LegalZoom: What Does Not Destroy Me, Makes Me Stronger

The news broke today that a widely watched Missouri class action suit against online legal forms company LegalZoom alleging the unauthorized practice of law has been settled. Did the plaintiffs’ team unmask LegalZoom’s misdeeds and bring this hideous threat to the legal profession to its knees? Nah.

Final terms still have to be worked out and approved by the court, but the major bullet points reportedly include:

  • TBD compensation for Missouri customers
  • TBD changes in the way LegalZoom operates in Missouri
  • No admission or finding of wrongdoing by LegalZoom
  • LegalZoom continues to operate in Missouri

In other words, LegalZoom saves some litigation expense and now has a roadmap for beating back similar cases in other jurisdictions, and in the process will become a stronger, savvier competitor nationwide.

Who’s Afraid of LegalZoom? And Why?

Mentioning LegalZoom in a group of lawyers elicits a similar reaction to uttering “Voldemort” to magical folk in a Harry Potter book/movie — fear and contempt for “He Who Must Not Be Named.” He Who Must Not Be NamedLegalZoom is the most reviled recent innovation in the legal industry, the bete noire of small business and family law.

But like family lawyer Lee Rosen, I’m puzzled why lawyers seem focused on destroying the business through legal challenges and rhetorical attacks instead of besting it in the marketplace.

 “…The flaws in LegalZoom…are fixable. LegalZoom has resources and they’ve got time. They’re going to fix every issue they identify and, eventually, they’re going to have an excellent product. They’ll build greater and greater intelligence into the service and they’ll, one day, get it right for every client.

“Once they get it right, you’re still going to need to make a living. It’s time to start telling the stories of how you add value and give people a reason to come to you.”

With some innovative marketing — like adapting your service delivery model and sharpening your value proposition — you can actually benefit from LegalZoom’s outsized presence in the market.

  • LegalZoom can only say it’s cheaper; not better, or even as good.
  • If you’re honest with yourself, you don’t even want clients who think online forms are good enough. They would never be happy, you would end up over-servicing the client, and you would likely not get future business.
  • Is anyone actually losing clients to LegalZoom, or is the service model just attracting individuals and small businesses who otherwise wouldn’t consult with an attorney?
  • LegalZoom’s Achilles’ heel is that it cannot provide peace of mind. Leverage that. Create a higher-margin niche in reviewing draft DIY documents.
  • Productize and market your own forms. 
  • Give templates away. It’s a mitzvah to other small and solo firms (and potential referral sources), and a good marketing hook for your higher-value client services.

Do you think LegalZoom is an actual threat to small and solo firms, or are you embracing the challenge?

Pro Se Nation: Schadenfreude Don’t Pay the Bills

Desperate times call for desperate measures, so the continuing rise in pro se representation should not be a surprise to anyone. Driven partly by economic hardship and partly by social and political zeitgeist, pro se representation and self-service solutions like LegalZoom address real — and frequently profound — financial and psychological needs. Notwithstanding low probability of prevailing and high probability of costly oversights and mistakes, DIY legal work is an enduring force to be reckoned with, especially in areas like family and small business law.

The typical lawyerly response to the issue is an “at your own peril,” “pay me now or pay me later” admonition. I wonder how much business fear-mongering and shaming brings in?

But what if enterprising lawyers started treating individuals considering pro se matters with respect, empathy and a spirit of collaboration, rather than bemused condescension? They might end up developing a successful niche for themselves in a crowded and challenging market, just as we saw with the development and acceptance of collaborative law, the non-adversarial alternative to scorched-earth divorce and child custody litigation.

For a while I have been intrigued by the marketing potential of constructive engagement with pro se representation and have posted on the topic before, so I am always interested to come across content like Arizona family law attorney Scott David Stewart’s Divorce FAQ. What’s interesting and worthy of emulation is that instead of  dismissing pro se divorce out of hand, Stewart treats the subject factually and candidly, with balance and respect. Instead of baleful warnings, his Q&A simply reminds people of why they genuinely need a lawyer.

Since the perceived high cost of divorce proceedings figures so prominently in decisions to proceed pro se, Stewart straightforwardly kicks the legs out from under that myth without talking discounts: 

“The cost of a divorce in Arizona depends upon how well two people are willing to work together to resolve any outstanding issues. Ultimately, if two people cannot get along and resolve their divorce, then their attorneys must resolve every aspect of their case for them, therefore driving up the cost of their case. If two people are capable of working together and resolving outstanding issues in their divorce case, then their case can be resolved with minimal attorney involvement and minimal attorney fees.”

In other words, clients make divorces expensive, not lawyers. Only ugly divorces are expensive; well-intentioned, reasonable people with their family’s best interests front and center can certainly afford proper representation.

I think that’s a powerful and persuasive statement because it is commonsense and simple, and it could certainly form the basis for a firm’s unique value proposition. Unfortunately, that great passage is buried in a video clip. Notwithstanding, it’s an excellent example of how attorneys can begin treating the pro se “menace” as an opportunity.

If you have some success — or cautionary — stories to share about lawyers taking on “pro se nation,” I’d love to hear them.

Even in Legal Marketing, Price ALWAYS Matters

Recently I read a post by a legal blogger that warned readers to “never compete on price,” which struck me as quaintly out of touch

Price Matters in Professional Services

with the market for professional services, and egregiously self-serving.  You see, this blogger’s business is building blogs — something you can easily do yourself with professional-looking results in an afternoon — for free — using Google’s Blogger service or WordPress . 

The post was prompted by a sales discussion wherein a prospective customer questioned why this blog development firm’s initial fee was double that of a competitor’s. In a clunky bit of sophistry, the author asserts that charging lawyers well above market for a commoditized service like blog development and hosting actually helps them because “Focusing on price, as opposed to quality and service, leaves the American lawyer ill-served. It’s not what companies serving lawyers should be all about.” 

It’s not what they should be “all about,” but price definitely matters — a lot. Law firms are businesses, and what successful business does not factor price into the equation on EVERY vendor decision? Has anyone successfully gone into a competitive pitch saying, “We’re not going to talk about price because it’s beneath us, and it should be beneath you.” 

Price is concrete; “quality” and “service” are the subjective filters through which we view price and form our perception of value. You can’t compete on quality and service without putting a price tag on it. 


Virtual Law, Affordable Legal Services and Access to Justice

Back in March I wrote a post about the Austin Bar Association’s “People’s Law School,” a program intended, in part, to address access to justice issues related to education and resources supporting pro se representation. So I was interested to see Donna Seyle’s take on addressing access to justice issues through wider adoption of Web 2.0 technology. She noted in a recent post on her Law Practice Strategy blog that:

  • The lower cost structure of virtual law practice could make legal services more affordable to more people, and
  • Broader, more innovative implementation of IT solutions could address barriers to information, processes and other resources.

What impressed me most about the post, though, were the ethical underpinnings of Seyle’s argument:

“Yes, offering consumers affordable services is a great way to create a market for your practice. But the advantages of affordability also spill over to one of the great tenets of our profession: access to justice. I would argue that the advancement of this right is as paramount as any security and privacy challenge posed by the use of cloud-based practice management platforms.”

In other words, virtual law and innovative IT make for good business and good policy.

Practice Management Literacy: What They Don’t Teach You in Law School

Tom Mighell made an impassioned case  last night at the Ignite Law 2010 conference for better practice management instruction at law schools, and it strikes me that the topic has particular resonance now that the structure of the profession and the underlying business models are undergoing fundamental changes.

Given the scarcity of jobs at established firms and the related rise of  solo, networked & virtual gigs, young lawyers need to be prepared to make their own way as soon as they get their diploma. Even young associates at traditional firms, who couldn’t count on mentoring even in the best of times, cannot now expect to learn about the complexities and implications of alternative fee arrangements when the partners are grappling with the issue themselves.

While practice management education was not its focus, a recent post by David Koller on the Small Firm Business blog makes the point clearly that the “business” of law is a glaring gap in legal education. Koller’s is a great first person entrepreneurial success story, but it demonstrates the signifcant challenges lawyers face if they do not have a grounding in marketing, cash flow planning, accounting and all the other hidden joys of running a law firm profitably.

While some commentators on the #ignitelaw Twitter thread seemed to fret that law schools might need to be lobbied/pressured into incorporating practice management into the curriculum, it seems to me like a tremendous opportunity for entrepreneurial and innovative law schools to further differentiate themselves and attract top candidates.

How better to enhance a school’s job placement story than with a strong platform for supporting and encouraging your graduates’ entrepreneurialism?

Of course, that’s going to take a while. In the meantime, there’s great info for autodidacts on sites like Jeff Krause’s Practice Management Blog.