My Experience with LawPivot: An Online Legal Advice Service

LawPIvotLawPivot, 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.
 

More Transparency to Lawyer's Fees by AttorneyFee.com

AttorneyFee.com is partnering with FindtheBest.com to increase transparency of lawyer's legal fees.

FindTheBest is launching a lawyers comparison engine, on May 4, 2012, which allows consumers to find, narrow and compare thousands of US-based attorneys by name, education, specialty, bar admission information, pricing, contextual charts and contact information. The combination of transparent data from AttorneyFee, and the interactive presentation of the information—organized by FindTheBest’s comparison engine—will allow consumers to compare their options when it comes to finding the right attorney at a fee that the consumer can afford.

The lawyers comparison engine will allow users to:

  • Find attorneys in their area with a specific specialization
  • Narrow options with smart filters
  • Compare options side-by-side
  • View key stats (like average years of experience and average price per specialty) within a surrounding context so users can see if they’re getting a fair deal
  • Find answers to frequently asked questions
  • Contact lawyers with one click

 

FindtheBest was started by Kevin O'Conner whose last company (DoubleClick) was sold to Google for 3.1 billion and whose first company (Internet Security Systems) sold to IBM for $1.4 billion. This is a real win for the AttorneyFee.com team.

Legal Forms for the Price of a Song on iTunes?*

Legal forms, without the legal advice or assistance of a lawyer, continue to decline in value. As a pure digital product, a legal form follows the price curve of other digital goods eventually approaching zero.  Several new start-ups in the legal industry will accelerate this trend.

Docracy is a new legal document start-up, founded by Matt Hall and John Watkinson, that grew out of a TechCrunch Disrupt Hackathon in New York City. The idea is to provide a free depository of legal documents that meets the needs of small business and start-ups which are crowd sourced by individuals who register for the site. The concept is to provide an open source site for legal documents in the same way that GitHub is an open source site for code. The company is venture funded First Round Capital, Vaizra Seed Fund, Quotidian Ventures and Rick Webb by a group of investors who see opportunity in disrupting the legal profession. The documents are largely flat forms (MS Word or Adobe .PDF File format), with quality control provided by the "community." It's not clear yet what the business model for this site will be. Online signing of legal documents is coming.

A second legal document start-up has emerged out of the New York City start-up web scene called Paperlex  .  Paperlex is also targeting the small business market. This site will contain standardized legal documents that can be modified within the web browser. A user will be able to store all of their documents online in their own private and secure web space, will be able to collaborate with third parties, and will have the capacity to execute/sign documents online.

Rather than crowd sourcing the legal form content, Paperlex will provide their own libraries of standard forms. Alison Anthoine, Esq., the CEO and Founder, hopes to provide an accessible legal document portal that small business can easily use with their customers and other parties at a cost that is much less that the cost of a custom document crafted by an attorney. The business model for Paperlex is a Saas subscription service provided for a low monthly fee.

DocStoc is another document repository that includes not only collections of legal documents, but collections of documents in other categories as well, such as human resource, travel, and personal finance documents. Documents are for free or can be purchased. The site is also built on crowd sourcing principles. Users can contribute documents and sell them through the site, with DocStoc taking a cut. Most documents are not automated and are provided in either MS Word or Adobe .PDF file format. However, a new feature called "custom documents" enables the user to answer an online questionnaire which generates a more customized document. The user can view the assembled document before making a decision to purchase a monthly subscription.Monthly subscriptions range from $9.95 a month to $39.95. The site claims to have 20,000,000 users.

Docstoc, Inc., was founded by Jason Nazar (bio) and Alon Shwartz (bio). The company was selected in September of 2007 to debut its product at the prestigious TechCrunch40 Conference. The platform was subsequently launched to the public in October 2007.

Docstoc is a venture backed company (Rustic Canyon) and received funding from the co-founders/investors in MySpace, LowerMyBills, Mp3.com, PriceGrabber and Baidu.

WhichDraft.com , founded by Jason and Geoff Anderman, brothers, and both attorneys, offers free contracts that can be assembled within the web browser. Legal documents can be easily shared with third parties, and you can build your  own Question and Answer templates. A nice feature enables a user the compare any two versions to see new and deleted text in the fee legal form. 

By A Legal Forms PLan frm MyLawyer.comMyLawyer.com, our  own consumer legal document portal, also offers legal document plans that are libraries of automated legal documents that when purchased in a bundle are less than the cost of a song on iTunes*.

 

 

In the nonprofit sector, LawHelp Interactive, a unit of LawHelp.org,with funding from the Legal Services Corporation, [ See Technology Initiative Grants ] has been working with a legal aid agencies nationwide to help the automate legal forms and publish them to state-wide legal form web sites which are available to any one within the state. The program is not limited to low income people. Hundreds of thousands of free legal forms are now created annually in more than 34 states. LSC has invested millions of dollars in the development of interactive legal form sites over the past 9 years.

Courts have also jumped into the free legal forms distribution game in response to the hoards of pro-se filers looking for free legal help. See for example: Online Court Assistance Program in Utah and Maryland Family Law Forms .

These free legal form web sites raise some interesting questions about the future role of the attorney and the changing nature of law practice.  What role will the lawyer play in this changing environment?  What is the impact of these relatively new sources of free or low cost legal forms on law practice, particularly the practice of solo and small law firms? Our own research provides support for the fact that solos and small law firms will continue to loose market share to these new providers.

"Unbundling" legal services by providing legal advice and legal document review for legal forms that clients secure from another source, may be a way of expanding access to the legal system, but it is also disruptive of law firm business models,  just like iTunes* was disruptive of the bundled album approach of the music industry. Value is shifting from the lawyer to the consumer and non-lawyer providers of legal forms. I can hear the sucking sound as law firm business models collapse.

Some questions to think about:

  • What risk do consumers and small business assume when they use a legal form without the advice or review of an attorney? The answer depends on the type of form, its complexity and the complexity of the transaction. If a user represents themselves in their own relatively simple name change, and their name gets changed by the court successfully,  then one can assume that self-representation worked.
     
  • But what about a Shareholder's Agreement, where terms have to be negotiated, and the standard document doesn't include the particular language required by the parties to reflect their intent? Should the parties now draft their own language? Should the parties simply ignore the need to include special language that reflects their intent hoping that there will be no situation in the future that will create a conflict between the shareholders because of a failure to include the language?
     
  • Who should negotiate the terms of the Agreement? The lawyer or the principal? Who would do the better job? How much shuld be charged for a successful negotiation?
     
  • How should the lawyer price services, when the client comes to the lawyer with their own standardized form and asks the lawyer to review it?
     
  • Will the lawyer refuse to serve the client, unless the client uses the lawyer's form or document?
     
  • How important is the insurance that a lawyer provides that the document or form is valid for the purpose intended, accurate, and reflects the intent of the parties?
     
  • Lets assume that the 85% of the legal form content in many categories of documents is identical. [ This is what Kingsley Martin from KIIAC has concluded and he should know ! ] But 15% consisted of critical variable language not susceptible to easy document automation. Should the attorney charge on a fixed price for the entire project as if she drafted the entire agreement, although she only worked on several paragraphs? If the agreement fails because the variable paragraphs are incorrect for the particular case, why shouldn't the attorney charge as if she he worked on the entire agreement?

If you have thought about these questions, and have some ideas on the impact of free legal forms on the legal industry, please share them here.

Document Automation as  DisruptuveTechnology

 

*iTunes is a trademark of Apple, Inc.

 

Another Disruption: AttorneyFee.com

The legal profession has witnessed the rise of new players that are disruptive of existing patterns of law practice.

First came LegalZoom, AVVO, TotalAttorneys, Rocketlawyer, MyLawyer (our company), and Law Pivot, disrupters that are having an impact on the way legal services are identified and delivered to the broad middle class.

Now comes AttorneyFee.com that holds promise of making legal fees more transparent.

For many years I have been critical of the fact that lawyers charge widely differing legal fees for the same work. In a study I was involved at the University of Maryland Law school some years ago, we discovered that for simple family law actions, such as a no-fault divorce, lawyers would charge any where from $500.00 to $3,000.00 for essentially the same work. This variation in legal fees for the same work tasks is another cause of the distrust that the average consumer has of the legal profession.

AttorneyFee.com is a welcome development for law firms that are already experimenting with fixed fee legal services delivered online. Law firms that are using online delivery technology will in fact have a competitive advantage over law firms that use higher cost productive methods. Sites like AttorneyFee.com expand the reach of these firms by giving them another channel to advertise their fee information to consumers.

I registered my Maryland virtual law firm at AttorneyFee.com yesterday. I found the interface to be clean and simple and the registration process easy.

My only criticism was that there was no field to display a law firm's web address -- only an email address and a telephone number. This means that an interested prospect will have to contact the law firm to get more information by phone or email, without the opportunity of easily clicking through to the law firm's web site.

In my case, the page describing the pricing of my services does not provide enough information to the consumer about the scope of my services. There is no place to indicate that we offer "limited legal services" for pro se parties exclusively. For a new company that prides itself on transparency, this feature is less than transparent.

Moreover, when my firm comes up, a form also pops up that enables the prospect to ask for a free consultation. Except in our case, we don't provide free consultations. Since we sell a legal advice service by the question for a modest flat fee, offering a "free consultation" is not consistent with our business model. 

When I asked Robert Komaiko, one of the co-founders of AttorneyFee about these issues, he said they have other features planned for the site but they felt it was important to launch the site, get feedback, learn, and revise. As a believer in the lean startup method of starting a company, which is now all the rage in Silicon Valley, I agreed with Robert that it was important to get the concept launched and to work out the kinks later. There is certainly enough benefits and features already built into the site to see if this concept gets any traction. Better to launch the service , get feedback, and revise, as opposed to waiting for a year, adding every feature imaginable, and then discovering that consumers have no interest in the service.

AttorneyFee  using a proprietary search technology,has already  listed the prices that over 20,000 law firms are charging on their web sites.  The company plans to have over 70,000 law firm sites indexed within a relatively short period of time. This information alone will provide a useful consumer resource for comparing fees charged by law firms for similar tasks.

Some lawyers are bound to be critical of this web service as it is another indication of the commercialization of the legal profession but as Beibei Que, the other co-founder of AttorneyFee, and its CEO, told me: 

We have all known that this moment was coming for a long time.  The profession can no longer limp along with one foot in the for-profit economy and another in a quasi-clergy role.  If we wish to reap the benefits of the for-profit economy, we must be prepared to comport ourselves like private market actors, and this means not retreating from conversations about price or concealing them behind closed doors.

AttorneyFee.com is a welcome addition to the family of new disrupters shaking the legal profession to its core.

download-our-whitepaper-on-virtual-lawye

NJ Attorney Advertising Committee Rules that a TotalAttorneys WebSite is Misleading

The Committee on Attorney Advertising of the New Jersey Court System issued an Advisory Opinion this week that stated that a Total Bankruptcy web site,  published by TotalAttorneys®, a law firm marketing and services organization based in Chicago, is misleading and in violation of the Rule of Professional  Conduct 7.1 (a) .Download Full Opinion .

The Committee also ruled that the web site was not an impermissible referral service and that Attorneys are not flatly prohibited from paying for advertising on a "pay-per-lead" or "pay per click" basis. That's good news for TotalAttorneys and other performance-based marketing schemes on the Internet.

The Committee sets out clearly that "Attorney advertising cannot be misleading or omit operative facts." and found that the website did not provide sufficient information to the user and is misleading. 

In this case, the user was directed to only one attorney based on the purchase of exclusive rights to a geographical area. To avoid misleading consumers, the Committee stated, the methodology for the selection of the attorney's name must be made clear, including the fact that the website limited participation to one (paying) attorney per geographical area. Further, the Committee specified that all requirements to participate in the website must be clearly specified; a full list of participating attorneys must be readily accessible, and the website must inform the user that the attorneys have paid a fee to participate.

It is easy for attorneys to violate their professional obligations and expose themselves to bar sanctions, by ignoring the fine print in their agreements with Internet-based marketing websites.

For example, no less a credible organization as Lexis-Nexis®,  recently launched a direct to consumer web site, called  EZLAW.COM. The website purports to offer wills, powers of attorney and advance directives forms bundled with legal advice for a fixed and reasonable fee. A goal I would heartily endorse.

However, the site seems to suffer from the same issues as the TotalAttorney's web site when viewed through the lense of the New Jersey Advisory Opinion.

At EZLAW, the site operator provides a mechanism for consumers to assemble legal documents on-line and then make available a network of attorneys to provide legal advice as part of the offered package. In describing its Attorney Network, EZLAW states that:

They are all prescreened by EZLaw to ensure that you get professional, experienced and confidential legal counsel. To be included in our network, attorneys must meet our rigorous 12-point checklist of criteria.

This suggests that EZLAW is vouching for the quality of the qualifications of the participating attorneys, not only whether an attorney has practiced a number of years or maintains a certain level of malpractice, and this could be construed as misleading.

Moreover, the NJ Opinion states clearly that as a form of attorney advertising, " a full list of participating attorneys must be readily accessible," but on the EZLAW web site no list of participating attorneys is to be found.

Moreover the limited representation agreement executed by the client with the law firm is provided by EZLAW on behalf of the law firm, so the client never knows the identity of the law firm prior to entering into an engagement with the attorney. Normally you would expect that the client would enter into a limited retainer agreement directly with the law firm. I never heard of a retainer agreement that wasn't entered into directly between the client and the law firm. Not in this case.

Click here for a copy of the Representation Agreement between EZLAW and the client.  You decide whether  this agreement is ethically compliant? I am interested in hearing other opinions about this agreement. If you have one. please comment.

So what's the bottom line? Lawyer's need to read the fine print. Lawyers need to have a  full understanding of how their ethical obligations apply  to these new Internet-based marketing schemes lest they be caught in a web of disciplinary proceedings that wasn't part of the bargain. 

LawPivot: Another Legal Advice Web Site

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.

 

Framing the Discussion About Virtual Law Firm Practice

There is a thoughtful discussion going on about the value of adding the capability of offering legal services online to a law firm's business model that was started by Lee Rosen's blog post titled, "What the Virtual Office Advocates Aren't Telling You."  Responses, so far,  include a post by Carolyn Elefant, an astute observer of solo practice, a post from Susan Carter Liebel, the  Founder of Solo Practice University, and a comment by Stephanie Kimbro, the founder of Virtual Law Office Technology, now owned by TotalAttorneys and the author of the recently published book, Delivering Legal Services Online. Lee Rosen is the winner of the ABA/LPM James Keane Memorial Award for Excellence in eLawyering in 2010, and Stephanie Kimbro won the same Award in 2009 for her work in creating her virtual law firm at KimbroLaw. Donna Seyle, a member of the ABA/LPM eLawyering Task Force and a consultant to solo law firms on law practice strategy, also commented on Lee Rosen's blog arguing that there is a great demand for "unbundled" legal services by the middle class.

Lee's argues that in his opinion there isn't much demand by clients for virtual services and that many clients if they want a virtual service are perfectly happy with LegalZoom. He says he has seen, "a survey indicating that many clients prefer a paralegal-provided service to an attorney-provided service, even when both are offered at the same price." Moreover it will be very hard to turn around consumer preferences now that LegalZoom has established a nationwide legal brand.
He also argues that it is very difficult, or not impossible, for a lawyer to generate a stream of income from a purely virtual practice and that a low-end practice doesn't generate the kind of clients that a law firm needs to be successful. Carolyn Elefant makes a similar argument that it is very difficult to generate significant profits from a low end practice unless you have volume which is difficult for the average solo practitioner to create without some capital and the skills to market their legal services on the Internet. I would agree with these points, but whether a solo or small law firm should consider adding a virtual law firm presence to their web site and modifying their business model is really a more complex discussion than can be easily done within the context of a blog post. There is much wisdom in Lee's observations, but the story is more complicated than he makes out.

I would make the following additional points:

1. A virtual law firm as we define it, is one that has a “client portal” where clients can interact with their attorneys online, view copies of their documents, pay their bills online, communicate with their lawyer in a secure space where their attorneys responses are archived and available, assemble documents through an online questionnaire, and access other digital applications. In my opinion, the benefit of using a virtual law firm platform is to increase law firm productivity, law firm transparency, client retention, and client acquisition. These are all positive values that studies of consumers indicate that they want.  It is not the case, as Lee argues, that there is little demand for by consumers for online legal services.  The 1,000,000 wills that LegalZoom claims it has created during the past five years or so, and the dozens (hundreds ?)  of other non-lawyer legal form sites is ample evidence that the legal profession has abandoned the online legal services market to non-lawyer providers.

2. A “client portal” concept is just another tool that enables a law firm to have an interactive presence on the Web which has certain productivity and client communication benefits. It is not a substitute for a law firm developing its own unique business model and market positioning approach which identifies a group of prospects and converts them into clients. Each law firm has to figure out how to integrate these tools into their own business model. For some law firms, this concept is not relevant to their type of practice. For others, it can be another basis for differentiation,  for choosing one law firm over another.  For many law firms, a virtual capability becomes an important adjunct to the regular office based practice, creating efficiencies that only can be created by using the web as a platform for delivery.

Here are a few examples of law firms that are experimenting with online marketing of legal services, offering "unbundled" legal services in a niche area for a fixed price:

For other examples, see the Law Firm Directory at MyLawyer.com.

3. If a law firm wants to market to web-based consumers, including members of what we now call the “connected generation” a law firm needs to have a virtual law firm platform in place, as one option for relating and working with clients.  The cost of adding this functionality is now trivial, so there is little excuse for not trying it. We know from our own experience that there are benefits to this approach, as a complement to a traditional office-based practice.

4. LegalZoom and other non-lawyer legal form sites can’t provide legal advice. I can give you many examples from my own virtual law practice where legal advice makes a major difference in legal outcome. Providing just legal forms alone, can sometimes solve a legal problem, but often they do not. The challenge for us lawyers,  is to figure out a way to provide an offering that is price competitive with LegalZoom, but which offers more value.

Moreover, as a profession we should not walk away from the legal problems of moderate income clients. We have skills that will result in better legal outcomes for moderate and middle income clients. As a profession we have an obligation to provide services at a lower price to individuals who can’t afford higher fees and we should figure highly productive methods of serving them. Are we only to serve the wealthy? If so perhaps the legal profession should be deregulated, as it is being done in the United Kingdom, and legal services regulated just like any another service business. This would provide opportunities for many different kinds of providers to provide legal advice and other services which the legal profession now monopolizes. This is the direction that we are heading.

5. Providing a low end, lower priced legal service can be a marketing strategy for providing higher end, higher fee services. A client of http://www.directlaw.com, that is a personal injury firm, is using a low end service to build relationships with prospects so that the prospects turn to the law firm when they have a high value PI case. Some of the DirectLaw law firms give away free legal forms as an inducement to enter into a relationship that results in the purchase of a broader array of legal services.

6. Some lawyers are able to attract a clientele that will be willing to pay $400.00 an hour for a divorce lawyer, but there are not enough of these clients to go around to satisfy all of the divorce lawyers in a state. The broad middle class is seeking less costly alternatives as this level of pricing, and pricing by the hour,  is more than they can afford. There is real demand for "unbundled legal services" at a fixed price. We can see this directly from the weekly increase in traffic at MyLawyer.com , since a Spring, 2010 launch, where virtual law firms offer their services at a fixed price. The success of RocketLawyer , operating in the same market space, is another example that there is real demand for this type of legal service.

7. For many law firms, a virtual offering becomes an important adjunct to the regular office based practice, creating efficiencies that only can be created by using the web as a platform for delivery. It is a component of an office-based practice that can be used to enhance the experience of existing clients with their lawyers.

8. Finally, the cost of adding these technologies to even a solo practice is becoming trivial. We tested a free version of DirectLaw this summer and experienced great demand, so we decided to end it on September 1, 2010, and offer in the future, what we call DirectLaw Basic for a subscription fee of only $49.00 a month for a solo practitioner.

$49.00 a month is not a significant cost for a solo practitioner to acquire a virtual law firm capability. It is low enough for a solo practitioner to experiment and test out the benefits. 

There will come a time, when thousands of solos and small law firms will add a “client portal” to their web sites to power and extend their marketing programs and to enhance the client experience for those clients that are looking for a way to work with their lawyers online. Lee Rosen is correct,  that simply adding a “virtual law firm” capability does not make a marketing strategy, but there are online marketing strategies that can’t be executed without a virtual law firm platform in place.

The delivery of online legal services will continue to expand, I predict, but it is not going to happen tomorrow. As a new generation of clients mature to the point where they have legal problems of their own,  the need of delivering legal services online will intensify.

New innovations take time to reach a tipping point. I remember, very clearly,  when lawyers would not think of using a paralegal, and I remember how long it took for the innovation to mainstream and reach a tipping point. These times are not dissimilar, as the platform for the delivery of legal services is changing, as Jordon Furlong observes.   In all things innovative, patience is a virtue.

 

LawBidding.com - Alternative Legal Fees

A new site called LawBidding.com was recently launched by Nick Cronin, CEO. The site enables potential clients to submit a description of their legal problem in a post,  and have law firms submit legal fee proposals to serve them.

This kind of reverse bidding process has been tried before in the legal industry during the early days of the Internet without success. But times have changed since 2000. The idea of providing "unbundled legal services" to clients for a fixed fee is more accepted now than it was ten years ago, and the current recession is forcing more solos and small law firms, as well as large law firms to become creative about their pricing structure. Its about time lawyers started thinking differently about pricing. Pricing every transaction by the hour doesn't make any sense. If a carpenter can give you a fixed price for a custom wall unit, a lawyer should be able to estimate a fixed price for standardized transactions where the costs are easily estimated and known. Not all transactions will lend itself to this approach. LawBidding.com also provides for fees based on hourly rates, so this could create a market for hourly rates for certain kinds of transactions. The analysis becomes more difficult when the matter is very complex requires a lawyer with very specialized knowledge or skill

This is an advertising driven web site, so its feasibility depends on traffic to the site which should grow as consumers and lawyers become more aware of it. Traffic could grow quickly which would attract advertisers.

I could see this idea being picked up by other law sites that already have traffic such as AVVO and Lawyers.com. But I right now LawBidding.com has a head start and we wish Nick good luck with his project.

LegalZoom Sued for UPL in Missouri

It seems like LegalZoom's practices are finally catching up with it. The company is being sued in Missouri on the grounds of unauthorized practice of law and the plaintiff's are requesting class certification. To give an example of how popular LegalZoom's services have become, LegalZoom in its petition for removal to Federal court claims that it has served over 14,000 Missouri residents in a five year period, generating over $5,000.000 in sales. Missouri is a relatively small state, so you can get some idea of what kind of business LegalZoom is doing nationwide. No wonder the legal profession is getting nervous and starting to pay attention to this disruptive player in the legal industry.

A good discussion of the case can be found on the IPWatchdog Blog in an article by the Blog's Founder Gene Quinn.

Click here for a copy of the Missouri Complaint,  LegalZoom's petition for removal to Federal court, and a copy of a letter from the North Carolina Bar requesting that LegalZoom Cease and Desist from operating within North Carolina because it is violating North Carolina's UPL statute when it prepares incorporation papers.

In its defense, LegalZoom in its removal petition,  claims that it is:

" a company whose principal business consists of providing an
online platform for customers to prepare their own legal documents. Customers choose a
product or service suitable to their needs and input data into a questionnaire. Where applicable,
the LegalZoom platform then generates a document using the product and data provided by the
customer."

It this were the case, LegalZoom would be functioning only as a "scrivener" transcribing the client's information into a form. It is well established in some states, including California, where LegalZoom is based, and also Florida for example, that non-lawyers, often called "legal technicians" can help consumers prepare legal documents, as long as they don't give legal advice.

The question of whether LegalZoom's  staff do more than they say, and actually provide legal advice, even if it is limited legal advice, is a question of fact to be determined. It  would be interesting to see what the discovery process turns up and what the  LegalZoom, "platform" actually does and how it works.

For comparison, We the People, a retail chain of 35  "Legal Document Preparation stores  operating in six states, operates under the same principles. Customers complete paper questionnaires which are faxed to a central processing center where a technician simply inserts the client's data into a desktop document assembly program which generates a form. (This is  the same process that many lawyer's use, except lawyers provide legal advice and analysis).  This document preparation process is essentially the same as LegalZoom's except that it takes place off the Internet through a network of retail stores. We the People has been attacked by the Bar in several states for UPL, but the company has worked hard to assure bar authorities that its staff and franchisees don't provide  legal advice.

In theory, We the People, stores are able to reach a market of customers that do not have Internet access and prefer to deal with a human being directly. This market base is likely to have even lower incomes, and ignored by  both attorneys as a target market, and have too much income to qualify for legal aid.  Ironically, however, the We the People pricing is even higher than the LegalZoom pricing, probably because of the cost of maintaining a  retail location. Yet the remaining We the People stores, ( down from a high of 140 stores), seem to be sustainable, if not thriving.

Both companies provide a needed service in the sense that they provide an alternative to consumers who are willing to invest their own time and resources to make sure that the forms offered are the correct forms for their particular situation. Neither company can advise a consumer about what form they should use for their situation, as that would be a form of legal advice. Consumers may be taking a risk when they buy from a self-help document preparation forms company, but it seems this is a risk that consumers are willing to take to avoid what are perceived by many as high legal fees for the same  transaction. For these consumers, what they get is a "good enough" result at a price they can afford.

The other reality is that it is deceptive for LegalZoom and We the People , to claim that using their services will save hundreds or thousands of dollars in legal fees, when two very different category of services are being compared: 
 

  • one a legal information service;
  • and the other a true legal service from a licensed attorney.

    The content of the services are fundamentally different and to compare the services to each other is like comparing "apples' and " oranges". 

    Sometimes you get the same legal result when you use a document preparation service, but often you don't.  Apart from UPL issues, it seems to me that this is a misrepresentation in advertising and these claims should receive closer scrutiny from state consumer protection agencies. (Although I am sure that many of LegalZoom's satisfied customers would say that they don't need any protection).

Both companies demonstrate the principle that you can solve certain legal problems by having access to "legal information." Legal information by itself is a problem solver for many consumers, and the access to legal information and legal forms on the Internet, has simply accelerated this trend at a much faster rate in the last five years than the self-help law book industry has been able to accomplish in 30-35 years of its existence. This means that lawyers will have to do more to demonstrate their value to the consumer, particularly solos and smaller law firms that serve the broad middle class.

A better solution for consumers, as we have advocated in these pages, is for attorneys to offer legal forms bundled with legal advice at an affordable price, perhaps slightly higher than LegalZoom, but offering much greater value, over the Internet. This is often called. "unbundled legal services," enabling a consumer to purchase just the legal services they need, and no more.

Using virtual law firm technology, like DirectLaw's virtual law firm platform, lawyers can be even more efficient that the LegalZoom or We the People models, because the entire document assembly process is software driven creating a legal document instantly from the user's input, ready for the lawyers further review, drafting, and advice-giving. The increased productivity that results from a web-enabled document automation process enables the lawyer to offer a very price competitive service that in fact offers more value. The value of each sale is lower, from the attorney's point of view, but volume can be much higher if effectively marketed. (Neither LegalZoom nor We the People have such a technology in place. No wonder there prices are so high for what you get!).

As long as the legal document preparers don't give legal advice, they should be able to coexist with the legal profession, for certain kinds of common legal transactions, but not all.

But lawyers will have to work harder to provide their value and start offering true legal services online over the Internet. Driving non-lawyer legal document preparers out of business on UPL grounds is not an answer. At the end of the day prosecution efforts, will seem to the consuming public as just another attempt by the legal profession to maintain high legal fees for common transactions, while avoiding the cost of innovation.
 

Blue Ocean Strategy and Limited Legal Services

When we designed the DirectLaw web service we relied on theories developed by W. Chan Kim and Renee Mauborgne in their best selling book Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant .

Our concept is that a technology platform that enables law firms to offer limited legal services over the Internet could tap into the "latent markets" for legal services.

We also used this analytical approach to develop our online non-lawyer document preparation service approach and our approach to offering automated legal forms over the Internet which are also designed to serve the "latent market for legal services". LegalZoom is demonstrating that there is a huge latent market that is satisfied with a "good enough" solution.

Nicole Garton-Jones, a lawyer based in Vancouver, Canada, and a user of our DirectLaw platform has posted a detailed analysis of how her law firm development strategy is an example of Blue Ocean Strategy in action. See her blog post on this subject. Its worth reading.
 

The Good Enough Revolution

The month's WIRED Magazine, (September 2009) has an interesting article on how the Internet is enabling "Good Enough" solutions, (when cheap and simple is just fine). I have maintained for a long time that often there is a certain amount of overkill when lawyers tackle a problem, when consumers really want a quick and reasonably priced result. Consumers will often sacrifice securing every "right" they have in order to save thousands of dollars in legal fees. I see this in the divorce area in my online practice all of the time. Often the divorcing parties want to get on with their life at the lowest possible cost. Rather than spend $15,000 in legal fees pursuing every right that the parties think they have, often the best solution is to use the funds that would have been spent on legal fees to invest in their individual futures. The present recession is accelerating these trend.

Lawyers are taught to represent a client "zealously". In fact they are required by the ethical codes of professional conduct to do so -- but at what price. Pursuing every legal angle results in prohibitive legal fees that the average consumer or small business can't afford. There must be a better way to practice law without breaking the bank.

Louisiana Virtual Law Firm

 Myrna Arroyo, a solo practitioner in located in Baton Rouge, Louisiana, who specializes in estate planning, has launched a virtual law firm site that offers wills, living trusts, and other estate planning documents bundled with legal advice for a fixed price. The site is designed to provide an alernative to web sites like LegacyWriter, Do Your Own Will, LegalZoom, and Wills-Online, which offer legal forms without any legal advice. None of these legal form web sites offer documents that are specific to the State of Louisiana because of the particular nature of Louisiana law, which is based on the French Civil Code. Users are able to complete an on-line questionnaire which generates a completed legal document, ready for lawyer review, analysis, and further customization. Web enabled document automation enables saves time in document creation, enabling Ms. Arroyo to provide legal advice with the document for a fixed price. The site is powered by Epoq's, DirectLaw Web Service.