Legal EducationTwo ABA presidents to weigh in on future of legal education at South Carolina Law Review symposium Feb. 27 – 28.Legal Education

For more information and to register online, go to the South Carolina Law Review website.

Will non-lawyers soon be allowed to provide certain legal services? They might if one of the key conclusions from a recent report by the ABA Task Force on the Future of Legal Education is implemented. (See my blog post on this topic at: Limited Licensing of Legal Technicians: A Good Idea? 

I am participating in this program so I will get another opportunity to air my somewhat contrarian views on whether there should be another licensed class of professionals serving the public directly who are not lawyers. A complicated subject that needs more debate.

The report, released in January, will be the focus of the South Carolina Law Review Symposium Feb. 27 – 28 at the University of South Carolina School of Law. The symposium will explore why law schools and the legal profession must make changes – and what those changes should be – to keep up with the evolving marketplace for legal education and legal services delivery. 

Titled “On Task?: Expanding the Boundaries of Legal Education,” the symposium will take place in the law school’s auditorium. 

The symposium will begin at 4 p.m. Thursday with a panel discussion in response to the Task Force’s report and a keynote address by Jim Silkenat, president of the American Bar Association and partner at Sullivan & Worcester LLP in New York. Silkenat will discuss the legal profession and future of legal education and its impact on law schools, corporate counsel and private attorneys. USC board of trustee, alumnus and ABA president-elect William Hubbard will introduce Silkenat and offer his views on the future of legal education. 

Friday’s sessions, which take place 9 a.m. to 4 p.m. will focus on proposals outlined in the Task Force’s recent report and law schools’ responses to changing markets within—and outside of—the law curriculum. Panels also will address the changing expectations of law firms and clients, new platforms in the delivery of legal services, the growing demand for information management by corporate clients, and the promises and challenges of limited licensing. 

Participants include, among others: 

  •  Elizabeth Chambliss, USC professor of law and director of the Nelson Mullins Riley & Scarborough Center on Professionalism;
  • Steve Crossland, chairman of the Washington Supreme Court Limited License Legal Technician Board;                                          
  •  Barry Currier, managing director of accreditation and legal education, ABA Section of Legal Education and Admissions to the Bar;  
  • Neil Hamilton, professor of law and director of the University of St. Thomas School of Law’s Holloran Center for Ethical Leadership in the Professions; 
  • Renee Knake, professor of law and co-director of Michigan State University College of Law’s Kelly Institute of Ethics and the Legal Profession;  
  • Paula Littlewood, executive director of the Washington State Bar Association;
  •  Hon. Barbara Madsen, chief justice of the Washington Supreme Court;
  • Lisa Rohrer, executive director of executive education and the Case Development Initiative at Harvard Law School; and
  • Ronald Staudt, professor of law and director of Chicago-Kent College of Law’s Center for Access to Justice and Technology.

I am participating on a Panel with my colleague and friend, Ron Staudt, focusing on teaching legal technology in the J.D. curriculum,  a current project of mine through the new Center for Law Practice Technology at Florida Coastal School of Law..

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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. 

 

Just Answer is a question and answer platform that provides answers to users questions for a flat fee of approximately $30.00 per question. It turns out that one of the fastest growing categories within JustAnswer is the answering of legal questions by lawyers.  

Here are other the JustAnswer terms and conditions that apply to lawyers that participate in this service:

"Experts in the Legal categories must be attorneys licensed to practice law, and be
in good standing in at least one jurisdiction in the United States or foreign
country. Such Experts shall provide general information only, such as providing
descriptions of general principles of law, and shall not provide legal advice. In
responding to questions, Experts in the Legal Category shall not apply their legal knowledge or skills to resolve or advise on the Customer’s specific factual circumstances described in the question, such as by proposing a specific course of action (other than advising the User to seek the advice of an attorney licensed to practice in the relevant jurisdiction). Experts in the Legal Category shall not form an attorney-client relationship on the Site."

To be qualified to answer questions as a lawyer within the JustAnswer platform, the lawyer has to take a test in the practice area and meet other qualification standards.

Disclosure: I answer legal questions on the JustAnswer.com website in my capacity as an attorney and a member of the Maryland Bar.

The Website is very well executed. Users can select from a panel of lawyers that are online at the time that the question is asked. You can name your price – indicate what you are willing to pay for an answer. You can see the credentials of the lawyers and their track record in answering questions, communications are secure and confidential, and the user can indicate the urgency of the answer, and the level of detail required. Answers are 100% guaranteed. If you are not satisfied you get your money back. You can select the State that you are located in, so answers can be state specific. Most questions are answered within minutes.

I have yet to see a state bar association offer such a service with the same level of Website sophistication and quality control.

 

Continue Reading Does JustAnswer.com Provide Legal Advice Online? Is this Site Ethically Compliant?

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.
 

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!.

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

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."
 

Detroit News just published an article on the decrease in divorces because of the recession – a national trend, and an increase in pro se divorces in Detroit, also a national trend. The article discussed the possibility that law firms could offer "unbundled legal services" as a way of reducing the cost of divorce, but apparently there are very few Michigan law firms that provide this kind of limited legal service.

One law firm in Michigan that is pioneering in offering a reasonably priced limited legal service for divorcing couples over the Internet is Calibre Law, PLC at  Michigan Virtual Law, one of the law firm;s in the DirectLaw network.  Calibre is Michigan’s first virtual law firm.  Calibre offers no-fault divorce forms with legal advice for a reasonable fixed fee.

Calibre Law is lead by Edward F. Hudson II. a litigator with experience in estate planning, family law, and small business disputes. Based in Royal Oak, Michigan and launched only a few months ago, Attorney Hudson, plans to have an impact on making legal services affordable throughout the entire Detroit metropolitan area.

There has been some recent blog comments [See: Carolyn Elefant ‘s Blog  [about  the meaning of Robert Capps article  in this month’s WIRED Magazine, (September 2009) about the concept of "Good Enough",  "Good Enough" solutions, (when cheap and simple is just fine). , and my quote about how this concept applies to the legal profession.

When I was interviewed for the Wired Article, I didn’t know the focus of the article, and I was simply reporting my experience in offering limited legal services to consumers for a fee they can afford. I wasn’t saying at all that lawyer’s should do less competent or less excellent work. Rather I was thinking about how legal transactional events between consumer and lawyer can be restructured to get to the "good enough result" that many consumers seem to want.

My best example is one that I participate in daily, and which I mentioned in previous blog post. Divorcing couples opt for a quick settlement, even if they don’t get "every right" they are entitled to in the interest of reducing their legal fees and getting on with their lives.

Divorce lawyers can charge from $5,000 – $10,000 (low-end of fee schedule) for even a relatively simple divorce. case. The lawyers will say there are no simple divorce cases. But that is from the the viewpoint of the lawyer. From the consumer point of view, they have a choice to spend $5,000 for each counsel who is representing either party- or to take the money and use it to get on with their lives. The question is–  what is the ROI from the consumer’s point of view?  Sometimes the investment of $5,000.00 in legal fees is worth it. ($5,000.00 is really a low end estimate). Consumers don’t think so, or there would not be thousands of pro se litigants representing themselves in family court. Pro Se Representation is a good example of a restructuring of the lawyer/client relationship to get a "good enough result." The success of LegalZoom –  admittedly a service which is a very small step above a bare legal forms service is more evidence of consumer preferences.

So is the movement towards "limited legal services." Lawyers, mostly solos and small law firms, that think that otherwise and think that full service representation is the only way to go are not facing consumer reality. These lawyers are living in a dream world.

Consumers want solutions to their legal problems. If they can get legal solutions in a different form than a traditional legal service from an attorney that is "good enough" at much less cost, they will turn away from the legal profession and seek those alternatives if they get a result that satisfies their expectations.