions expressed in this blog post are my own, and not the opinion of the eLawyering Task Force of the Law Practice Management Section of the American Bar Association..

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.

Private capital into law firmsI 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

 

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.

ClearsspireClearspire 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.

Foloow the MoneyThe 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?

 

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.

LegalForce Store in Palo AltoThere 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.