Limited Scope Legal Services

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.

client-centricThe American Bar Association Standing Committee on the Delivery of Legal Services, with the ABA Legal Access Job Corps Task Force and the Institute for the Advancement of the American Legal System (IAALS) is convening a national conference in Denver, Colorado on August 14-15, 2015  titled: Client-Centric Legal Services: Getting From Here to There.  The conference will have special value to practitioners who provide personal and small business legal services, bar leaders, judges and court administrators, legal educators, Access to Justice Commission members and staff, and incubator directors and law school clinicians. The focus of the conference is to explore new law firm business models that can enhancement engagement, re-define lawyer value, and pivot practitioners into 21st Century problem-solvers.

So what are client-centric legal services? 

The concept of client-centric legal services is part of a consumer revolution that puts the purchaser at the center of a commercial transaction shifting power from supplier to consumer. Power in the legal profession has always been on the supply side, but the legal profession is not immune from the consumer revolution and the demand by consumers for more transparency, information,  and control over the lawyer-client relationship. Consumers want fixed fee pricing so they can control their legal expenses and when possible be a co-producer of legal services to keep legal fees reasonable and manageable. This translates into “unbundled legal services” or “limited legal services”, powered by online delivery systems.

Internet based applications that either enhance the client’s understanding of their legal rights, or enable them to represent themselves with the assistance of an attorney, are examples of client-centric legal services.

A short list would include:

A law firm web site that consists of information only about a lawyer’s practice and biographies of the law firm’s lawyers is not client centric because it is solely focused on the supplier and provides no tools that empower the client as consumer.

Here are good examples of client-centric law firm web sites: The Rosen Law Firm in North Carolina – a family law firm; and The Baker Law Firm – an estate planning firm also in North Carolina.

Large law firms and their corporate clients are not immune from these developments as Big Law seeks to provide tools that enable corporate legal departments to service their internal clients more effectively.

For example Seyfarth and the Littler, Mendelson law firm  are developing expert systems applications on the NeotaLogic platform that can be used by their clients to more efficiently access legal advice at low cost. See Human Resources Compliance Application.

Prof. Stephanie Kimbro, author of The Consumer Revolution: The Lawyer’s Guide to the On-Line Legal Marketplace   predicts that:

“The client-centric law firms that are transparent in their business practices and provide communication and delivery methods that clients expect from professionals in any industry will be the firms that survive in our quickly changing legal marketplace.”

To learn more about creating client-centric law firms, register for the Denver conference, here.

FTC Disclosures:
I am a speaker at the ABA Denver Conference and I am also a liaison member of the ABA Standing Committee on the Delivery of Legal Services, and the company I am CEO of- DirectLaw – provides a virtual law firm platform for solo and small law firms that enables these firms to deliver legal services online.

The unberization of the legal professionThe legal profession will not be immune from the rise of the uberized economy. Consumers want to purchase only the legal services they need. This means that the trend towards offering “unbundled” or “limited legal services” will continue to accelerate as the most economical way for consumers to purchase legal service is by the “task”, rather than the hour.

Think of “task rabbit for legal services” – legal services at the click of a button on your smartphone.

The new virtual marketplaces connecting lawyers with clients for the purchase of specific legal tasks will also accelerate this trend. These legal marketplaces are a response to the inefficiency of bar-sponsored legal referral programs (the subject of another blog post to come), and the desire of consumers to have a more transparent way of selecting attorneys to solve their legal problems. The last few years has seen the ascendency of these legal marketplace platforms.

To name just a few of these new legal marketplaces, look at:

  • Avvo  – “Get legal advice from a top-reviewed lawyer on the phone – $39.00 for 15 minutes.”
  • Bridge.US – “Top attorneys and easy-to-use software that make immigration delightfully simple”
  • DirectLawConnect – “FInd a fixed fee online lawyer in your state now.”
  • Fixed – “The easiest way to fix a parking ticket”
  • Hire an Esquire – “Legal staffing redefined online.”
  • LawDingo – “You won’t believe how simple and affordable it is to get a lawyer;s help.” “$50 for a telephone consultation. Other projects for a fixed fee.”
  • LawGo – On Demand lawyers for a fixed fee in personal and small business matters.
  • LawGives – “Get free quotes and consultations from trusted lawyers in 100+ cities”
  • LegalHero – “Law Done Better. Experienced attorneys for your business at clear, upfront prices. ”  “No hourly rates. No retainers.”
  • LawKick – “Find the right lawyer at the right price”
  • LawNearMe – “Law Near Me offers an attorney referral service to help you find the legal representation you need in a variety of areas.” “ZocDoc for lawyers”
  • LawZam -“Free legal consultations by video-conference.”
  • LegalZoom – “Find an attorney you can trust for your family for $9.99 a month”
  • PrioriLaw – “lawyers hand-picked for your business.”
  • RocketLawyer – “Legal Made Simple”
  • SmartUpLegal – “Quality Legal For Startups and Business.”
  • UpCounsel – “Hire a great attorney for your business. Fixed fee projects”

Some seek to link consumers with lawyers who charge their regular hourly rates, but the marketplaces that will scale are those that offer limited legal services for a fixed fee, ideally powered by technology to keep legal fees low. These new vertical marketplaces will serve what Richard Susskind has called, “the latent market for legal services.”, but in the fullness of time, the “limited legal services” approach will move up the value curve serving small business and eventually larger business entities and more affluent clients.

Not all will survive as many cannot generate the traffic to justify the fees charged to lawyers or consumers to participate in a particular platform. Survivors will be those platforms that can generate consumer traffic and which can scale their offerings. A likely winner could be AVVO as it leverages its huge consumer traffic and large lawyer data base into delivering legal services for a fixed fee.

Some larger law firms will adopt this independent contractor labor model using contracted labor to perform tasks for their clients. This is already happening in the United Kingdom. See: Lawyers on Demand; RiverviewLaw; and Peerpoint from Allen & Overy

The services that will scale the most will be smart legal software applications that can do a task for the fraction of the fee that a lawyer can charge for the same work.

As the idea of offering limited legal services goes mainstream, powered by these new marketplaces, consumers will benefit through more affordable, accessible, fast, and transparent legal services.

The legal profession, particularly solos and small law firm practitioners, will not benefit as much as the consumers they serve. Here are some of the negative consequences:

  • A downward pressure on legal fees;
  • More competition for solos and small law firm practitioners;
  • Lawyers will have less or no social structure to support collaboration and cross-communication with peers;
  • Newly admitted lawyers will lack the training and professional development structure for them to really learn how to practice law. (as law schools don’t really train lawyers to practice law).
  • Less organizationally sponsored fringe benefits for lawyers.
  • Loss of control of a client base, as clients are attracted and owned by the new legal marketplaces;
  • Reduction in the size of the legal profession as it becomes harder to make a living as a lawyer, with a consequent reduction in the number of law schools – particularly those that turn out lawyers for solo and small practice but continue to teach the a purely doctrinal approach to law and law practice.

Recent litigation in California where California judges have ruled that the issue of whether drivers for Uber and Lyft are independent contractors or employees will have to be decided by a jury suggest that the rules that apply to the new ‘sharing economy” are not so clear. It will be interesting to see at some point in the future whether a group of lawyers -so-called independent contractors- might sue their platform provider or an AxiomLaw, on the theory that that the platform that they are using exercises so much control that they are really employees and entitled to the benefits of being an employee. See generally:  1099 vs. W-2 Employee Classification Infographic from Hire An Esquire.

Surely, the legal services industry is continuing to evolve driven by Internet-based innovations.

American Bar AssociationThe American Bar Association has issued its draft Report and Recommendations on the Future of Legal Education. You can download it here.

I agree with many of the recommendations of the report which urges law schools to experiment with different modes of legal education, recommends relaxing ABA accreditation rules which impede innovation, and modifies the traditional law curriculum to focus less on the teaching of doctrinal law and more on skills the prepare law students to actually practice law. Many of the recommendations,if adopted, would radically change the structure, focus, and culture of many law schools.

One of the recommendations of the Task Force is the idea of limited licensing of non-lawyers ("legal technicians") to deliver legal services to the public directly without the supervision of a lawyer:

"However, there is today, and there will increasingly be in the future, a need for: (a)persons who are qualified to provide limited law-related services without the oversight of a lawyer; (b) a system for licensing of individuals competent to provide such services; and (c) educational programs that train individuals to provide those limited services. The new system of training and licensing limited practice officers developed by Washington State and now being pursued by others is an example and a positive contribution."

Thus one of the final recommendations of the Task Force Report is:

"Authorize Persons Other than Lawyers with J.D.’s to Provide Limited Legal Services, Whether Through Licensure Systems or Other Mechanisms Assuring Proper Education, Training, and Oversight."

and:

"Develop Educational Programs to Train Persons, other than Prospective Lawyers, to Provide Limited Legal Services. Such Programs May, but Need Not, Be Delivered through Law Schools that are Parts of Universities."

Unlike the other recommendations which deal with fixing legal education, these recommendations are focused on access to justice issues, which requires a different framework for analysis. 

The recommendation to create a new class of limited licensed legal providers, so-called "Legal Technicians" –  needs to be re-evaluated in the light of changing legal industry market dynamics and the accelerating impact of Internet technology on the delivery of legal services.

Just to note, for decades I have been a strong advocate for the idea that trained paralegals should be permitted to serve the public directly, without further licensing or regulation by any state body, other than graduation from an ABA-accredited law school and a few years of experience working in a law firm.  I was formerly President and Dean of the Philadelphia Institute for Paralegal Training, the nation’s first paralegal educational institution, and in that role saw how effective a trained paralegal can be in serving a law firm’s clients.

More recently. the company I founded – DirectLaw – offers a virtual law firm platform for solos and small law firms. If there were a new class of limited license professionals in the market, I would not hesitate to modify our DirectLaw platform to serve limited licensed professionals, opening up a major new market for our virtual service. So personally I have much to gain by a new class of limited license professionals that would serve the public directly.

Only recently have I begun to reconsider the viability of a new class of legal paraprofessionals serving the public directly primarily because of  changes in the market for personal legal services.

I have  reservations about the proposal to license non-lawyers to provide limited legal services. My reservations are in the form of a challenge to the Task Force recommendations on limited-licensing, in the sense that the idea needs further thought and analysis before states rush to adopt these ideas. (despite the fact that Washington State already has a scheme in place, and  California and New York are considering similar proposals). 

Here are my reservations – comments welcome:

  • The data that we have (see for example www.attorneyfee.com) suggests that the pricing of legal services by solo practitioners and very small law firm firms is going down — not up. It is not a fact that the legal fees are out of reach of many consumers. There is an issue of connecting with consumers with lawyers– but it is becoming less of a price issue and more of an "engagement" issue. There is no evidence to suggest that the fees that limited licensed practitioner would charge would be any less than the fees currently charged by solo practitioners, but their service, by definition, would be much more limited than the service offered by an attorney.
     
  • Solo practitioners are already being displaced by technology which is forcing a reduction in legal fees. Limited license practitioners would be even more vulnerable to the impact of information technology on the more routine services that they would offer.
     
  • The restrictive licensing scheme for lawyers, which is based on a "job-shop" model is likely to be replicated in the licensing scheme for "legal technicians." Licensing of legal service professionals based on the "job shop" model creates a high overhead enterprise that is vulnerable to new entrants into the market, e.g., LegalZoom, that are not subject to such restrictions.  Lawyers already suffer from a competitive disadvantage against new market entrants. Legal technicians will face the same competitive disadvantages. I can’t see how the practices of legal technicians, with certain exceptions, will be viable economically. (I have yet to see a business plan of what such a limited license practice would look like that would include the cost of malpractice insurance, office expenses, advertising and marketing expenses, etc.).
     
  • Introduction of a new class of limited licensed professionals will continue to erode the economic model of solo and small law firm practice by sucking out from those practices the more routine legal services which are important to sustaining the economic viability of those law firms. It is naive to suggest that solo practitioners should concentrate on doing "more complex legal work" leaving the routine legal work to "limited license professionals.". If the ABA wants to deliver a death blow to solo practitioners this is a good way to do it. (See: Will California Threaten Lawyer Livelihoods with Legal Technicians?)
     

Creating a new re
gulatory scheme and educational system for limited licensed professionals is going to be high in cost. It is not likely that law schools and universities will be able to offer education a price point which is much lower than there existing price levels. The result will be that we will have a new class of students being trained in law that who will incur high student loans where the income generated from their practice will be insufficient to amortize the principal and interest, because of limited market prospects and price compression in the legal industry.

  • Many of these new students who aspire to limited licensed professionals professionals are likely to be members of minority groups. Since there will be no hard data on the income prospects for this new class of professionals — just the idea that that once graduate they will be able to compete with lawyers in a limited way – seducing students into a new field where there is no effective demand.
     
  • I can just hear the pitch of commission-based admission’s representatives at a variety of educational institutions who will jump in this market: "Become a licensed legal professional and you can provide legal services like a lawyer."

One result will be the imposition on a group of students excessive loan burdens which will be impossible for them to discharge. (This reminds me of the banking industry preying on minority neighborhoods with fraudulent loans). I would feel more comfortable with an of educational program to train legal technicians if the tuition was very low or free. Since there is no evidence that there is a viable career upon graduation, the risk should be assumed by society, and not the individual student. So if law schools and universities want to jump in this educational market the least they can do it make it tuition free or very low in cost for the first three years, until it is clear that there is a real career after graduation.

I could write more abut this subject, but this post is already long enough. 

 

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.
 

 Raj AbhyankerHere is a tale of an exceptional entrepreneur/solo lawyer who has built a thriving Internet-based law practice of large scale in less than seven years. Raj Abhyanker, 37,  started his law practice in Palo Alto in a small office above a rug store in 2005 (sounds like many Palo Alto start-ups like Apple and Google!). The law firm’s focus is patent and trademark law which is Mr. Abhyanker’s specialty.  

In September, 2009, Mr Abhyanker launched a web site called Trademarkia which is designed to help small business secure a trademark for an affordable fee. Trademarkia contains an easy to search data base of all of the trademarks of the USPTO office. The site has been written up in the New York Times.

Little more than two year after launch,  Trademarkia has become the leading trademark site on the Web generating more than as 1,000,000 visitors a month, more than either LegalZoom or RocketLawyer.  The law firm now employs more than 60 lawyers, including a team of lawyers in India trained in U.S. trademark law.

This is an example of how a single lawyer with a deep knowledge of the power of the Internet, together with a background in knowledge process management and outsourcing, can create a world-class enterprise from nothing in a relatively short period of time.

Quality Solicitors in the United KingdomMr. Abhyanker is now moving his concept to a new level by creating LegalForce,  a new national legal services retail brand, similar to the Quality Solicitors concept in the UK.

Quality Solicitors
is a national network of retail offices serving consumers and small business by linking together a network of small law firms that share a common brand, advertising and marketing budgets, and an online presence. Mr Abhyanker’s goal is to create a Quality Solicitors type network in the United States.

Legal force Law CenterLegalForce is creating, in a historically-preserved building, a retail law center in downtown Palo Alto in the heart of Silicon Valley, (right across the street from the new Apple store on University Ave.)  The LegalForce center is set to open in the Fall of 2012.

Mr. Abhyanker’s idea is to create a physical space, that is as much about education as it is about "retail", like an Apple Store. In this innovative legal space clients can meet with their lawyers in a comfortable and non-formal setting. Like Starbuck’s "Third Place"  consumers and small business entrepreneurs will be able to meet their lawyer’s in a casual friendly environment. Part coffee bar, self-help book store, legal education and  legal research center, the idea is that a LegalForce center will be a nexus where people can connect and get to meet their lawyers in an accessible environment. Legal services won’t actually be delivered from the store – instead the store will be designed as a gateway to legal and other related services and the visible manifestation of a national retail legal services brand.

There have been other attempts to create a physical retail space where clients can meet with their lawyers in a comfortable and accessible environment. LegalGrind, based in Santa Monica, Los Angeles, advertises coffee with your counsel, but has never been able to expand beyond a few locations. Chicago has their LegalCafe, which is a similar concept, but remains a limited operation. 

My opinion is that the failure of these two operations to scale is the absence of an online strategy which offers legal services over the Internet as well as in a physical setting.

Unlike these smaller operations, Mr. Abhyanker plans to create a national branded legal service that links together lawyers working in the real world with a powerful online legal service strategy.

Unlike a typical law firm, Mr Abhyanker employs a team of software engineers capable of creating an innovative Internet legal services delivery platform that can create referrals for law firms that are members of the LegalForce network.

LegalForce  has the promise of creating a true national retail legal services brand that will offer a range of legal services – from limited legal services online to full service legal representation.

I have often thought that what serves consumers best is a business model that combines a strong online presence with lawyers who provide a full range of services within their own communities.

Online legal form web sites, like LegalZoom, CompleteCase,  RocketLawyer, and our own SmartLegalForms, are limited in scope.These are alternatives that consumers choose because (1) there is no existing national trusted legal service brand; and (2) consumers don’t understand what they are not getting when they purchase just a form from a non-law firm.

The LegalForce idea is designed to be a counter-force to these online insurgents which are capturing market share from the legal profession.

It will be interesting to see how this LegalForce idea develops and whether Mr. Abhyanker will be successful in this venture. LegalForce is one to watch.

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LegalZoom, the leading online provider of legal services to consumers and small business, as predicted here previously, finally filed for an IPO last week. The company is seeking to raise $120 million to expand their services both in the US and internationally.

LegalZoom’s data in the S-1 filing is now available for everyone to analyze:

  • In 2011, 490,000 orders were placed through their web site;
  • 20% of all limited liability companies in California were done by LegalZoom;
  • During the past ten years, LegalZoom has served over 2,000,000 customers.
  • Revenue in 2011 was $156 million.

These are impressive statistics and provide support for the proposition that consumers and small business prefer a very limited legal solution that is just good enough to get the job done, rather than pay the high legal fees charged by the typical attorney.

This is LegalZoom’s analysis of the legal market for consumers and small business, buried on p. 62 of the S-1 filing: 

"Making the right choices with respect to legal matters can be difficult, especially for those with limited time and resources. The U.S. legal system consists of overlapping jurisdictions at the city, county, state and federal levels, each of which has its own evolving laws and regulations. Businesses may be subject to additional laws, regulations and legal issues applying specifically to the industries in which they operate. In addition, the policies and procedures associated with the creation, filing and certification of legal documents are often arcane and confusing."

        "When in need of legal help, small businesses and consumers lack an efficient and reliable way to find high quality, trustworthy attorneys with the appropriate experience to navigate this complex legal system and handle their specific needs. Small businesses and consumers often do not understand their legal needs or know where to start looking for an attorney. Some are wary of attorneys in general, and others may have heard from friends or family about negative experiences with attorneys or the legal system."

        "The high and unpredictable cost of traditional legal services also presents challenges for many small businesses and consumers. In 2011, the average billing rate for small and midsize law firms was $318 per hour, according to ALM’s 2012 Survey of Billing and Practices for Small and Midsize Law Firms. Attorneys are frequently unable to predict the time required to address a client’s legal matter, sometimes billing thousands of dollars to research a legal issue they have not previously encountered. This can be particularly true of generalist attorneys that offer many disparate legal services to members of their local communities. Unlike attorneys at large global law firms or specialty boutiques who handle high volumes of similar matters and develop expertise in specific domains, generalists can find it difficult to efficiently address a client’s particular legal issue due to their lack of specialized expertise. Due to the high and unpredictable costs of traditional legal services, many small businesses and consumers limit their use of attorneys and instead often attempt to resolve legal issues without assistance."

       "As a result of these factors, many small businesses and consumers often are unsure of or dissatisfied with the legal services available to them, and many either elect not to seek help or take no action to address their important legal needs."

Many lawyers are in denial about the desire of consumers and small business to purchase their services. They will assert that consumers and small business are exposing themselves to liability by using LegalZoom’s limited services which will bring regret later. But consumer’s don’t seem to care. What they get from LegalZoom is "good enough." The numbers tell the story.

Solos and small law firms will find that it will be very difficult to compete against LegalZoom with its superior capital resources. The organized bar (State and ABA) has given up on trying to put LegalZoom out of business on they theory that the company is violating UPL (‘unauthorized practice of law") rules. Any organized bar attacks will be resisted by LegalZoom which will now have the capital to fight any challenges to its business model. The American Bar Association has created a Solo and Small Law Firm Resource Center, but it is too little and too late.

LegalZoom is here to stay and will expand its market share as the major provider of the delivery of legal solutions to consumers and small business.

LegalZoom will, inevitably, put many solos and small law firms out of business as it grows and expands its suite of services.  For a related analysis on my theory about the venture capital industry and disruption in the legal industry see video at: Legal Startups – An Overview at PointOneLaw ].

To survive in this fast changing environment, solos and small law firms need to figure out strategies that extend their brand online, without detracting in any way from their role as a trusted adviser in the communities where they live and work.  I see too many solos and small law firms that think they can emulate LegalZoom’s success but don’t have either the capital or the skills to compete in an online environment.

The competitive response for solos and small law firms should be to create a "click and mortal" strategy that combines what can be learned from LegalZoom with the best management practices of a law firm that has the capacity to deliver "limited" or "unbundled" legal services at a competitive price point, both in the office and online.

Here is a previous blog post which lists steps that solos and small law firms can take to become more competitive in this rapidly changing environment. The cost of adapting to this new competitive environment is not the cost of software, which is relatively inexpensive. The cost is the investment in time that the lawyer has to make to learn new online skills, create more efficient production procedures, and adopt marketing approaches that amplify a lawyer’s experti
se both online and offline.

It will be interesting to see what the legal landscape for solos and small law firms looks like five years from now. 

Limited Scope Legal Services: Unbundling and the Self Hep ClientStephanie Kimbro, a virtual solo practitioner based in North Carolina and a member of the ABA’s eLawyering Task Force,  has authored a new book on Limited Scope Legal Services- Unbundling and the Self-Help Client, published by the Law Practice Management Section of the American Bar Association.

The book is "must reading" for solo practitioners and lawyers in small firms who want to expand the reach of their legal services to serve an expanding latent market for legal services plus provide innovative and responsive legal services to existing clients.

The original book on this subject, also published by ABA/LPM, was written by Forest "Woody" Mosten, who is considered the "Father of Unbundling" in 2000. That was 12 years ago, before the ascendency of the Internet. A lot has happened in 12 years. Kimbro’s book up-dates the original concept and explains clearly how these ideas can be used ito create new on-line business models for law firms.

When you combine the power of the Internet as a delivery platform,  with the idea of limited scope representation, new "unbundled legal services"  can be created that can be sold to clients in volume over a wide geographical area. The Internet takes the idea of "unbundling" to an entire new level. An example is the packaging of highly specialized legal forms with legal advice for a fixed legal fee that are sold through out a state. Long Tail marketing concepts apply when selling specialized legal services to a niche market and are compatible with the idea of limited scope legal representation.

Like Kimbro’s earlier work on Virtual Law Practice,  this new book is a manual filled with relevant case studies, explanations, and other resources that help a lawyer figure out out how limited scope representation could be applied to an individual practice. It should be on the book shelf of every lawyer who is thinking about ways to compete with non-lawyer companies like LegalZoom – which in effect has taken the idea of "unbundling" to an extreme by simply "unbundling" the lawyer completely out of the legal document creation process. [ LegalZoom is not a law firm, in case you haven’t heard.]

The book comes with useful check lists, discussions of best practices, a discussion of the pros and cons of "unbundling" , a discussion of ethical rules that apply, a chapter devoted to marketing unbundled legal services, sample limited retainer agreements, and a sampling of state by state ethics rules that apply to limited scope representation with citations back to the relevant state statutes. This is only the tip of the iceberg. With this single book, a practitioner has enough information to develop a viable business plan for offering limited scope legal services.

If Woody Mosten is been considered the"Father of Unbundling" than Stephanie Kimbro has earned the title of "Mother of Unbundling." 

Buy this book!.