eLawyering Blog

13 Top Law Schools Teaching Law Practice Technology

Richard Granat — Mon, 06 May 2013 09:14:18 -0500

The eLawyering Task Force of the Law Practice Management Section of the ABA was created in 2000 by then President of the ABA, William Paul. At that initial meeting Gary Munneke, a founding member of the Task Force and the leading law school educator and author on the subject of law practice management and then Chair of the Law Practice Management Section of the ABA (now deceased), recommended that law schools update their law practice management courses to reflect the impact that the Internet would have on the practice of law.

13 years later there are few law schools that have made a sustained commitment to teaching what the Task Force calls "law practice technology". By "law practice technology" the Task Force does not mean technology and law courses such as Intellectual property courses, patent law courses, courses in copyright, etc.

Instead the Task Force means the intersection of internet technologies and the practice of law. It is no longer possible to teach law practice management without taking into account the impact of information technology on law practice. We include within this category courses that train law students in document automation, legal expert systems, and other course work that has an impact on the nature, productivity and profitability of law firms.

The Task members believe that to educate law students to be "practice ready", particularly for law schools where the majority of graduates will end up in solo and small law firm practice, understanding the principles of law practice technology are essential.

The Top Legal Practice Technology Schools Project

In honor and in memory of Gary Munneke, the eLawyering Task Force is working on a project to identify the top law schools teaching legal practice technology today. Our methodology is to review law schools web site catalogs and also seek input and recommendations from law schools themselves through a self-nomination process.

The criteria for inclusion on the list is:

1. A full-time faculty member dedicated to teaching and coordinating a program in law practice technology. This subject matter should be the focus of serious research, including the development of innovations in law practice.

2. At least two credit courses in this subject matter such as law practice management, law practice technology, ediscovery and big data, outcome prediction, legal project management, virtual lawyering, expert legal systems development, document automation, and/or other coursework which deal with innovation in the delivery of legal services and law practice.

3. Non-credit courses taught by adjunct instructors don't quality.

4. Law schools sponsoring incubator programs are interesting, but these programs involve lawyers who have already graduated, not law students.

The initial list includes the following law schools, in alphabetical order:

Brigham Young University Law School for their ground-breaking work in teaching computer-based practice systems under the leadership of Larry Farmer and Blair Janis.

Chicago Kent Law School's Center for Justice and Technology under the leadership of Ronald Staudt and CALI for their work in piloting law school clinical programs and for their innovative On-Line Course on Digital Law Practice under the leadership of John Mayer.

Columbia University School of Law, Lawyering in the Digital Age Clinic, under the leadership of Professor Conrad Johnson, Professor Mary Marsh Zulack, and Brian Donnelly, Lecturer in Law. Conrad Johnson is chosen as 2013 Professor of the Year.

Georgetown Law School's Iron Tech Competition and Technology, Innovation and Law Practice Seminar under the leadership of Tanina Rostain and Roger Skalbeck.

Maurer School of Law at Indiana University under the leadership of William D. Henderson for his courses on Legal Project Management and the Law Firm As a Business Organization and for Directing the Center on the Global Legal Profession.

Michigan State Law School's Reinvent Law Laboratory, under the leadership of Dan Martin Katz and Renee Newman Knake.

New York Law School's Certificate Program in Mastery of Law Practice Technology under the leadership of Dan Hunter.

We are adding today, (May 17, 2013) a 13th school to our list - the Northern Kentucky University Chase College of Law because of a $1,000,000 grant made just last week by W. Bruce Lunsford to establish and support the W. Bruce Lunsford Academy for Law, Business + Technology. Lunsford, is a 1974 graduate of Chase College of Law, and is chairman and CEO of Lunsford Capital, LLC, a private investment company headquartered in Louisville, Ky. The Academy will be operated by the NKU Chase & Informatics Institute under the leadership of Professor Jon Garon. Click here for the full press release.

University of Miami Law School's LawWithWithoutWalls Project under the leadership of Michelle DeStefano and Michael Bossone and the Apps for Justice Project within the Law School's Clinical Program.

The CodeX - Stanford Law School Center for Legal Informatics - under the leadership of Mark A Lemley and Roland Vogl. See course on Legal Technology and Informatics by Ron Dolin.

Suffolk Law School's new Institute for Law Practice Technology and Innovation under the leadership of Andrew Perlman. Co-Chair of Advisory Committee are Jordon Furlong and Marc Lauritsen.

University of the Pacific McGeorge School of Law for their course on Computer-Assisted Litigation under the leadership of Professor Fred Galves and Tim Pignatelli, CEO, Legal Technology Consulting.

Vermont Law School's new Technology of Law Curriculum and their course on "Digital Lawyering" under the leadership of Oliver Goodenough, Jeane Eicks, and Brock Rutter.

This is a preliminary list. The eLawyering Task Force is inviting self-nominations from law schools and recommendations by others either commenting the Task Force's list serve or for convenience by simply adding comments to this blog post. Our plan is to publish a more complete list by the Annual Meeting of the America Association of Law Schools in January, 2014 in New York City.

Disclosure: I am Co-Chair if the eLawyering Task Force. Any opinions expressed in this blog post are my own, and not the opinion of the eLawyering Task Force of the Law Practice Management Section of the American Bar Association..

Is Axiom Law a Law Firm?

Richard Granat — Mon, 08 Apr 2013 13:47:36 -0500

Some colleagues asked me that other day if I knew whether Axiom is a law firm. I said I didn't really know, so I decided to find out. There has been much buzz lately about AxiomLaw . The company recently raised $28,000,000 in private equity funding, after an initial round of $5,000,000. Axiom has recently launched a new Web site call ReThinkLaw - a kind of forum Web site that is designed to "provoke thought and drive innovation in the business of law—leading to greater efficiency and positive change for the benefit of clients, firms and lawyers alike."

The AxiomLaw Web site and ReThinkLaw site makes it look like Axiom is a law firm.

For example:

A landing page on the Axiom Law Web site claims they do "legal work efficiently";
Axiom calls the companies it works for its "clients", rather than customers.
Axiom claims it is a "modern interpretation of a law firm" , implying that it is a law firm.
Axiom compares itself to traditional law firm, and asserts that it is a law firm on diet.

AxiomLaw sounds like a law firm and has a domain name that makes it look like a law firm. When it describes itself it states that "it is not your father's law firm" or it is "a new model legal services firm."

But its not a law firm at all. The company's real name is Axiom Global, Inc., It is organized as a "C" corporation, and incorporated in the State of Delaware, just like any other company. (This explains of course how it can have investors).

So if AxiomLaw is not a law firm - what does it actually do? It targets the General Counsel's office of large corporation's and provides the following services:

It's a high priced placement firm assigning lawyers to work for in-house General Counsel;
It's an outsourcing firm working directly for General Counsel of major Fortune 500 corporations;
It does "projects" directly for General Counsel of major Fortune 500 corporations.

Should any one care whether AxiomLaw is a law firm or not?

Prospective attorney recruits might care whether they are being recruited by a law firm or something else;
Prospective customers should understand that only a company with an in-house counsel who is a member of the bar where the legal matter is being conducted can qualify for AxiomLaw's services;
If you don't have an in-house counsel, then you can't use Axiom's services. Not being a law firm. Axiom cannot provide services to the public (individuals or organizations) directly;
Prospective corporate customers should understand that the traditional lawyer-client confidentiality privilege does not apply. Any confidentiality must result from the relationship between the company's general counsel and their outsourced lawyer workers by virtue of the agreement between Axiom and the corporation customer - but I wonder if that is sufficient.
Competing law firms might care that Axiom suggests that its services are "legal services" competitive with the services of other law firms, when in fact they are are just "services" by definition. Actually contracted support services by in-house counsel. Otherwise Axiom would be violating Unauthorized Practice of Law (UPL) regulations in every state. Since Axiom is not really a law firm it can make claims about its services, that are not subject to bar regulation. Some of the statements that Axiom makes about its services, a law firm is prohibited from making because it would be in violation of the advertising and disclosure rules which are operative in every state.
Law firms are prohibited from solicitation. AxiomLaw is not subject to the same constraints.
Maybe state bar association officials should be concerned that the location of the disclaimer on the AxiomLaw web site that states that Axiom is not a law firm and cannot give legal advice. It is difficult to find. . I finally found it here. and here.

Is AxiomLaw a positive development for the legal profession? Who knows?

General Counsel of major companies seem to think so. AxiomLaw is demonstrating that certain kinds of services can be delivered at a much lower price, without compromising quality. By enabling corporate counsel to get done certain kinds of legal work that ordinarily would be provided by outside counsel at a much higher price, Axiom has opened up a major market be simply segmenting the kind of work that can be done more efficiently in-house with help from Axiom.

It seems to me, however, that an in-house counsel assumes the risk of malpractice when they contract with Axiom. Axiom is not a law firm so it can't secure a law firm malpractice insurance policy. Moreover, the supervisor of the legal work is not Axiom, (technically it can't be), but in-house counsel. When in-house counsel contracts with a company like Axiom they give up the assurance of quality legal services and accountability that they get from a traditional law firm.

In checking directly with Axiom on this point, Axiom states that:

"The individual lawyers don't carry their own malpractice, Axiom maintains a lawyer's professional liability insurance policy that provides coverage for all Axiom attorneys, regardless of W-2 or independent contractor status. Almost all of our lawyers in the US are W-2 employees. Axiom does not, because we cannot, have access to or supervise the substantive work of our lawyers."

One likely impact of these developments is to destabilize the business model of the Big Law firms by sucking out the more routine work from big law firms which results in decreasing overall profitability. As the Axiom's of the world expand their services and their reach, there will be less work for the large law firms resulting in a shrinkage of the market share of traditional law firms. (real law firms!). The firms that are left standing will offer the most high-end legal services but will probably raise their fees as they will be the only game in town as a supplier of complex legal services where law firm accountability is a necessity.

Do GC's have any interest in a vibrant independent and expanding legal profession, or do they prefer a world where there will be less traditional law firms offering their services at higher fees?

Two final questions for consideration:

1. Should AxiomLaw be more transparent on its Web site about what kind of an organization it really is by making clear that it is not a law firm, and should it avoid comparisons with traditional law firms?

2. Maybe non-law firms like Axiom, with their access to capital and superior management and technological resources, should be able to offer legal services like a real law firm, but just make these new organization's subject to the Rules of Professional Conduct like any other law firm.

Of course, private investment in a law firm is prohibited by Model Rule 5.4, but maybe it's time that state bar associations recognize that there is a new kind of organization moving into the legal industry any way, so why not simply subject these new players to the same regulatory scheme as traditional law firms?

Would that level the playing field? Would that provide better consumer protection for both individual consumers and corporate purchasers of legal services?

Private Investment in US Legal Services

Richard Granat — Sat, 16 Mar 2013 10:19:14 -0500

I had the honor of speaking at ReInventLawSiliconValley, a conference on innovation and the legal system sponsored by the ReInvent Law Laboratory at Michigan State Law School, co-founded by Professors Dan Martin Katz and Renee Newman Knake. This was a great learning day for me and I suggest if you are interested in the subject of change in the legal profession and legal education that you watch the videos when they are published on the ReInventLaw Law Channel. See also on Twitter #ReInventLaw and my pre-conference post on this Conference.

Here are the slides from my ReInventLaw presentation.

I am interested in the subject of how to get private capital into law firms to spur innovation despite the prohibitions of 5.4 of the ABA Model Rule of Professional Conduct. This is the rule that prevents a non-lawyer from owning an equity interest n a law firm in all US states, except on a limited basis in the District of Columbia. This is a controversial issue in the US, and the the ABA Ethics 20/20 Commission decided not to address the subject in its recent deliberations. The ABA House of Delegates and almost all state bar associations are dead set against any change to this rule.

Jacoby & Meyers, the pioneering consumer law firm, has filed a suit against the judiciary in New York, New Jersey, and Connecticut in Federal court to overturn the rule, but that's another story.

I am interested in finding out if clever lawyers have figured out away around the rule. I discovered at least two instances where law firms have created a business model that enables private capital to fund technology and management support that would be beyond the ability of the law partners to fund by themselves.

The law firms are Clearspire and RajPatent, recently re-branded as LegalForceLaw. Both law firms are built around the same concept - a law firm that is supported by an independent management company that provides technology and management services to the law firm.

Clearspire invested over $5,000,000 in a technology and management platform to support the delivery of legal services to corporate legal clients. The firm is growing rapidly and recently opened a San Francisco Office.

LegalForceLaw was founded by a solo practitioner, Raj Abhyanker. The underlying company is called Trademarkia, Inc., which created the Trademarkia web site, the legal web site with the most traffic on the Internet. Like Clearspire, Trademarkia developed a technology to make it easy for non-lawyers to do a trademark search. The traffic to the Trademarkia site generates business for the law firm. [See previous post on LegalForce ].

In both cases, a separate management and independent management company provides services to the law firm. In theory the management company could serve other law firms, but in these cases the management company only has one client.

The arrangement raises more questions and the answers are not apparent.

I would like to learn more about how these management companies price their services to the law firms they serve. They can't take a percentage of the legal fees or it would be a violation of Rule 5.4 How much of the cash generated by the law firm can be siphoned off by the management contract between the management company and the law firm? What is the pricing mechanism between the management company and the law firm? Is it a cost plus contract or are market rates charged for the services provided?

Why would an investor put funds at risk within the management company as there would be no easy exit. The law firm can't go public and if the managing partners of the law firm were hit by a bus the law firm would go out of existence. The brand belongs to the law firm, not the management company. The financial return to the management company is limited because of the 5.4 prohibition. So where is the upside for the investors in the management company?

I think that these innovative law firms should be more transparent about the nature of the management agreement between their management company and their law firm, so that other law firms interested in replicating this business model can experiment.

Maybe these management agreement should be scrutinized and approved by the ethics counsel from the bar associations in the jurisdictions where these law firms are located, so there is no question that there is no violation of 5.4?

ReinventLaw Silicon Valley

Richard Granat — Fri, 01 Mar 2013 23:39:05 -0500

ReinventLawSiliconValley is happening next Friday, March 8 at the Computer History Museum in Mountain View, California. The brain child of Professors Daniel Martin Katz and Renee Knake, co-founders and co-directors of the Reinvent Law Laboratory at Michigan State University Law School, the event promises to be quite a bash. The event is free, but attendance is limited to 400 participants and you have to register to get in. Over 40 innovators, founders, policymakers, venture capitalist and other change agents interested in reforming the legal services industry will be speaking in 6 - 10 minute presentations.

Think of this as a TED Talks event about innovation and change in the legal industry-- a crash course about disruption in the legal profession.

Here is the full detailed schedule with the speakers and the titles of their presentations.

Some of the speakers I am especially looking forward to listening to are:

"ABA Journal LegalRebel" Stephanie Kimbro discussing her new book: The Consumer Law Revolution: The Lawyers’ Guide to Online Marketing Tools (2013).
Colin Rule, CEO, Modria, Online Dispute Resolution: Improving Access to Justice
Henry Jones, Managing Director of AxiomLaw (founded by Mark Harris, ABA Journal Legal Rebel), discussing the Axiom business model. I am interested in how they were able to raise $28 million in a Series D Round from Carrick Capital.
Karn Kerkonian, Principal at Velawsity --a new cloud-based practice management system that is launching at ReinventLaw. Velawsity is aiming at the same target market that CLIO and RocketMatter and other cloud-based practice management solution providers serve. I am interested in learning how they are different.
Raj Abhyanker, founder of LegalForce about law firm redesign and the nationwide network of law firms he is creating under the Legalforce brand.
Dan Lewis of Ravel Law, a spin out from Stanford Law School, that is creating a new visualization approach to legal research. Ravellaw is another start-up that looks like it is about to fully launch.
ABA Jounral Legal Rebel Kingsley Martin, CEO and Founder of KMStandards about his company's unique and patented approach to contract analysis.
ABA Journal Legal Rebel Bill Henderson, from Maurer School of Law, Indiana University, discussing his ideas about change in the legal profession.

This is just a sampling of the range of talks at ReinventLawSiliconValley - 2013.

Yours truly is giving a talk on Private Investment in US Legal Services: New Business Models. I am interested in how to get private capital into law firms, given the restrictions of ABA Professional Rule 5.4 which prohibits non-lawyers from taking an equity interest in a law firm. Are there ways of getting around this rule? What kind of law firm structures can be created that enable private equity investment? Is it wise to enable private investment in law firms? Will it ever happen in the United States given the present position of the ABA and state bar associations? What can small and medium size law firms do to access capital to make them more competitive? Are Clearspire and AxiomLaw ethically compliant models that can be replicated?

LegalForce Store Offers Walk-in Lawyer Access in Palo Alto

Richard Granat — Tue, 05 Feb 2013 20:26:37 -0500

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.

There 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.

Burton-Law Selected by LTN for Innovative Use of Technology in a Small Law Firm

Richard Granat — Fri, 01 Feb 2013 01:29:45 -0500

Burton-Law, a virtual law firm based in Ohio and North Carolina has been selected by Law Technology News for the most Innovative Use of Technology in a Small Law Firm. This small law firm is a good case study on how a law firm can leverage virtual law firm technology to serve a diverse group of clients over a wider geographical area.

We are proud that the Burton-Law has selected DirectLaw as their client portal with embedded document automation capabilities. Burton-Law also uses CLIO as their web-based practice management solution which integrates seamlessly with DirectLaw through the use of an API.

Stephanie Kimbro, formerly co-founder of Virtual Law Office Technology which was acquired by TotalAttorneys several years ago, helped make the decision to adopt DirectLaw as Burton-Law's virtual law firm platform. Stephanie is no longer with TotalAttorneys. Stephanie joined Burton-Law last March to expand their operations in North Carolina. Stephanie is a pioneer in the development of the virtual lawyering concept, having written the book on the topic.

Stephanie has also just released a new ebook on the Consumer Law Revolution which is the best description and analysis of online marketing platforms that I have seen. You can download it here.

Stephanie also blogs at Virtual Law Practice, and you can follow her on Twitter @StephKimbro.

eLawyering Blog Chosen As One Of The ABA Journal's BLAWG 100

Richard Granat — Tue, 18 Dec 2012 19:14:28 -0500

We are pleased to announce that the Editors of the ABA Journal have selected the eLawyering Blog as one of the top 100 best blogs for a legal audience.

In addition, the magazine has introduced the inaugural Blawg 100 Hall of Fame,
featuring 10 of the very best law blogs, known for crafting high-quality, engaging posts
day in and day out.

The ABA Journal is asking readers to weigh in and vote on their favorites in each of the 6th Annual Blawg 100's 15 categories. Go to http://www.abajournal.com/blawg100 to register and vote. Voting ends at close of business on Dec. 21, 2012.

The ABA Journal, in announcing this year's selection, said:

"Each year, our choices become tougher. Blogging has become such a staple of
professional communication that keeping up with our own directory of more than 3,500 blogs by lawyers, judges, law professors or even law students is more formidable than it's ever been," said ABA Journal Editor and Publisher Allen Pusey. "Some of them have become such permanent, even required, fixtures in our everyday reading that we're introducing the ABA Journal Blawg 100 Hall of Fame to recognize those blogs and bloggers that have set the standards for this vast, vibrant network for legal news and commentary."

The ABA Journal is the flagship magazine of the American Bar Association, and it is read
by half of the nation's 1.1 million lawyers every month. It covers the trends, people and
finances of the legal profession from Wall Street to Main Street to Pennsylvania Avenue.

ABAJournal.com features breaking legal news updated as it happens by staff reporters
throughout every business day, a directory of more than 3,500 lawyer blogs, and the full
contents of the magazine.

Futures Conference: The Legal New Normal

Richard Granat — Wed, 26 Sep 2012 09:08:50 -0500

The College of Law Practice Management is presenting the Futures Conference on October 26-27, 2012 at Georgetown Law in Washington, DC. Anyone interested in the future of law practice and legal business should attend. Click here to register

I am a Fellow of COLPM and highly recommend this Conference. My colleague, Ron Friedmann, is a Trustee of COLPM and is Co-Chair of this important Conference.

Below you will find the program in chronological order.

NEW MODEL LAW FIRMS
Big Law has never been the only option for general counsel. Today, many alternatives exist, including “new model law firms.” This panel will examine how these firms do business, practice law, differentiate, serve clients, and offer lawyers a different work experience. We will also hear from the founding visionaries on where they think the law firm market is heading.
Moderator: Ron Friedmann, Fireman & Co. Consulting
Panelists: Mark Cohen, Clearspire; Ben Lieber, Potomac Law Group PLLC; Andy Daws, Riverview Law, and Patrick Lamb, Valorem Law Group.

THE CHALLENGES OF DIVERSITY IN A NEW STAFFING ENVIRONMENT
Law firms are adjusting the traditional personnel model, reducing the number of equity owners and adding new tiers of service providers. But the challenge of diversity remains. A nationally-recognized expert in diversity issues within law firms and other legal settings, Verna Myers will address what legal employers can do to tackle this critical issue.
Speaker: Verna Myers, Verna Myers Consulting Group LLC, author of Moving Diversity Forward.

PRESENTATION OF 2012 INNOVACTION AWARDS
The 2012 InnovAction Award Winners present.
Moderator: Tim Corcoran

LEGAL ACADEMY RESEARCH PROJECT
Reports on two research projects underway at the Center for the Study of the Legal Profession, Georgetown Law: Integration and Fragmentation in the Modern Law Firm; Developing Attorneys for the Future: What Can We Learn from the Fast Trackers?
Moderator: Mitt Regan, Georgetown Law
Panelists: Juliet Aiken, Georgetown Law; Heather Bock, Georgetown Law and Lisa Rohrer, Georgetown Law.

THE CONSUMER LAW REVOLUTION
The panel will consider such questions as: How is technology changing delivery of legal services to consumers? How is technology changing how lawyers who serve consumers practice? Do we see signs today that consumer law developments are already doing so? Will constraints - for example, client or lawyer conservatism, immature technology, or ethical barriers - limit a more rapid evolution or a real evolution?
Moderator: Tanina Rostain, Georgetown Law;
Panelists: Stephanie Kimbro, Burton Law LLC; Michael Mills, Neota Logic, and Marc Lauritsen, Capstone

EXPLORING THE NUANCES OF VALUE
In 2011, a panel focused on defining value. Now, in this panel discussion, we take the next step, as law firm and inhouse representatives explain how alternative arrangements are developed and tweaked so that both sides can derive value.
Moderator: Aric Press, American Lawyer Media
Panelists: Toby Brown, Akin Gump; Mark Chandler, Cisco Systems.

FUTURE OF MANAGING PARTNERS
The future demands a new focus in law firm management. This panel, featuring extraordinary managing partners, examines the critical roles and responsibilities of MPs in firms of all sizes—and what the panelists see as the future challenges and opportunities in firm management, including managing talent at all levels and “getting things done” in ways that most benefit the firm, its people and its clients.
Moderator: John Michalik, JJeyEm Consulting and author of The Extraordinary Managing Partner, Reaching the Pinnacle of Law Firm Management
Panelists: Thomas Grella, McGuire Wood & Bissette, P.A.; Fredrick Lautz, Quarles & Brady LLP; Charles Vigil, Rodey, Dickason, Sloan, Akin & Robb, P.A.; Ward Bower, Altman Weil, Inc.

THE NEW NORMAL FROM THE GENERAL COUNSEL PERSPECTIVE
General Counsel face continuing pressure to control costs while coping with growing demands for legal advice. In a panel organized by the Association of Corporate Counsel, you will hear how experienced law department leaders respond to this pressure and what it means both for their department operations and the law firms they retain.
Moderator: Amar Sarwal, ACC
Panelists: Scott Chaplin, Jorge Scientific Corporation; Susan Hackett, Legal Executive Leadership and Eric Margolin, CarMax, Inc.

LEGAL SERVICES UPDATE
2012 has been a year of intense pressure on low-income people facing legal problems and unfortunately, intense pressure on the legal aid organizations that serve them. In these tough times, law practice management expertise and best practices are needed more than ever to improve efficiency, buoy up morale, tune up staffing and employ new technologies. During lunch, Jim Sandman, President of the Legal Services Corporation and a 2012 College fellow-elect, will update attendees on bleak conditions facing LSC and describe a new mentoring initiative in the planning stages that will expand the pro bono consulting the College can offer to legal aid.

Best Practice Guidelines for Legal Document Service Providers

Richard Granat — Sun, 23 Sep 2012 19:56:15 -0500

The American Bar Association’s eLawyering Task Force has compiled a draft set of best practice guidelines for legal document providers, which can be downloaded here*.

An increasingly popular – and controversial – category of service providers are those that supply customer-specific documents over the Internet, using interactive software and/or human resources, without purporting to be engaged in the practice of law. There are literally hundreds of these legal documents Web sites. More of these legal document Web sites launch every month, of not every week on the Internet.

These Web sites include for example:

courts and government agencies
physical form suppliers, such as Blumberg
packaged software, such as Quicken’s Will Maker or Broderbund’s WillWriter
online form sites, such as US Legal Forms, SmartLegalForms, DivorceLawInfo, or CompleteCase.com
free online document repositories such as Docracy
organizations, such as the Association of Corporate Counsel
commercial online document preparation services, such as Koncision, LegalZoom, RocketLawyer, and WhichDraft
nonprofit and governmental sites, such as LawHelp Interactive
free online document generation services by law firms such as Goodwin Procter, Orrick, Perkins Coie, and Wilson Sonsini
contract analysis sites, such as KIIAC,
independent licensed notaries public or legal document assistants or technicians in states such as Arizona, California, and Florida
conventional private law practices and corporate law departments
virtual law practices, with secure client portals

The Task Force believes that there are common principles that ought to guide these legal document sites, and practices that consumers should be able to expect. The eLawyering Task Force also recognizes that consumers have different levels of knowledge in meeting their documentation needs. Some believe, for instance, that it is simply a matter of getting “the” right form, and pay little attention to careful drafting and appropriate execution. Others have a more sophisticated understanding of options and implications. Nevertheless there should be baseline expectations that meets the needs of all kinds of users. The goal is not to issue a "seal off approval" of these legal document Web sites. The objective is to encourage these Web sites to use acknowledged "best practices" in the development and delivery of their services.

These guidelines do not take a position on whether certain document services may constitute the unauthorized practice of law in certain jurisdictions if not performed by a licensed attorney, other than to urge providers to know and observe applicable law on that thorny subject.

The primary purpose is to aid consumers in making informed decisions about what they are buying.

Comments on these Guidelines are invited. They can be submitted on the eLawyering Task Force ListServ which any lawyer can join, Click here.

The eLawyering Task Force is having a Quarterly Meeting at he Hyatt Regency Lake Tahoe Resort, Spa and Casino on Friday, October 19, 2012 between 9:00 - 11:00 A,M,

This is an open meeting and individuals who want to submit comments on these Guidelines are invited to attend and participate.

Additional Conference details can be found here.

*(Disclosure: I am Co-Chair of the eLawyering Task Force. The Co-Chair of the Task Force is Marc Lauitsen, of Capstone Practice Systems, who is providing leadership to this project.)

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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 and SmartLegalForms, a web-based legal document 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.

New Law Start-Up Lead Generation Sites: What Lawyers Need to Know

Richard Granat — Sat, 01 Sep 2012 16:21:36 -0500

I have noticed recently the launch of many lead generation Web sites for lawyers.

In a previous blog post , I noted that lead generation sites for lawyers as one category of legal start-ups were increasing and entering into an already crowded market space. By a "lead generation Web site" I mean a third party Web site whose primary purpose is to provide qualified leads to law firms. The site may be free to users, or sell legal advice to users for a fixed fee, but the purpose is still to generate leads for lawyers. A "lead generation web site" is typically what I call a multi-sided platform - one side involves users looking for a lawyer, and other side are the providers who offer legal services. The lawyers who subscribe to the Web site typically pay a "marketing" or "advertising" fee to get access to the leads generated by the Web site.

More mature legal generation sites are expanding their features and depth of offerings TotalAttorneys recently received of infusion of $15 million in new venture capital from Bain Capital Ventures of Mitt Romney fame. A new CEO, Paul Ford, with expertise in developing lead generation Web sites is in place providing leadership. TotalAttorneys now gives away their Web-based practice management system for a $1 a month, to attract attorneys to their more expensive legal generation services. At $1.00 a month this is really good value for a web-based practice management application. However, for TotalAttorneys this web-based practice management solution that was originally developed by Stephanie Kimbro, now with Burton-Law, and her husband and acquired by TotalAttorneys, is now just a marketing strategy for their lead generation services. TotalAttorneys now claims that it is," the leading US company providing customer acquisition for lawyers"

I am not sure that ExpertHub, owned by InternetBrands, which acquired Nolo last year, would agree with this assessment, with its broad network of practice specific legal sites now being reinvigorated with content from Nolo. [ See previous blog post on this acquisition ].

Plus the big elephants in the room like Findlaw and Lawyers.com are still growing and not going away. I can easily see FIndlaw and Lawyers.com incorporating some or all of the new features being promoted by the newer sites listed below. In addition there are many lead generation sites that range from AVVO to FreeAdvice to USLegalForms that have been around for awhile, are well funded, and which have as a core element of their business model driving traffic to law firms in return for advertising fees.

To these older players, now come these new entrants

AttorneyFee.com - attracts consumers by publishing legal fees that lawyers charge for typical transactions. I have written previously about AttorneyFee.com in this blog, as I think they have a original twist on how to attract consumers to a lead generation site. There is no fee charged to lawyer's at the present time for participating in the site. A new feature is user accounts for attorney, so a lawyer can control the data appearing in their profile. (Disclosure: I am now an advisor to this company ).

LexSpot - Claiming to be the best way to find a lawyer which enables you to make an appointment with a lawyer on line, integrating with the available time in the lawyer's calendar. Their concept is based on the ZocDoc model which has proved successful in linking patients to doctors.

LawZam - which enables video chat with an attorney online. Free consultations for consumers. Developing a mobile platform. Still in Beta. Eventually as the services scales, revenues will come from attorney marketing fees and advertising.

Lawdingo - Lets people consult immediately (or by appointment) with a relevant lawyer by phone or video conference. Participating attorneys offer 15 - 30 minute virtual legal consultations free of charge and thereafter have the option to bill clients their hourly rate, prorated to the minute. Lawyers gain the ability to engage (and charge) potential new clients located outside their immediate vicinity (but in their state), and people gain the convenience of never having to leave home to work with a lawyer. According to Nikhil Nirmel, CEO/founder of Lawdingo, the site is still in beta and is presently free for attorneys to participate.

MyRight - specializes in providing interactive dialogues which the consumer his or her legal problem and then access an attorney who can solve it.. (Attorney Directory not yet in place). This company start-up with initial funding from a StartEngine, a start-up accelerator based in Los Angeles. MyRight is interested in licensing its interactive guides to other third party entities according to co-founder, Nikhil Jhunjhnuwala.

MyLawSuit.com - specializes in generating leads for contingency fee lawyers. Consumers submit their cases for free and the lawyers decide of they want to take it. There is no initial charge to the lawyers to participate, except that if the lawyer wins a percentage of the fee it is paid to the Web site. The Web site states that it has an opinion from an nationally known ethics counsel (identity unknown) who has rendered an opinion that the Web site does not violate any ethical rules, but the opinion is not available for review. I would not participate in this Website unless I had an opportunity to review this opinion.

LegalSonar - uses the power of your social network to help you find just the right attorney. The site is integrated with the major social networks and uses the trust factor in your personal relationships to help you find an attorney for your problem. The Website provides a variety of social media support and reputation management services and charges $99.00 a month for the basic level of service.

Shpoonkle.com - is a reverse auction bidding Web site where prospects submit a case and lawyers who participate in the site submit bids. Like eBay, the prospect can view the bids from different lawyers and compare their pricing. In the next, upgrade and Website release, according to Robert Niznik, prospects will be able to compare the credentials and the experience of the bidding attorney. The site has an interesting Facebook type comment and news feed feature and integrates nicely with Facebook. Lawyers have been able to register for free, but a monetization strategy is in the works. This is a site to watch.

VirtuallLawDirect - enables consumers to find a lawyer and get legal advice online. The website enables you to manage your cases online, enter into retainer relationships with clients online. Lawyers can bill and get paid online. The site is free to consumers and lawyer presently. It is still in beta. The Website describes itself as "a utility through which legal and related services, information and products may be provided and/or supplied by Attorneys and/or other Users of the site, and none of Virtual Law Direct nor any Virtual Law Direct Representative provides legal advice, information, services or products."

How does a lawyer decide which of these sites to subscribe to?

If your marketing budget is limited you must be careful as a solo practitioners or small firm when buying into multiple lead generation sites. If you over invest and get few leads, you lose. If a Website is initially free to participate, there is no reason not to try it.

Here are some decision factors to consider:

First, how much traffic does the Web site get?If the site gets little traffic then the lawyer's profile won't be seen even if if you are the most brillant and competent lawyer. Not enough traffic, means not enough visibility. One way to tell how much traffic a lead generation site gets is to use compete.com .

Simply set up a free account, insert the site's URL, and you will get a free estimate of traffic from the last month. If the site is free for attorney participation try it. If the site wants to charge you a marketing fee look closely at the traffic flow,and ask the sales staff how many unique visitors a month. If the site gets less than 5,000 unique visitors a month, it's not ready for prime time and not ready to monetize its traffic flow by charging lawyers marketing or membership fees.So for example, according to Compete in July, TotalBankruptcy had 436, 237 unique visitors, LawPivot had 32,291 unique visitors, and Shpoonkle.com had 5,839 unique visitors.

Second, evaluate what is different about the site that will enable it to scale its traffic flow without massive amounts of Google AdWords advertising. If the site has to build its traffic by buying boat loads of Google AdWords, the marketing cost to you will be very high. You might be better just marketing your law firm website directly by incorporating new and unique content and increasing your own organic search results.

Third, does the lead generation Web site have a specialty focus. For example TotalAttorneys sponsors TotalDivorce And Total Bankruptcy , specialty sites that have high traffic and designed just to aggregate prospects with divorce and bankruptcy problems. LawPivot has a reputation for attracting business start-ups that need legal assistance. It is often difficult for a lead generation site to build traffic in many different areas For this reason, ExpertHub runs a network of specialty law practice Web sites that have a better chance of getting good organic placement in the search engines.

Fourth is pricing. Does the pricing or advertising fee make sense for my type of practice? Many of these sites are charging fees that are only justified if if you get a big case. But if your practice is serving up limited scope representation for modest fees, the fees charged by these sites will not result in a decent return on investment. If your average legal fee is $300 for an uncontested divorce, you can't pay the equivalent of $50 a lead, since you need about ten leads to convert to one lead that converts to a client that buys your service.

How many of these new sites will survive a year from now? It is hard to tell. My prediction is that there will be a shake out and many of the new lead generation sites won't be around in 2 years. Only time will tell.

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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 SmartLegalforms a lead generation Website for a network of virtual law firms, and 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.

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

Richard Granat — Sat, 25 Aug 2012 09:02:32 -0500

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.

JustAnswer.com is not a law firm, but retains part of the fee paid by the user, and pays a portion of the fee to the lawyer who answers the question, provided the user is satisfied with the answer. JustAnswer.com claims that this fee splitting between a law firm and a non-law firm does not violate the Rules of Professional Conduct because the answers are "legal information" and not "legal advice". See previous blog post on LawPivot and this fee-splitting issue -- and a method of getting around the prohibition against fee-splitting.

A recent ethics opinion by the Ethics Advisory Committee of the South Carolina Bar, however, concluded that the JustAnswer website was not ethically compliant and advised South Carolina attorneys not to participate in the service. See opinion here.

The Opinion is worth reading, because it is likely that if other bar association ethical committees were presented with the question of JustAnswer's ethical compliance they would reach the same conclusion. Lawyer's who participate in ventures that are not ethically compliant expose themselves to liability and bar censure.

One key conclusion reached by the Committee is that the JustAnswer Website is providing legal advice not just legal information:

Because this specific website asks lawyers to provide specific legal advice in response to detailed questions, it is substantively inviting the creation of attorney-client relationships despite its likely ineffective attempts to disclaim them. Initial boilerplate responses to questions include requests for “more details about your situation” and the advice provided is often specific and contains legal conclusions based on application of the law to the facts presented. At a minimum, justanswer.com provides, not just question-and-answer, but a specific question-and-paid-professional-answer service that removes it from the radio call-in show/public seminar paradigm described in prior advisory opinions and is irreconcilable with the site’s disclaimers.

Therefore a lawyer participating in JustAnswer.com would be violating the prohibition against splitting fees with a non-lawyer. Other advertising statements on the JustAnswer Website would also cause the lawyer to violate South Carolina's lawyer advertising rules, by attribution. The bottom line is that the Committee recommended that lawyers who are members of the South Carolina bar should not participate in this service.

Comment:

The South Carolina's Ethics Committee's interpretation of its rules as they apply to the JustAnswer Website is not unreasonable and a straight forward analysis of undisputed facts about the way the service operates. Yet there is obviously a great demand for this service, and consumers have few alternatives to get answers to their legal questions for a reasonable flat fee online.

This situation is changing as law firms figure out how to deliver "unbundled" legal services online using virtual law firm platforms like DirectLaw and VirtualLawDirect. Yet very few law firms offer this kind of service directly to consumers online - also known as "unbundled" legal services.

When lawyers do provide answers to consumers questions they usually do so through a third party Web portal like JustAnswer.com. The problem with participating in a third party portal is that:
(1) the portal may suffer from the same ethical issues as JustAnswer; and
(2) often the consumer can not connect with the lawyer directly so the potential for future work for the lawyer is not an option.

A list of other online legal advice portal websites can be found here.

Consumers seem very satisfied with the JustAnswer service. There is high demand for it. There is no empirical evidence of consumer harm.

Maybe its time to change the rules that regulate the legal profession so lawyers can serve the real needs of consumers at a price they can afford? Just to note, the United Kingdom has no such rule structure that constrains the delivery of legal advice by lawyers or non-lawyers, and there is no evidence of consumer harm in that country.

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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 that supports the delivery of "limited legal services.". I participate as an attorney n the JustAnswer.com website. 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.

Serving Justice With Conversational Law: Expert Legal Systems Are Here

Richard Granat — Tue, 21 Aug 2012 10:31:39 -0500

David 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

Richard Granat — Thu, 16 Aug 2012 14:57:10 -0500

LawPivot, 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's Achilles' Heel: Free Legal Forms

Richard Granat — Sat, 04 Aug 2012 13:34:36 -0500

For those of you following the LegalZoom IPO, which was scheduled for Friday, August 2, 2012, it was postponed for the usual stated reason that market conditions were not suitable. This really means that the offering could not get off at the $10-$12 price per share that the selling shareholders wanted. Instead the maximum price institutional buyers were willing to pay was reportedly $7-$8 a share, which would have reduced the valuation of the company by one-third. The reasons that were given for this lower valuation were comparisons with other transactional-based companies like www,ancestry.com which is selling at a price to earnings ratio of 21.73, compared to a projected price to earnings ratio for LegalZoom of over 40x.

Perhaps the research analysts on the buy side perceived a more fundamental flaw in LegalZoom's business model.

The LegalZoom product offering at its core is still the provision of legal forms offered up to recently, without the option of the legal advice from an attorney. The pricing for these legal forms are comparable to the pricing of paralegal prepared legal forms offered for example by the many legal technicians in the State of California who work with consumers off line in face-to-face meetings, like lawyers.

Thus for example LegalZoom charges $299 for no-fault divorce forms, and $139 for name change forms. Many virtual law firms now offer comparable legal form services but bundled with legal advice. See for example www.morrisfamilylaw.com where a no-fault divorce is offered with the full accountability and the backing of an attorney for a fee of $275. For another example see FlashDivorce a virtual law firm service that offers no-fault divorce in four states for $199.

Law firms are going virtual and are finally figuring out ways to compete against LegalZoom on its own playing field. To be sure, these small law firms don't have the capital and marketing budgets of a LegalZoom, but as thousands of these law firms eventually migrate to delivering online legal services they will not only offer a better value to consumers, but they will constrain LegalZoom's growth and dominance.

The problem with the LegalZoom pricing model is that automated legal forms are digital goods whose marginal cost is zero. Eventually a pure digital good has a marginal cost of zero and will be made available a price which is either free or close to free. It is for this reason that a song, for example, on iTunes cost only .99. [I wrote about this idea previously at Legal Forms for the Price of a Song on iTunes? which identifies other legal start-ups moving into the free legal forms market space.]

LegalZoom itself has aggressively argued that it services are essentially software-powered and its document assembly processes are publications entitled to the same First Amendment protections as other kinds of commercial speech. Its products are therefore, it argues, immune from organized bar claims that their services constitute the unauthorized practice of law. By its own admission, the professional review of legal documents by LegalZoom is very limited and does not constitute legal advice.

If this is the case, once consumers figure out that the product that they get from LegalZoom is essentially the same digital form that can be purchased from many automated legal form websites at a price which is 10% of LegalZoom’s existing selling prices, -LZ's revenue should implode, in theory. I say, "in theory", because LegalZoom has done an excellent job in persuading consumers that what they have to offer is a better service than what they get from the typical lawyer.

Because of the overwhelming advertising that LegalZoom pushes into multiple channels the LegalZoom brand is likely to remain intact, because the truth about the nature of LegalZoom's product offering is obscured by their aggressive advertising messaging.

For many consumers, if a service does not appear on page one of a Google search, they will look no further, and the opportunity to avoid using a lawyer in solving a legal problem is often the controlling decision factor.

For example, many consumers are still unaware of the fact that the US Legal Services Corporation has subsidized the creation of free automated legal forms available to people of all income levels that are available for free from a network of state-based legal information and legal document web sites. These free legal form services have no budget for marketing, certainly nothing like the $40 million a year that LegalZoom's spends on marketing and advertising.

These legal forms are fully automated, web-enabled, automated,easy to use, and often employ a visual graphical interface to help users navigate through online questions and courthouse procedures. The program is not limited to low- income people.

Even without a marketing budget, last year more than 500,000 legal forms were downloaded by users in 34 states using this program. This transactional volume already exceeds LegalZoom's annual volume and it is increasing as more legal forms are automated and the number of states participating in this program increases.

State courts have also jumped into the free legal forms market in response to the demands of pro se filers looking for free legal help. See for example Online Court Assistance in Utah and Maryland Family Law Forms.

Even the US Bankruptcy courts are prototyping a free online set of Chapter 7 bankruptcy forms to be used by self-filers. This service will eventually be rolled out nationwide to every US Bankruptcy Court Website.

I can think of other ways that the development and distribution of free automated legal forms can be monetized, without the need to charge a transactional fee to the consumer. (This is the subject of a future blog post).

Free legal forms are here and the supply is expanding. Lawyer's won't like the fact, any more than LegalZoom, that this development will disrupt their business models. The reality is that both kinds of suppliers of legal solutions will have to accept the challenge of the accelerated pace of technological change.

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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 MyLawyer.com, a smart legal forms Website, and 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.

LegalZoom is a trademark of LegalZoom, Inc.

Virtual Lawyering and "Virtual Presence" under Model Rule 5.5 (b) (1)

Richard Granat — Mon, 30 Jul 2012 14:00:45 -0500

The ABA Commission on Ethics 20/20 Working Group on Uniformity, Choice of Law, and Conflict of Interest has identified some issues related to defining limits on Virtual Practice under Rule 5.5. Model Rule 5.5 (b) (1) requires a lawyer to obtain a license in a jurisdiction if the lawyer has an office or a “systematic and continuous” presence there, unless the lawyer’s work falls within one of the exception identified in Rule 5.5 (d). The Commission has identified as a potential problem the situation where lawyers are physically present in one jurisdiction, yet have a substantial virtual practice in another. The problem is “that it is not always clear when this virtual practice in a jurisdiction is sufficiently “systematic and continuous” to require a license in that jurisdiction.”

This comment could be interpreted to mean that lawyers who have a virtual law practice, mostly solos and small law firms, may have an issue about whether they need to “secure a license” in the other jurisdiction.

This is a solution looking for a problem where none exists as far as the typical virtual law practice is concerned.

A virtual law practice is commonly associated with the online delivery of legal services. Lawyers engaging in virtual practice are only able to provide legal work that pertains to the laws of the state(s) in which they are licensed or they are in violation of 5.5. Whether or not their delivery methods or work with the clients takes place in a physical location other than where the lawyer is licensed, the key factor is that the lawyer is practicing the law of the jurisdiction they are licensed in and to which the client’s legal needs pertain. A law firm will have a website that anyone in any jurisdiction may find and read online. The lawyer places the appropriate disclaimers on the website and makes it clear in any registration process for a client portal that the law firm is only permitted to practice the laws of a certain jurisdiction. This is not misleading to the public nor is it the unauthorized practice of law.

For example, a client living in Florida who owns real estate in Maryland should be able to work online with a lawyer licensed in Maryland to handle the matter. That lawyer licensed in Maryland, whether he or she lives in Florida or New York, is not creating a “systematic or continuous presence” in the state of Florida to subject the lawyer to Rule 5.5(b). Contacts for the purpose of determining “systematic and continuous presence” in the context of determining “personal jurisdiction” have nothing to do with a virtual law firm that limits its practice to residents of the state in which it is primarily located, or serving out of state residents who have matters that are within the state where the attorney is licensed.

When an attorney creates a virtual law office, the gateway to the virtual law office is a Website that any other law firm would create and which is available for viewing by anyone in the world. The difference is the addition of a secure client portal where the prospective client and existing clients will register for assistance. The virtual law office Website states throughout where the attorney is licensed to practice law. The terms and conditions or disclaimers on the site should clearly explain where the attorney is licensed to practice law. This is no different than a traditional law firm Website.

Only residents of the state where the attorney is licensed, or out of state residents who have a legal matter within the state are permitted to register as clients of the law firm. Often the attorney may have the online client sign a traditional or digital engagement agreement that provides notice of which state’s law will apply should there be any dispute.

In addition, some virtual law office platforms have jurisdiction checks so that in order to register, the prospective client must provide their address. If the client is not physically located in the state, a notice is sent to the attorney reminding the attorney that before the client can be accepted as a client of the firm the attorney has to determined that the matter to be handled is a legal matter within the attorney’s jurisdiction. A notice is also sent to the client, reminding the client that the attorney is only licensed to practice law in the state in which the attorney is located. A client’s presence in a different geographic location than his or her attorney does not mean that a state’s ethics rules should come into play for the attorney handling a project that is unrelated to that state’s laws. Just because an attorney’s Website can be viewed in another state, doesn’t mean that a state should have disciplinary authority over that attorney because the Website and the law firm are not offering to provide “legal services” in that state. The alternative logic would suggest that a law firm should be available to be viewed only in the state in which the lawyer is a member of the bar – a truly absurd result – not worthy of further discussion.

To summarize: There are two separate questions about when a UPL claim would arise. First, what contacts does a state require to establish presence when the lawyer is not admitted there but is working with a client who physically resides in that state? Second, in the situation where the lawyer is admitted to practice in that state, but the lawyer physically wants to reside outside of that jurisdiction, what are the contacts that would need to be required to establish presence in the state where the lawyer is licensed? Again, the answer to both questions should be that the legal work that the lawyer provides to the client is what matters rather than where either the client or the lawyer is physically located.

Stephanie Kimbro contributed to this post and see: What constitutes virtual presence? see also Carolyn Elefant's post on this subject on her MyShingle Blog.

Law Firms and Cloud Computing: Ethics Guidelines

Richard Granat — Sat, 14 Jul 2012 09:18:45 -0500

State bar associations are starting to address the issue of law firms storing confidential client information in the cloud and are rolling out ethics opinions to guide law firm conduct. You can find a list of these opinions here on the American Bar Association web site. The basic standard that is emerging is that the attorney must use "reasonable care" under the circumstances. This makes sense. It leaves to the attorney the responsibility of making a management judgment about the risks in choosing one cloud solution over another. This assumes that the law firm has sufficient technical knowledge to evaluate these new risks created by the development of new information technologies. [This is the subject of a future blog post!].

The Massachusetts Bar Opinion Ethics Opinion on this subject is troubling because it explicitly requires:

"Consistent with its prior opinions, the Committee further believes that the Lawyer remains bound to follow an express instruction from his client that the client's confidential information not be stored or transmitted by means of the Internet, and that he should refrain from storing or transmitting particularly sensitive client information by means of the Internet without first seeking and obtaining the client's express consent to do so"

The requirement that in every case the client's express consent to store confidential information in the cloud is not realistic and not consistent with the way web technology is evolving. There are clearly situations where it would would be reasonable under the circumstances to secure a client's consent for storing confidential information in the cloud, but the way this Opinion is framed law firms will interpret to this mean that in every case the client's express consent needs to be explicitly secured. This adds unnecessary "friction" to creating the lawyer/client relationship.

This requirement actually puts Massachusetts lawyers, particularly solos and small law firms at a competitive disadvantage. Solos and small law firms now have to compete against software powered non-lawyer sites such as LegalZoom, LegacyWriter, MyLawyer.com, and RocketLawyer, to name only a few. None of these non-lawyer web sites require that their customers provide express consent to store their confidential data in the cloud, and if they do, the consent is buried so deep in the fine print that the average user is completely unaware of what they are consenting to.

The Opinion cites Google Docs as its leading example, which is a good example of how out of touch the Bar is with emerging technological trends. It won't be long before a person will be able to create a Will using a mobile app on their cell phones.

Must the user then be required to give their express consent before storing their data? What does that "express consent" mean in a mobile application context? The necessity of preserving the integrity of the lawyer/client relationship through the appropriate application of ethical rules is clearly appropriate. But adding unnecessary "friction" to accessing legal services for the average consumer is just going to result them turning to alternative non-lawyer providers who operate with less restrictions. Restrictions like this impede innovation in the delivery of legal services by the legal profession. No wonder the legal profession is lagging behind every other service industry in adapting to the mobile social web.

For a similar viewpoint see: Carolyn Elefant's Blog Post: The Bar Associations Have Their Head in the clouds When it Comes to Cloud Computing.

For a thoughtful analysis of bar association ethical opinions on the use of cloud computing by lawyers see also: Bob Ambrogi's blog posts at Catalyst.

May the LegalForce Be With You!

Richard Granat — Mon, 11 Jun 2012 14:10:31 -0500

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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LegalZoom: Where There's Smoke, There is Often Fire.

Richard Granat — Thu, 31 May 2012 15:50:31 -0500

Rozman Legal Group, P.C., a law firm that was formerly a member of the LegalZoom network of attorneys, recently filed a law suit against LegalZoom in U.S. District Court, for breach of the Panel Agreement that it entered into to become a member of the network.

LegalZoom maintains a Panel of Attorneys as part of a Legal Plan that provides its customers with the option of seeking legal advice in relationship to the their legal documents.

There are many claims in the complaint including breach of contract, breach of a non-disclosure agreement, and copyright infringement. The entire Complaint can be downloaded here, It makes for an interesting read.

For this observer, the most interesting claim is the alleged interference with the lawyer/client relationship.

Rozman alleges in the complaint, that LegalZoom interfered with the independence of the lawyer/client relationship, to wit:

the Rozman Legal Group was discouraged "from entering into limited representation or general retainer agreements with Plan Members";
the Rozman Group was instructed to " answer Plan member questions generally and rhetorically so as to specifically not create liability for Rozman Legal Group or LegalZoom.
Rozman was told by a member of LegalZoom's management "that the purpose of the Plan was to provide good customer service and that legal advice was ancillary."
Rozman also alleges that LegalZoom "sold family law leads usually for $75 and mesothelioma leads for as much as $1000 despite the LegalZoom policy that customer information was not sold to third parties"

It is hard to know what the real facts are of course, and I assume that discovery will shed some light on what really happened between the parties.

But the potential that there was interference with the independence of the lawyer/client relationship is ominous.

I have sometimes advocated that the American Bar should adopt some of the English reforms that enable non-law firms (companies) to own law firms, known as Alternative Business Structures. In theory, such an organization would have better access to capital markets which could finance true legal services innovation. In the United Kingdom processes and procedures are being put in place that are designed to insure the independence of the attorney.

When I read the complaint in the Rozman case, the idea of private company ownership of law firms, or non-lawyer equity ownership of law firms, doesn't seem like such a good idea after all.

US attorneys participate in network arrangements with private companies, but there is no mechanism to monitor whether management practices are in ethical compliance. While these arrangements may look ethical on paper, it is the management practices that may tell a different story.

So the question is: When you have a large, well-capitalized company that provides major cash flows to a group of law firms engaged in its delivery system, what guarantees can be put in place which protect the independence of the lawyer and the client;s interest?

It is easy to envision that LegalZoom which will soon be a public company --driven by Wall Street's demand for increasing earnings every quarter -- would manage its lawyer network in a way to maximize its commercial objectives.

There are solutions for this new breed of hybrid company that would give the public confidence that the ethical rules that apply to the lawyer/client relationship are being respect. [ RocketLawyer, JustAnswer, and Law Pivot are other hybrid company that work with a network of lawyers that provide legal services, just to name a few ].

One solution that would give the public confidence that these companies are in ethical compliance would be for the company to create a truly Independent Review Board of attorneys with backgrounds in legal ethics charged with monitoring management practices to make sure that they don't undermine the lawyer's obligations to their clients.

Another idea could be a Legal Ethics Ombudsman, who is independent of management and the company's office of General Counsel. Lawyers participating in the network would be required to consult or report violations to the ombudsman before resorting to litigation.

There is precedent for this in other industries.. e.g., peer review in medical institutions the New York Times has an ombudsman charged with monitoring ethical journalistic practice, and large commercial banks have independent risk officers (in theory!).

Creating this kind of impartial Board or Office to monitor the management behavior of the company and the lawyers it engages would be an important step towards assuring the public that their interests are protected. It could also minimize or avoid litigation like the Rozman law suit, which at the end of the day, will not likely be a satisfying experience for either party.

UPL and Legal Document Preparation by Non-Lawyer Providers

Richard Granat — Fri, 25 May 2012 04:08:54 -0500

The ABA Standing Committee on Client Protection just released a survey it conducted on unlicensed practice of law programs ( UPL) in United States jurisdictions in 2011-12.

Only 29 jurisdictions responded to the survey. Twenty-three of the 29 actively enforce UPL regulations, although some jurisdictions indicate that insufficient funding or resources make enforcement challenging. Nine jurisdictions stated that enforcement is inactive or non-existent.

Of the jurisdictions reporting, 21 states permit some form of limited practice by non-lawyers. Here is the summary from the report:

Twenty-one jurisdictions authorize nonlawyers to perform some legal services in limited areas. Sixteen permit legal assistants, legal technicians or paralegals to perform some legal services under the supervision of a lawyer; six jurisdictions permit nonlawyers to draft legal documents. Other allowable nonlawyer activities include: real estate agents/brokers may draft documents for property transactions or attend real estate closings; nonlawyers may attend (and in some states participate in) administrative proceedings; and participate in alternative dispute resolution proceedings. Many of these jurisdictions do not classify these activities as the practice of law.

There are only six jurisdictions in the US that permit nonlawyers to prepare legal documents,
(without providing legal advice). These jurisdictions are California, Arizona, the District of Columbia, Florida, Maine, and Missouri. In these jurisdictions the "nonlawyers" are referred to as - "Legal Document Preparers" or "Legal Technicians".

[ Download Entire Report Here ].

Only one jurisdiction that we know of, the State of Texas, makes an exception to the definition of the practice of law, and explicitly permits the sale and distribution of self-help legal software, software-powered legal web sites, self-help law books, and other technologically-based alternatives to the delivery of legal services.

It's no wonder that LegalZoom is required to state in its S-1 filing to go public - that violation of UPL statutes in many states is a major risk factor for its business:

"Our business model includes the provision of services that represent an alternative to traditional legal services, which subjects us to allegations of UPL. UPL generally refers to an entity or person giving legal advice who is not licensed to practice law. However, laws and regulations defining UPL, and the governing bodies that enforce UPL rules, differ among the various jurisdictions in which we operate. We are unable to acquire a license to practice law in the United States, or employ, or employ licensed attorneys to provide legal advice to our customers, because we do not meet the regulatory environment of being exclusively owned by licensed attorneys. We are also subject to laws and regulations that govern business transactions between attorneys and non-attorneys, including those related to the ethics of attorney fee-splitting and the corporate practice of law."

Some Observations

Some entity, such as the US Legal Services Corporation whose goal is to expand access to justice for all, or an independent or university-based research organization, should undertake empirical research which analyzes whether non-lawyer practices actually cause harm to consumers within the states that permit nonlawyer document preparation. Research should also be done on the impact that nonlawyer legal form web sites have on the consumer in terms of benefits and potential harm. Empirical research in England by the Legal Services Consumer Board on the issue of whether will writing by non-lawyers causes harm, concluded that it did. This resulted in making will drafting and will writing a reserved area under the new UK legal profession deregulation scheme.

We need more empirical research like the UK Study to inform public policy making in this area. Perhaps if LegalZoom is successful with its public underwriting it could subsidize or contribute to such a study, as it would certainly be in their interest to do so!

Research should be conducted in those states that permit nonlawyer document preparers to evaluate whether more consumers have access to the legal system and at a lower cost by using nonlawyer document preparers, rather than attorneys. This data would inform public policy with facts, instead of generalized theories that it is necessary to limit legal document preparation services to licensed attorneys in the interest of "protecting" the public from harm.

Legal document preparation software is getting smarter -- more intelligent-- Web-enabled document automation applications can now generate documents that really do reflect a person's individual circumstances. These applications are getting smarter and the intelligent templates easier to build. Other than in Texas, there is an issue as to whether legal software, standing alone, constitutes the unauthorized practice of law, despite disclaimers to the contrary.

State Bar UPL Committees should consider adopting the Texas UPL exception to avoid charges of monopolistic behavior, to gain the confidence of the public that the organized Bar is really interested in expanding access to the legal system through the use of technology, and to encourage innovation in the delivery of legal services. [Disclosure: We operate an intelligent legal forms software company ].

It would be interesting to see whether legal fees are also lower in jurisdictions which have competition from nonlawyer document preparers as these authors claim.

LegalZoom: The "Good Enough" Legal Solution

Richard Granat — Sat, 12 May 2012 09:37:41 -0500

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 expertise 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.