2010 ABA Legal Technology Survey Report on E-Lawyering: Questionable Data

Volume IV of the recently released 2010 ABA Legal Technology Survey Report is devoted to Web and Communication Technology. A section on E-Lawyering reports that 14% of Respondents over all, and 19% of solo practitioners, report that they have a virtual law office or virtual law practice. This question in the survey that deals with with the question of whether a law firm has a 
"virtual law practice" was framed in terms of whether the attorney primarily interacts with clients using Internet-based software and other electronic communications software.

In my opinion, these self-reported responses from attorneys are not meaningful and are much too high to be accurate. The reported numbers are not useful in understanding where the legal profession is in terms of adopting the concept of a "virtual law practice." The reality is that the adoption rate is much lower.

The ABA Law Practice Management Section's eLawyering Task Force (disclosure: I am Co-Chair of the eLawyering Task Force),  defines a "virtual law practice" as one that offers to its clients a secure client portal, as part of the law firm's web site, where the client can log in with a user name and password, and interact with their attorney, as well as consume other online legal services. A virtual law practice is more than simply communicating with clients by email and never meeting with clients face-to-face. In order to have a "virtual law practice" by our definition,  you have to have a web site and a portion of that web site has to be dedicated as a secure portal for clients. Without this distinction, many law firms can claim that they are "virtual law firms" simply because they use email extensively, as the ABA Study seems to imply, giving the impression that integration of Internet technologies as part of their legal service delivery system is much higher than it actually is.

For example, in another question, the survey participants were asked whether the firm has a web site. The solo practitioner group responded that only 52.1% had a web site, but this is the same group that responded that 19% has a "virtual law practice."  By our definition, if you don't have a web site you don't have a "virtual law practice." The only explanation for the discrepancy in these numbers is that the question of " Do you have a virtual law practice?" was phrased so broadly that more law firms where included in the category than should be.

Another question that was asked to determine what kinds of online legal services were offered by the firm was: "Does your law firm offer online document preparation?" 11.4% of solo firms reported that they did. Again this number doesn't make any sense. There were 149 respondents in the Solo category. Only 52.1% actually had a web site, or 77 firms had a web site from which online document preparation could be offered. 11.4% would suggest that only approximately 8 law firms could offer this service. Not only is this number too small to make any meaningful projections in terms of the total number of solo practitioners in the US (more than 400,000), but it is also likely to be misleading. Here's why:

The technological options for offering online document assembly for solo practitioners are very limited. One option is to provide fillable Adobe . pdf forms. But you can't easily use a fillable Adobe .pdf to create a text document such as a Will or a Shareholder's Agreement. The major document assembly vendors such as HotDocs, DealBuilder, and Exari have systems that support online document assembly but the price for licensing these systems is much too expensive for the average solo practitioner. Wizilegal, a new entrant to the field, provides a new low cost web-enabled document assembly solution, but our market information suggest that they have only a small number of users. (Disclosure: DIrectLaw, which sponsors this blog, is one of the few web-enabled document assembly solutions that is offered at a price that a solo practitioner can afford.)

In short, the question about the use of online document assembly should have been phrased much more narrowly, with a field in the questionnaire that would require that the law firm indicate what platform is being used to support online document assembly, and whether it is a third party vendor, or whether the programming was done in-house. My sense is that if the question were asked properly, the number of law firms offering online document assembly would be much lower than actually reported.

Finally, 3% of respondents report that their firms offer expert system on their web sites (compared with 1% in the 2009 survey), including 7% of the large firm respondents. Based on our surveys of law firms from solos to large law firms, this percentage seems very high to me. It is very rare that I come across a law firm web site that actually offers an "expert system" for use by its clients, and I review or check out literally thousands of law firm web sites a year.  Most lawyers don't even know what an "expert system" is! I would like to see a more precise question, where the respondent is required to name the kind of "expert system" they are offering and the url of the web site where it is offered, so that a reviewer could more closely examine what the law firm represents they are doing is in fact the case.

I think that it is commendable that the ABA Legal Technology Resource Center now has a separate section of its annual report just on web and communication technology. The platform for the delivery of legal services is gradually shifting from traditional face-to-face office practice to the Web, but my sense is that the the pace of adaptation is much slower than is being officially reported. This is understandable in a profession that views its core identity as one where clients are dealt with primarily face-to-face. 

On the other hand, our own research on consumer preferences suggests that more than half of consumers would like their law firm to have an online virtual component. Thus, the legal profession continues to lag behind what other service industries offer to their clients and customers online.

 

 

Free Version of DirectLaw Now Available

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

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

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

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

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

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

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

Analyzing LegalZoom's Advertising Practices

There is a blog post at For Connecticut Lawyers which analyzes LegalZoom's deceptive advertising practices that are designed to persuade consumers that purchasing legal documents from LegalZoom is the same as a service from an attorney. The post examines the hidden nature of the disclaimer notice that LegalZoom cannot give legal advice, and questions what "Put the Law on Your Side" - [ Legal Zoom's tagline] means when proclaimed by a non-lawyer, legal document preparation services organization. Since LegalZoom's staff members cannot provide legal advice  when they review a document one could ask the question:  What they really do and what justifies the relatively high cost of a LegalZoom's services? How are LegalZoom's services different from a legal form that is purchased from an on-line legal form web site such as US Legal Forms, which are available at much less cost?

Best Practices for Virtual Law Firms

The eLawyering Task Force of the Law Practice Management Section of the ABA, had its monthly telephone call on Friday. One of the action items is a renewed interest and commitment to produce a set of best practice guidelines for law firms that want to deliver legal services online. These guidelines would complement the Best Practice Guidelines for Legal Information Web Site Providers that were produced by the eLawyering Task Force and approved by the ABA House of Delegates in 2003. The Legal Information Best Practices Guidelines apply to both law firms and non-law firms and don't deal specifically with issues that lawyers face when they want to deliver legal services online. In some cases it has been reported that malpractice insurance carriers have declined coverage when a law firm attempts to provide legal services directly through their web site. With more law firms embracing the concept of virtual legal practice, it becomes even more important to provide a framework for best practices.  The guidelines would cover such topics as ethical issues in delivering online legal services, security issues, and the attorney/client relationship.

In addition, a new group of software vendors that license "software as a service" {SaaS) have emerged to provide online software applications that support virtual law practice. Some of these vendors include: Virtual Law Office Technology, RocketMatter, Clio, and our own DirectLaw, Inc.,  As part of the guidelines development process, we plan to seek input from this emerging group of software as service vendors.

The goal is to have a draft ready for the discussion by the eLawyering Task Force at the ABA mid-year meeting and then a revised draft for further discussion as the quarterly meeting of the Law Practice Management Section in New Orleans in May, 13- 16, 2009.

Feedback and ideas about what issues should be covered are welcome from all.

 

The End of Lawyers? Rethinking the Nature of Legal Services

 Richard Susskind's new book, The End of Lawyers?: Rethinking the Nature of Legal Services was just published by Oxford University Press, in the United Kingdom. I received a copy from my associates in London today, and US distribution should begin within 10 days.  For law firms thinking about the future of the legal profession, this book should be mandatory reading.

Susskind sees the legal market as “broken.” Access to justice is available only to citizens who are very poor or very rich. The cost of dispute resolution in the courts often exceeds the amount at issue. Small businesses invariably claim that mainstream legal services are beyond their budgets. And even the world's largest companies and financial institutions are seeking radically new ways of meeting their legal needs.

Susskind argues that, in this time of grave economic uncertainty, the market will no longer tolerate traditional, expensive lawyers who handcraft tasks that can be better discharged with the support of modern systems and techniques. He claims that the legal profession will be driven by two forces in the coming decade: by a market pull towards the commoditization of legal services, and by the increase of disruptive, Internet-based technologies. The threat here for lawyers is clear - their jobs may well be eroded or even displaced.

Susskind challenges the legal profession to ask what elements of their current workload could be undertaken more quickly, more cheaply, more efficiently, or to a higher quality using different and new methods of working. Susskind argues that if automation can streamline certain legal tasks and that the market will forces lawyers to adapt to the "digitization"  or they won't survive.

I am still working my way through this important book, so will have more to say in future blog posts when I finish it.

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What is LegalZoom?

LegalZoom is a California-based company that offers on-line paralegal document preparation services on a nationwide basis.  A nationwide advertising program, financed in part by a relatively large capital investment from Polaris Venture Partners,  is now underway in major national media markets with the goal of branding LegalZoom as the leading legal services web site on the Internet. With Robert Shapiro of OJ fame,  as the company's leading spokesperson, LegalZoom uses the  tag line: "We Put the Law on Your Side", a claim that the company could not make if it were a law firm under the marketing roles that govern the legal profession in all states. LegalZoom, as it is not a law firm, is not bound by these rules, Nevertheless, the company claims to be the leading legal web site. Is there something wrong with this picture?

When a customer arrives at the LegalZoom web site they are presented with a menu of legal documents that are sold for a fixed price. The documents are common legal documents that range from wills, powers of attorney, living wills, and no-fault divorce, on hand to business documents such as incorporation, trademark, and copyright on the other. The customer completes a web form and pays with a credit card. From the data inserted by the customer into the web form, a paralegal aided by document assembly software of some kind, generates a legal document or form, which is returned to the customer in paper format by regular mail.

Under long standing bar rules that are operative in every jurisdiction in the U.S, LegalZoom as a non law firm,  cannot give legal advice of any kind, cannot modify a customer's answers in any way, and cannot do any custom drafting that is responsive to a customer's particular set of facts. The company in a very fine print disclaimer makes clear that it is not a law firm and that" "LegalZoom is prohibited from providing any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms or strategies. " The company does do a review which has to be limited to making sure that all answers are completed in the Questionnaire, that the spelling is correct, and minor tasks that are limited to very narrow role of being a proof-reader of the customer's data entries.

The company claims that: "With LegalZoom's lawyer-free service, you can save up to 85% off the rates an attorney would charge for the same procedure. " This comparison misrepresents the contribution that an attorney makes when serving a client. It suggests that the LegalZoom service is equivalent to the services of an attorney, when it clearly isn't. The representation suggests that a consumer will receive the same result that they would get if they went to an attorney, which is clearly not the case. Moreover, there are many attorneys who charge fees which compare favorably with LegalZoom's fee structure, so the fees that lawyers charge for comparable transactions which are published on the LegalZoom web site are true of some law firms, but not all solo and small firms.

LegalZoom's prices are in fact not cheap, when you consider that with a bit of effort searching  on Google a customer can find identical forms on the Internet that are either free, or which are sold for a modest fee, when compared to the "document preparation fees" that LegalZoom charges for very common legal documents.

But if the role of LegalZoom is really limited to data input and some minor editing and proofing, where's the beef?

There is no doubt that this service concept has been successful, because the company has claimed to have served 500,000 customers. LegalZoom's customers may believe that they are getting a service that is equivalent to the service that they would get from an attorney.

As a disruptive innovation, LegalZoom is demonstrating that there is room for competition in the delivery of legal services and that there are other way's to solve people's legal problems than going to an attorney, despite the very real limitations of the LegalZoom service.

It will be interesting to see how the organized bar responds to LegalZoom as the company becomes more dominant and continues to eat away at the legal profession's dominance in helping people solve their everyday legal problems.