LegalForce Store Offers Walk-in Lawyer Access in Palo Alto

Ray Abyhanker, the entrepreneur lawyer behind the Trademarkia web site,  the highest traffic legal sites on the Web, opened a kind of Apple Store for legal stuff and other stuff (self-help law books, non-Apple tablets, tablet accessories, etc), right across from the Apple Store on University Avenue in Palo Alto. [See previous post on this company at: May the LegalForce Be With You! ]

Beautifully designed in a historic building the idea is to provide an  "third place" where lawyers can meet and mingle with potential clients, provide community law classes, and generally demystify the law by creating an accessible and friendly legal environment.

The ultimate goal is to create a branded network of law firms that promises a high value client experience for the broad range of consumers and small business that are also attracted to pure online ventures such as LegalZoom and RocketLawyer, but want something more.

LegalForce Store in Palo AltoThere is a lot to be said for a "click and mortar" strategy which involves lawyers working with clients in their offices, and interacting as well online,  but also meeting and interacting in a neutral physical space that is a retail environment. Sort of like having a  "Genius Bar" for legal problems where you can ask a question and get a quick legal answer or get assistance in knowing how to start out to solve a legal problem.

Where do I start? Do I need a legal form or a self-help law book? An "unbundled"  legal service, or full service representation? What's the lowest cost solution to my legal problem?

The LegalForce lawyer store staff call themselves  "Concierges" and I believe that is an apt title. We need more legal concierges, on the web, and in the real world.

Legal services, particularly the more complex the legal service, depends on the presence of a skilled trusted adviser. Sometimes the lawyer presence can be virtual, but sometimes the legal problem requires a face to face meeting with a client so that a thorough exploration of the facts of the case can be fully understood.  For lawyers, the ideal strategy is one that combines an off-line practice with an online presence and a brand that expresses both dimensions of the practice.

 

The term "Click and Mortar" is attributed to David Pottruck, then CEO of Charles Schwab Corp, in a July, 1999 speech at a conference sponsored by the Industry Standard. Pottruck is quoted as saying:

 "Schwab's vision has always been designed around customer needs and the company is engaged in constant reinvention to stay ahead of these powerful investors. Schwab believes that it is the combination of people and technology that investors want -- a "high-tech and high-touch" approach. As such, Schwab is redefining the full-service business around the integration of "clicks and mortar."

Pottruck subsequently wrote a book about the strategy.  A brokerage firm is more like a law firm, than a law firm is to a ecommerce web site with no human touch. It might be fine to buy your shoes online from Zappos, but I am not so sure that in the fullness of time will clients want a purely virtual experience with their law firms. As someone who runs a company ( DirecttLaw) that provides a virtual law firm platform to law firms, and has operated my own virtual law firm since 2003,  I have experienced both the advantages and the  disadvantages of a pure legal service without any human meeting.

By linking together an online experience with an off-line, real work experience, Abyhanker may have come with a legal service concept that is unique. Trademarkia is being re-branded under the LegalForce brand and recruiting  law firms for the network, first in California and then nationwide has begun..To be clear this is not a franchise, but more of a marketing network with productivity benefits for its law firm members.

Disclosure: Our company created an interactive legal form portal under the LegalForce brand and a "legal form kiosk" for the store.

Serving Justice With Conversational Law: Expert Legal Systems Are Here

Expert Systems in the LawDavid R. Johnson, a Visiting Professor at the Institute for Information Law and Policy and New York Law School, has written a new thought piece for the World Future Society on how the digitization of law changes the nature of law. Building on a theme first articulated by Ethan Katsh in his seminal work on The Electronic Media and the Transformation of Law (Oxford University Press, 1991).  Katsh speculated that digital technologies would change our ideas about what the law actually is. Johnson extends the analysis and notes that "Katsh's speculations are only now becoming right-in ways that not even he predicted." I am indebted to Katsh as when I first read his book in 1991, in pre-internet days, it set me off on a journey and a path that I am still pursuing to this day. I underestimated that time that it would take for these predictions to become a reality by about two decades!

Johnson envisions a future where there will be a proliferation of expert systems developed by lawyers that will enter into dialogues with clients and consumers that will provide answers to legal questions at low cost and at scale. He sees law becoming conversational and dynamic, rather than static. Legal documents becoming wholly interactive. Statutes will also become dynamic with interpretations of language build into the code itself.

In an environment where law is conversational, the meaning of a term or rule will become less obscure and ambiguous, so that disputes will be resolved based on the facts, rather than what a particular term means.

Johnson predicts that that:

"As law becomes conversational code, we will talk to it directly. Some people may not get the answer they like. so lawyers will always need to be around to provide comfort or help formulate alternative plans for those who can afford them."

The tools to create such "expert systems" are getting to be easier to use. Neota Logic, an expert systems authoring tool company, collaborated this year with New York Law School and Georgetown Law School in a project to train law students to help students build expert legal systems in the context of  courses offered by both law schools. I have reviewed these student projects and I can tell you that they are quite good and useful aids to decision-making. Here is a video that describes these projects. These students are learning skills that will enable them to become a new kind of legal professional that creates systems that can have wide distribution, and as Johnson points out a potentially a new kind profitable law practice.

(Richard Susskind , another one of my mentors to whom I owe a great intellectual debt, also predicts the rise of a new class of legal software engineers, in his seminal book on The End of Lawyers).

It will be interesting to see how long it will take for Johnson's predictions to become a reality. (Probably another two decades!) One constraint  that we know of, is that it takes capital to build any kind of a digital application, because it takes time to build, and if you are spending time building a digital application, you are not billing hours to clients.

It is for this reason for example. that although we make our document authoring system available for free when a lawyer subscribes to our DirectLaw virtual law firm platform , less than 5 lawyers out of hundreds of law firm subscribers have elected to automate their own legal documents.

Perhaps the current generation of lawyers simply don't possess the skills to do this kind work - a problem that some law schools are trying to address. See Reinvent Law at Michigan State Law School. Change comes very slowly to the academy, so I would not expect a new cadre of legal software engineers to available soon.

For those that acquire these new skills, I think they will find themselves in demand - not by law firms - but by disruptive law start-ups, privately-financed companies, that will be the source of these new legal expert system applications.

You can download the entire Johnson article here.

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In accordance with the   FTC 16 CFR, Part 255: "Guidelines Concerning Use of Endorsements and Testimonial in Advertising" I am disclosing that I have a material connection to some of the companies referred to in this Post. I am the Founder/CEO of  DirectLaw, a virtual law firm platform provider.. The opinions expressed here are my own. I did not receive any compensation from any source for writing this post. DirectLaw sponsors this blog by paying for the costs of hosting.

 

 

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.
 

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.

 

December Law Practice Today Issue Focuses on eLawyering

Virtual Law PracticeThe latest edition of the ABA's Law Practice Today webzine has good articles on elawyering and virtual practice and a really innovative piece by Marc Laurtisen titled,  Dancing in the Cloud, and an introduction to the elawyering concept by Stephanie Kimbro --  Getting Started With eLawyering).

I also wrote a short article on Document Assembly Over the Internet , which as readers of this Blog will know is an old theme for me.

For our latest analysis on what is working in the virtual law firm space, download our White Paper on Virtual Law Practice: Success Factors.

 

 

How Do Lawyer Bidding Sites Work?

Recently several Web sites have emerged that enable consumers to bid for legal services. Examples include: ExpertBids and  Shpoonkle. (Don’t ask me how to pronounce  it). They all work pretty much the same way.

You submit a description of your project or the service you want, your location and your estimated budget. You create a secure account with a user name and password. Your service request is then posted or published to a lawyers who have registered for the service so they can bid on your work. When a lawyer bids for your work, you receive an email (each bid includes a rate, a description, and the lawyer’s profile, rating and client reviews). When the lawyer bids, whether bid by the hour or fixed price, you receive an email which includes a rate, a description, and the lawyer’s profile, rating and client reviews. The process gives you options and a basis for comparing how different lawyer;s will submit bids and pricing for similar work.

The process is always free to the potential client. Once you are connected to a lawyer you can continue your conversation either online or off-line. The sites enable you to communicate with the lawyer online directly, but often you don’t get any free legal advice or any legal service until you accept a retainer agreement and the lawyer/client relationship is established.

For law firms that have learned how to offer legal services for common legal matters for a fixed fee, these bidding sites could be another channel to the consumer and potential clients. These law firms, often virtual law firms, are low-cost producers of legal services, and can out bid more traditional legal firms without sacrificing quality or their profit margins.

Many of these law firms offer what are called, “limited legal services”, which enable these law firms to offer a low cost solution to consumers, but often consumers have no understanding of this concept. See for example the law firms listed in the MyLawyer.com Directory of  Virtual Law Firms. We think that the bidding sites should have articles and information on their web sites describing the “limited legal service” concept as this would be way to educate consumers about another way to cost effectively buy legal services.

A problem that we see with the bidding sites that we reviewed is that there is no easy for the consumer to describe that they want “limited legal services“, as distinguished from traditional legal services. There are options for bidding by the hour, or by the project, but no option for limiting the scope of representation. “Unbundling legal services“, is a relatively new idea, but many states (more than 35) have already passed amendments to their Professional Rules of Responsibility that enable law firms to offer “limited legal services” as long as the retainer clearly defines the scope of representation.

I think this is a critical gap in the way the operators of these site understand how middle class consumers want to purchase legal services. I also think that there is likely to be a disconnect between what the consumer bids for a service, and what they law firm delivers for the bid price. Without a clear specification of the scope of services, there is bound to be miscommunication and confusion.

It is too early to predict whether these “bidding sites” will survive. In the “dot-com boom and bust” era, there were several experiments with lawyer bidding, but all the sites failed because they could not generate enough volume to support their overhead structure.

Susan Cartier Liebel, the President of Solo Practice University has written a good blog post analyzing these sites,  that is worth reviewing by consumers who are interested in this approach to securing legal services.

Buy a Legal Forms Access Plan from MyLawyer.com

Is LegalZoom Just a Self-Help Legal Software Company?

In a Fortune Magazine blog post by Roger Parloff just last week, entitled Can Software Practice Law?, writing about the class action suit against LegalZoom in Missouri for violating Missouri's UPL statute, Parloff argues that LegalZoom is no more than a self-help legal software company, and therefore entitled to the same protections as a self-help legal software publisher. The question of whether legal software constitutes the practice of law is a controversial one. When the Texas Bar won a suit against Nolo Press on the grounds that its WillMaker program constituted the practice of law, the Texas Legislature amended the UPL statute and further defined the practice of law  as follows:

Texas Code, 81.101 (c) the "practice of law" does not include the design, creation, publication, distribution, display, or sale, including publication, distribution, display, or sale by means of an Internet Web site, of written materials, books, forms, computer software, or similar products if the products clearly and conspicuously state that the products are not a substitute for the advice of an attorney. This subsection does not authorize the use of the products or similar media in violation of Chapter 83 and does not affect the applicability or enforceability of that chapter.

No other state has passed such an exemption, but there is a well-established line of cases that supports the position that the publication of information about the law, as well as self-help legal books, divorce forms with instructions, and do-it-yourself kits is not the practice of law and protected by the First Amendment of the U.S. Constitution and may be protected by state constitutions as well. See, e.g., New York County Lawyers’ Ass’n v. Dacey, 21 N.Y.2d 694, 234 N.E.2d 459 (N.Y. 1967), aff’ing on grounds in dissenting opinion, 283 N.Y.S.2d 984 (N.Y. App. 1967); Oregon State Bar v. Gilchrist, 538 P.2d 913 (Or. 1975); State Bar of Michigan v. Cramer, 249 N.W.2d 1 (Mich. 1976); The Florida Bar v. Brumbaugh, 355 So.2d 1186 (Fla. 1978); People v. Landlords Professional Services, 215 Cal. App.3d 1599, 264 Cal. Rptr. 548 (Cal. 1989). 

LegalZoom takes the position that it is no more than a self-help legal publisher and seeks to fall within this classification, as Roger Parloff argues in his blog post. This is also the position that Legal Zoom takes on its Web site and in its answer to the Missouri Complaint:

From the LegalZoom Web site:

"Is LegalZoom engaged in the practice of law?"

"No.  LegalZoom is the latest and natural evolution of the centuries-old legal self-help industry."

"No jurisdiction prohibits the sale of software that generates a legal document based on a customer’s unique input.  LegalZoom has never been prohibited from operating in any state."

"Should consumers be concerned about LegalZoom losing this case?"

"No.  If LegalZoom is found to be engaged in the unauthorized practice of law in Missouri, then every guide and legal formbook in libraries and bookstores in the state would also be engaging in the unauthorized practice of law.  These days, nearly all such books are packaged with computer software that works in a similar manner to LegalZoom.  Just like with a Nolo Press® book or a preprinted form, LegalZoom customers have the ability to review and consider their legal form before committing to their purchase."

It is not possible to know how LegalZoom’s document technology actually works without further evidence. However, one can state with certainty that it doesn’t work like a true Web-enabled document automation technology which generates a document instantly from data entered into an on-line questionnaire that is presented through the Web browser.

Vendors of true Web-enabled document automation solutions, such as HotDocs, Exari, DealBuilder, WhichDraft and Rapidocs (our company) have document automation technologies that generate a document instantly after the user clicks on the submit button. Because LegalZoom’s technology seems to require a separate step that is executed off-line, it does not in my opinion, fit into the category of a Web-enabled document automation technology. [ For a more extensive discussion of Web-Enabled Document Automation as a Disruptive Technology, click here to download our white paper on the subject. ]

Instead, in the LegalZoom  business model, as described by LegalZoom, a data file is created, reviewed by a legal technician, and then imported into their - document assembly application utilizing some form of import mechanism. It is not clear whether the document is fully-assembled until this second step takes place, and it’s a distinction that makes a difference.

If LegalZoom were just a legal software company, it is hard to understand why it needs over 400 employees to provide services to its customers, other than the fact that these employees are conducting professional reviews and providing real service support. For these services, LegalZoom receives a substantially higher price than if they were just selling a self-help legal form. See for example on the LegalZoom Web site, the 30-point review of wills conducted by LegalZoom's "professional legal document assistants."

These more labor intensive, personal services makes LegalZoom a "service business" and not just a "legal software publisher" entitled to the First Amendment protections that are afforded to publishers.

Andrea Riccio, a Canadian lawyer who has commented about this subject, responds to some of the arguments that LegalZoom makes in its defense:

LegalZoom’s argument: "Typically, there is no interaction between the customer and the person reviewing the file."

Riccio’s response:

“The mere fact that the employee is granted access to the customer's response is an interaction between the employee and customer.”

LegalZoom’s argument: "If there is an inconsistency, it is NOT corrected by the employee – instead, it is brought to the attention of the customer." 

Riccio’s response:

“Whether it is the customer or the LegalZooM employee that physically changes the document is irrelevant. What is important is that it is the LegalZoom employee that has identified the inconsistency. That, in my opinion, goes beyond "self-help" and is an act of legal draftsmanship.”

LegalZoom’s argument: "no employee revises or corrects any portion of the customer’s self-created document." 

Riccio’s response:

“Identifying inconsistencies or errors in another person's document is in my opinion an act of revision and correction. Who physically makes the changes is irrelevant.”


It is for these reasons that LegalZoom was required to be licensed under California law as a registered and bonded legal document assistant (see footer
LegalZoom Web site).

What is a Legal Document Assistant?

A "Legal Document Assistant", as defined by the California Business & Professions Code (Section 6400 (c)) is:

"Any person who is otherwise not exempted and who provides, or assists in providing, or offers to provide, or offers to assist in providing, for compensation, any self-help service to a member of the public who is representing himself or herself in a legal matter, or who holds himself or herself out as someone who offers that service or has that authority, or a corporation, partnership, association, or other entity that employs or contracts with any person who is not otherwise exempted who, as part of his or her responsibilities, provides, or assists in providing, or offers to provide, or offers to assist in providing, for compensation, any self-help service to a member of the public who is representing himself or herself in a legal matter or holds himself or herself out as someone who offers that service or has that authority."

This California statutory scheme is based on the idea that a non-lawyer can perform clerical support functions without violating the unauthorized practice of law statute in California. Only a few states have carved out this exception by statute (e.g., California, Florida, Arizona).  Missouri is not one of them.

Could LegalZoom operate in California, where it is headquartered, without being registered with the state as a Legal Document Assistant?  I think not.  

This is the category that LegalZoom fits into, not “self-help” software.

Otherwise, I suppose Nolo, a California-based self-help legal software publisher, and other California-based legal software publishers that sell directly to the public, would have to be licensed in California as Legal Document Assistants!!!  (See generally - http://en.wikipedia.org/wiki/Legal_document_assistant, for a more extensive discussion of what a Legal Document Assistant is, and is not.)

Just to be clear, I am personally in favor of both self-help legal software and paralegal-assisted document preparation services as a way of providing access to the legal system, and personally think there should be more choices for consumers.  But my personal opinions are not the issue.  The issue is: 

“What does the law in the different states now require, and what can we do to change it if we don’t like it?”

It is becoming clear that LegalZoom’s defense strategy in the Missouri case is to associate itself with “self-help software”.  I am sure that its well-financed publicity machine is already approaching bloggers and the business press to write stories about whether “legal software” should be prohibited or regulated, when the real issue is whether and under what conditions a legal document preparation service should be regulated, or immune from regulation.

Definitions of what is “legal self-help software”, and what is not, are critical for carving out safe harbors for innovation, particularly as legal software applications that are distributed over the Internet have potential for great impact and for providing access to the legal system for those who cannot afford full service legal representation.

For example, LawHelpInteractive, a non-profit pro bono support organization, with grants from the US Legal Service Corporation, has assisted in the creation of true Web-based document assembly Web sites in many states that provides free legal forms directly to consumers that can be assembled directly on-line. 

LawHelpInteractive has generated thousands of legal forms during the past few years that are instantly available and free to consumers throughout the United States. No one is arguing that these Web sites constitute the practice of law.

Because of the wider reach of the Internet, Web-enabled legal software applications are actually more of a threat to the legal profession, than desktop software, and the opportunity for over-regulation remains ever present. I would regret the day that courts prohibit the sale of self-help legal software because it is the unauthorized practice of law.

However, stronger arguments can be made for protecting from regulation the distribution of legal software applications, than there are for exempting from regulation a "service business", so I maintain that confusing one category with another is dangerous and takes us down a slippery slope.

Whether or not LegalZoom provides a valuable service; whether or not consumers have been harmed by LegalZoom; and whether or not the company provides some form of legal advice are questions of fact for the Missouri jury, and beyond the scope of this post.

The question for the U.S. District Court in Missouri is whether, as a matter of Missouri law, LegalZoom's document preparation service business constitutes the practice of law in Missouri, under the terms of the Missouri UPL statute.

I think it does. What do you think?

 

How Much is Legal Advice Worth?

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

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

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

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

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

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

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

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

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

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

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


You don't get legal advice from a legal forms web site or a LegalZoom for that matter, which can be a major limitation depending on the complexity of the document or the transaction. Without annotations that explain the significance of particular language in an agreement, the non-lawyer is stumbling around in the dark.
 
Nevertheless, I don't doubt that consumers and small business will find this a popular site, despite its limitations. Caveat emptor!
 
Free White Paper on Virtual Law Practice: Success Factors

Keane Memorial Award for Excellence in eLawyering Goes to Orange County Legal Aid

The James I. Keane Memorial Award for Excellence in eLawyering for 2011 is going to the Legal Aid Society of Orange County for their Legal Genie Project, reports the eLawyering Task Force of the Law Practice Management Section of the ABA, the group that makes the Award.

James Keane was the first appointed Chair of the group, and passed away tragically from cancer six years ago.

Legal Genie - Keane Award Winner - 2011

Bob Cohen is the long time leader of Orange County Legal Aid, and provided the leadership for this Project. 

This project combines the use of advanced web-enabled document automation technology to generate Chapter 7 and Chapter 13 documents, as well as California divorce pleadings. It is unique because it involves a network of lawyers who provide legal advice, document review,  and other assistance to clients who use the program. The use of Internet technology makes it possible for the lawyers to be involved, and to also get paid a fee, because the entire transaction is made more efficient. The lawyers who participating get the benefit of the Legal Aid brand, and the marketing that results from promoting the project.

The Project demonstrates how a vertical branded network of attorneys, empowered by a robust technology platform, can provide legal services at an affordable fee to individuals who could not normally afford a lawyer.

This is from the Legal Genie website:

 “Legal Genie is a simple, affordable and reliable online service created by Legal Aid Society of Orange County. It is designed for people who do not qualify for legal aid and cannot afford the services of an attorney. It asks simple questions and puts answers on the forms in the correct place.

"Legal Genie is different from other services because it connects you to a licensed attorney on our Lawyers Referral Service panel. The LRS attorney will give you telephone consultations, review your documents and give you legal advice. Legal Genie combines the magic of technology with the help of a professional at a price you can afford.”

The formal granting of the Award will be on April 12, 2011, at a Lunch for all of the attendees of  ABA TECHSHOW in Chicago, Illinois at the Hilton Hotel.

Applications for the James Keane Award for Excellence in eLawyering Are Still Open.

The eLawyering Task Force of the Law Practice Management Section of the ABA is seeking recommendations and applications for the James Keane Award for Excellence in eLawyering which is awarded annually at ABA Tech Show in Chicago ( April 11-13, 2011). This will be the fourth year that the Award has been made. Previous award winners include Stephanie Kimbro for her work in creating the virtual law firm of KimbroLaw and Lee Rosen of the The Rosen Law Firm (both coincidentally located in North Carolina).

The purpose of this Award is to give recognition to law offices that have developed legal service innovations that are delivered over the Internet. The focus of the Award is on the innovative delivery of personal legal services, with special attention given to firms and entities that serve both moderate income individuals and the broad middle class. 

The Award is technology-focused, in the sense that the Award Committee is seeking innovations that demonstrate the concept of eLawyering - which can be  further defined as the delivery of online legal services. Examples of elawyering include the development of online web advisors, expert systems, innovative uses of web-enabled document automation, on-line client collaboration systems, and on-line dispute settlement systems, to name a few examples.

Nominees may be any individual lawyer, law firm or other deliverer of legal services to individuals within the United States.

The nominee can be a large or small law firm, public or private, or a legal services agency. More than one entry may be submitted, and the Task Force encourages self-nomination. The Application deadline has been extended to March 15, 2011.

For further information and an application form see: http://tinyurl.com/48xvcfq

 

What Lawyers Can Learn From LegalZoom

Unless you've been asleep for the last five years, you have probably heard of LegalZoom, the California-based, non-lawyer legal document preparation company that claims it has delivered over 1,000,000 wills to consumers, and that it is the largest incorporation company in the country.

LegalZoom is only one of hundreds of Internet-based legal form web sites that have emerged during the last 10 years and which are eating away at the market share of solos and small law firms. LegalZoom has been challenged by some state bars with the unauthorized practice of law, but hasn’t lost a case yet. They are serving thousands of customers who ordinarily would be served by solos and small law firms. They must be doing something that is in demand because they continue to grow at the expense of solos and small law firms.

LegalZoom, and non-lawyer legal form web sites like it, have a business model that consists of the following elements:

  • A legal service delivered purely over the Internet;
  • No physical offices, and thus no extensive rental costs to pass on to customers;
  • Limited services offered at a fixed price that can be easily compared with other providers including law firms;
  • The use of web-enabled document automation technology to reduce costs and increase productivity;
  • A secure customer portal where clients can execute legal tasks in their own personalized web space;
  • Access on their web site to thousands of pages of free legal information on hundreds of subjects;
  • Money-back guarantees to comfort consumers; and
  • Reliance on informed consumers to do part of the work, often called co-production, such as filing their own documents or executing their documents on their own based on provided instructions to keep costs down.

Consumers don’t seem to care that they are not dealing with a law firm. As lawyers, we know the service they are selling is risky for consumers, but for consumers it delivers a “good enough” result. LegalZoom would not be growing at this fast a rate if they weren’t offering something that consumers want and value.


How to Compete Against Legal Zoom and Other Non-Lawyer Providers

In the new, competitive environment that solos and small law firms face in the current economy, the keys to law firm survival are to expand the strategic options available by opening new client markets, reducing the cost of services, and delivering legal services in a way that distinguishes your firm from other firms in the pack. These strategic options should be mixed with more traditional approaches to differentiation such as specialization within a niche practice area.

It is time for solos and small law firms that offer personal legal services to the broad middle class to rethink their law firm business models. There are many opportunities for incorporating some of the elements of the LegalZoom business model into a more traditional law practice.

To name a few:

  • Consider offering "unbundled" limited legal services at a fixed price, both on-line and off-line;
  • Leverage a reputation in your local community and a physical office into an on-line brand that is both local to your community and extends throughout your state;
  • Add virtual law office functionality to your web site so that your clients can have the option of interacting with you on-line;
  • Figure out ways of using Internet-based technologies, such as web-enabled document automation to strip out costs from your overhead structure increasing profitability;
  • Figure out how to segment the market offering lower priced services for more routine matters in order to build trust so that when a client has amore complex problems they will turn to you for assistance;
  • Emphasize all of the advantages of using an attorney over a non-lawyer forms provider in your marketing materials and your elevator speech. Click here to see one such comparison.
  • Use web-based technologies to respond to both prospects and clients within hours rather than days.
  • Reduce the perceived risk that consumers have in retaining a lawyer by increasing transparency and structuring forms of performance guarantees.
  • Adopt project management technologies to better estimate costs and fees on more complex projects, translating that data into communications that clients understand.

The current depressed economy and its affect on the broad middle class is not going to change tomorrow. It is likely that solos and small law firms, will have to adjust to new pricing and market realities in the future as competition from non-lawyer providers of legal solutions continues to increase. Large law firms serving large corporations may be immune from these developments, at least for a few years any way, but the fact that Big Law is changing relatively slowly should not mask the rapid changes happening to solos and small law firm practitioners that serve consumers and small business.

I heard a report the other day that the volume of wills and estates practice in one state declined by 50% during the past year. I predict that this trend will continue and not reverse itself, despite any improvements in the economy.

Some commentators think that the monopoly will hold. History and the experience of other countries in deregulating the legal profession suggests otherwise.


Welcome to the "new normal."
 

Defining the Virtual Law Firm

Jay Fleischman, who authors the LegalPracticePro Blog, recently had a blog post where he wished "Death to the Virtual Law Firm." His problem is not with the idea of lawyers practicing law over the Internet, but that the term "virtual" is confusing because it connotes that the lawyer really isn't present. In reality, the virtual lawyer is very present as the producer of legal services, perhaps even more so than a traditional lawyer, because there is the potential for 24/7 accessibility.

He argues that this term confuses the consuming public and potential clients.

In my opinion, the idea of a "virtual law firm"  is becoming a way of describing a law firm that delivers legal services in a new and innovative way. The average consumer whose purchasing behaviour  has changed because of the proliferation of non-lawyer web sites on the Internet, such as LegalZoom, understands very well that when a law firm uses the terms, "virtual" or "online" that the firm is offering a service that is often more reasonably priced, more convenient to use, and often delivered at a faster response time than is usual.  Our market research shows that when consumers see the term "virtual law firm", that it means that a law firm is willing to offer legal services in a non-traditional way, usually  "unbundled legal services," and at a fixed price.

Sometimes a term moves into common usage with unanticipated consequences and a different meaning than its common meaning.  For law firms offering online legal services, this is a way for them to differentiate themselves from law firms that offer legal services in a traditional office setting who eschew digital methods.

It is a marketing message that is powerful, because at the present time there are very few lawyers who have learned to harness the power of the Internet to increase their productivity and keep their prices affordable. "Virtual lawyering" communicates a message to consumers that this is not your "grandparents" law firm.

I doubt that consumers think that a virtual lawyer is someone who is just an avatar in http://www.secondlife.com. At some point in the future, delivering legal services online will become common. At the present time it is not, and the online law firms, that use this moniker, are trying to differentiate themselves from from the rest of the pack. There are very few law firms reaching out to the broad middle class with affordable legal services and too few law firms using the Internet as a platform for the delivery of legal services. "Virtual law firms" represent a new category of law firm that are reaching out to a "latent" market of consumers with a new value proposition.

Because the method of delivering legal services over the Internet is shaped by technology, and the underlying technology needs to be carefully examined and evaluated in terms of whether legal services delivered online are ethically compliant, it is useful to be able to treat this activity as a separate category, at least for the purpose of discussion.

Perhaps in the future, lawyers who deliver legal services over the Internet will refer to themselves as "digital lawyers", or "Online Lawyers", and these terms will become synonyms for "virtual lawyers".  For now, the label, "Virtual law firm" and "Virtual lawyers" is a useful way of framing this emerging activity so its benefits and deficiencies can be further examined. Without precision in definition, it is easy for any lawyer who works from home, and who never sees a client face to face, and who simply uses email, to call themselves a "virtual lawyer." 

I think that the Wikipedia definitions of a "virtual law firm" and "elawyering" , are useful as a starting point for understanding this new category of law firm. The only way to advance the "state of the art" is to recognize that the Internet as a platform for the delivery of legal services is something unique that requires careful examination and assessment. That exploration doesn't get very far if we simply lump all law firms into the same category.


 

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?

eLawyering Task Force Conference Call

For those of you who are members of the eLawyering Task Force of the Law Practice Management Section of the ABA, this is reminder that there is a Task Force Conference call on January 9, 2009 at 10:00 A.M.

Our agenda includes a discussion on standards and best practices for elawyering and delivering legal services online.

Members of the American Bar Association, who wish to become members of the Task Force should contact Marc Lauritsen, Co-Chair of the Task Force at marc@capstonepractice.com directly. In order to be eligible for membership you also have to be a member of the Law Practice Management Section of the ABA. 

 

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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