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

One of the winners of TechCrunch Disrupt Hackathon is a new, yet to be launched, legal document web site called, Docracy,  The idea is that members will contribute their legal documents to an open source site so that there would be a basis for comparison between  "open source" documents and the document that the member needs for their business. The theory is that by comparing documents, with the document that the member has on hand, there would be a basis for comparison, resulting in an informed decision, without the cost or benefit of legal advice.

In this model, legal advice from an attorney is worth zero. The model is designed to eliminate the attorney from the transaction.

The idea was developed by mobile app developers Matt Hall and John Watkinson ,from Larva Labs, who were faced with signing an NDA with a client and were unsure of some of the terms and concluded that the cost of legal advice was either unnecessary or prohibitive.

This is another example of the resentment that the average consumer  and small business person has towards the legal profession resulting in the rise of non-lawyer legal form web sites such as LegalZoom.

Another example of an open source legal document repository is Docstoc which we have used as a research source. It is useful for us, because as lawyers we understand what we are reading. I think simply accessing raw documents as a consumer would be a daunting exercise, although I am sure that many consumers and small business use the site.

The problem with any  legal document web site as a source for creating binding legal documents  is that the use of a particular clause may be rooted in case law in a particular jurisdiction.

Without understanding all of the implications of using particular language in an agreement, the "non-lawyer" moves into a danger zone, because he or she has no idea what they are signing. 

A better alternative is a "self-help" book from Nolo that contains both legal forms and explanations of the implications of each clause, but that often involves reading and understanding a 300 page book, which is beyond the attention span of most consumers.

Another solution is an automated document with extensive help screens that explain the implications of choosing one clause over the other.

A third alternative, is to purchase "unbundled and limited legal services" from an on-line law firm  for a fixed price with legal advice bundled into the transaction. In that case you get a certain level of accountability and guarantee that the legal advice is correct for the user's individual situation.

See for example the firms listed at DirectLaw's legal document portal , where you can access legal forms for free, or forms bundled with legal advice for a fixed fee.

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Another interesting start-up has emerged out of Silicon Valley to provide crowdsourced legal advice to other start-ups for free.

Vertical Q&A web sites seems to be the next new thing among venture capital investors. Even Facebook  rolled out this year a crowd-sourced Q&A service.

LawPivot, a legal Q&A web site founded in 2009,  hopes to fill a niche by providing legal advice to the founders of start-up and early stage high-tech companies based in California at a legal fee they can afford -- FREE.   Legal advice is provided by an experienced network of high-priced business law attorneys, recruited from the top 200 hundred or so law firms, who hope to pick up new clients by entering into discussions by providing free legal advice services to start-up companies.

Free legal advice or the “free consult” has been employed by lawyers for years, pre-Internet, as a tried and true marketing strategy for acquiring new clients. Now many lawyers are beginning to offer free legal advice online from their web sites directly. See for example,  VirtualEsq.Com . By next year there will be hundreds of these free legal advice services offered directly by lawyers from their web sites as the virtual law firm movement begins to scale.

However, free legal advice from an individual law firm's web site, is not the same thing as a vertical web site that aggregates answers from many lawyers, giving consumers a wider variety of responses to their particular situation.

Free legal advice online is not a completely new idea. FreeAdvice has been doing it for years, and consumers can get answers to their basic legal questions from sites such as AVVO, RocketLawyer, and JustAnswer. What is new, is that LawPivot provides through its network of lawyers “real” legal advice that applies to the client’s particular situation, as distinguished from merely legal information. And this advice is reputedly to be "high quality" given the stature of the lawyers recruited to the LawPivot network.

However, genuine legal advice, [as distinguished from “legal advice” that is characterized as “legal information” ],  like any legal service, has to be delivered in an ethically compliant way requiring that the client’s information be kept confidential, that an attorney/client relationship be established, and that the attorney providing the legal advice be a member of the bar within the jurisdiction  where the client is located. Presumably LawPivot is addressing these issues. The LawPivot service is presently limited to California, but the company, according to its representations, plans to expand nationwide.

Although the company recently raised $600,000 from Google Ventures, the venture capital arm of Google, after a $400,0000 round from from a group of angel investors, it will be interesting to see how or whether it survives. At this point, neither the clients are charged for legal advice, nor are the participating attorneys charged an advertising fee. So there is no revenue, and apparently no business model. However, I doubt that the investors thought they were making  charitable contributions, so there must be a business model lurking in the background somewhere?

Unfortunately, the only business model that is ethically compliant in the US, is one where the participating lawyers pay an advertising fee to play (get listed) and get exposure. Splitting legal advice fees between a law firm and a non-law firm , is a big “No, No” and an ethical prohibition that exposes the participating attorneys to bar sanctions which could lead to disbarment.   Perhaps because Google is now involved as a major backer of  LawPivot , and the company is planning to move to the GooglePlex campus start-up incubator,  "they can do no wrong.!"

Many other Western common law jurisdictions, like the United Kingdom, have abolished the division of fees, but the rules against splitting fees with non-lawyers remains sacrosanct  in the US, on the theory that splitting fees would compromise the independent judgment of the attorney. However, in the UK, lawyers are permitted to work for a profit-making company and provide legal advice directly to consumers, and no one seems to be complaining about compromised judgment. [ See: FirstAssist in the UK  for an example ].

Charging clients an administrative fee to “use” the web site, as an alternative revenue source, has been tried before in an earlier Internet era, and it failed then. [ e.g. AmeriCounsel ]. I doubt that this model will work today when consumers are expecting everything on the web to be for free.

I think it is a good sign that innovation is happening in the legal industry, and that private capital is finally looking for a way to get a return by investing in the delivery of legal services. [See: Total Attorneys Receives Multi-Million Dollar Investment ].

I would like to see companies like LawPivot thrive, but at this point I don’t see the juice.  Are advertising revenues sufficient to make this venture sustainable, or has LawPivot  figured out another legitimate source of revenue that doesn't violate US ethical prohibitions? Only time will tell.

 

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As many of you know who have been following this blog, DirectLaw is a client portal that enables a law firm to offer online legal services. It is not designed as a cloud-based practice management system, such as timekeeping and billing which we view as "back-office" functions, although DirectLaw still incorporates many practice management features. The purpose of the client portal concept is to enable the law firm to work with a client online, rather than just by telephone and face-to-face, and in ways that are powerful than simply using email.

This week, we launched a Free Version of DirectLaw.  We call it "free" because there is no monthly subscription charge, but there is a $99.00 set-up fee to cover our costs in activating a new account.

This is a fully operational platform that includes all of the virtual law platform features except web-enabled document automation and our state specific libraries of legal forms and documents.

Here is what you can do with the "DirectLaw Free Version":
 

• Legal Advice by Phone, E-mail and Web Cam.  Sell any or all of these services on a flat fee basis.  You set the pricing.
• Legal Document Review.  Offer review services and provide advice for existing documents or forms.  Example:  "I purchased a will from LegalZoom.com, and need an attorney to review it."  You quote a fee based on the complexity of work.
• Legal & Court Coaching.  Another legal advice service you can offer on a flat fee basis.
• Online Collaboration Features.  Share and store documents.  Communicate with clients online.  Secure, archived and accessible 24/7.  Works great for existing/traditional clients, as well online clients.
• Calendaring.  Publish important, upcoming dates/events.  Includes an automatic reminder feature.
• Legal Resources.  Publish client-relevant legal information/links.  Information is accessible via the "client space".
• Attorney Dashboard.  Manage all client-related data; communications; selection/pricing of legal services, etc.
• MyAccount. Stores client contact information.  Information is downloadable to Excel spreadsheet format.
• Integrated Credit Card Processing.  Accept online credit card payment for online legal services.
• Legal Invoicing.   Bill clients via the "client space".  Easy, convenient way to offer online credit card payment of legal invoices.  Works great with existing/traditional clients and for online clients where work beyond the scope of limited services is necessary.
• Rapidocs Solo, our Rapidocs document authoring system, is also included, so you see if you can automate your own documents.

The DirectLaw Free Version is to be distinguished from the Free Trial, which is not a fully operational version and is simply a "sandbox" which lets you play around with the DirectLaw features. You can convert from the Free Trial to the DirectLaw Free Version at any  time, and you can upgrade from the DirectLaw Free Version to Levels I, II, and III at any time. Click here to see the differences between the three levels of service and the different levels of pricing.

We decided to introduce the concept of a Free Version with the idea of accelerating the adoption of virtual law firm concepts by solos and small law firms. Our marketing data, based on analyzing Google Key Word popularity in this market space, such as "virtual law firm," "online legal services", and "virtual law firm,"  shows a relatively low hit rate compared to other trends in the law firm technology market space. We will provide more details of this analysis in a later post. What it says to me is that the number of lawyers, particularly solos and small law firm lawyers, who are simply just interested in learning more about the"virtual law firm" concept is a very low percentage of the total addressable market. This is typical of the way in which the legal profession adapts to new technology - - very slowly. Thus we think the concept of a "Free Version" of DirectLaw can be an important learning tool for lawyers who are interested in moving their law practices onto the Internet. By making this proposition a "no-cost" experiment, law firms can witness first hand how operating on the Internet can enhance their law practice and increase law firm productivity.

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

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

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

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

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

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

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

 

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A new web site based in Florida: http://www.idivorce.com     offers a set of automated Florida divorce forms for free. The user scrolls through a set of friendly but numerous screens, and inserts their financial information and other information. Once completed, the forms are instantly available and can be printed out from the web browser. The generated forms are not in Adobe .PDF format, as distributed by the Florida Supreme Court, but they seem to meet all of the court requirements any way, so they should be accepted by Florida court clerks.

The interesting feature of the site is that the forms are not only automated, which requires a capital investment, but also free. Apparently the research, development, and administrative costs will be offset by advertising revenues generated by Google Ad Words and other advertising networks. I see this as a trend in the sense that as legal forms continue to become more transparent in the sense that the legal profession can no longer control legal information distribution, they become commodities and the cost of legal forms themselves goes down to zero.

It will be interesting to see if this site generates enough advertising revenues to justify expansion to other states outside of Florida. Meanwhile it will be a useful site for Florida consumers. It would be useful if the site mentioned on the home page that only Florida divorce forms are available at this time, but there additional states are planned.  As presently presented the site is not in compliance with the American Bar Association's Best Practices for Legal Information Web Site Providers.

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