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.

Glass Houses: Applying “The 11th Commandment” to Professional Services

Though he did not invent the phrase, Ronald Reagan was the most famous proponent and practitioner of what’s commonly referred to as “The 11th Commandment”: Thou shalt not speak ill of any fellow Republican.

While initially coined to address political campaigns, the precept is directly applicable to branding and perception management in business as well. The underlying premise is that public attacks and denigration originating within a group ultimately undermine the group itself by giving credibility to similar attacks from outsiders.

Apparently Shawn McNalis at Atticus, a practice management education and training organization for attorneys, is not a believer. In a blog post this week on Attorney at Work, McNalis advocates for taking advantage of out-of-work and underemployed legal marketers to do admin work:

“You might be able to hire a college student part-time or as an intern, or try delegating marketing tasks to a paralegal or receptionist on your staff. But keep in mind that right now the job market is filled with skilled legal marketing professionals who are out of work because of the recession. Be sure to look at the more experienced marketers—you might be surprised at the quality of help that’s available.

Isn’t that analogous to the very thing law firms hire practice management coaches to help them with? Dissuading bargain-hunters and countering misperceptions about the value of attorneys’ expertise and professionalism?

Just for fun, let’s replace “marketers” with “lawyers” and “practice management consultants” in McNalis’ recommendation and see how it plays:

  1. “You might be able to hire a law student part-time or as an intern, or try using LegalZoom. Right now the market is filled with skilled lawyers who are out of work because of the recession. You might be surprised at the quality of lawyers willing to bill at steeply discounted rates.”
  2. “Keep in mind that the internet is filled with excellent  free practice management and lawyer coaching advice. Be sure to do a Google search and read and watch as much practice management content as you can before considering paying a consultant for training.  You might be surprised at the quality of lawyer coaching that’s available for free.”

Just sayin’…

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.

Reminding People Why They Need a Lawyer

On Saturday the Austin Bar Association, UT Law School, the Lawyer Referral Service and Austin TV station KEYE presented the People’s Law School at the UT Law School, a free semi-annual community event featuring basic classes taught by lawyer volunteers in many types of  law. I’d first learned of its existence the night before from a blurb about it on KUT radio, checked out the Web site and figured it would be a worthwhile
field trip — always looking for interesting topics and people. Sessions included family law, immigration, wills, business contracts, bankruptcy, debt modification and intellectual property.

In the day’s opening session, Judge Orlinda Naranjo of the 419th District observed that the People’s Law School concept was predicated on the belief that regardless of financial means, everyone should have access to justice, and that sharing general information and knowledge was an important means of supporting that vision. She went on to note that individuals attempting to represent themselves in court has become such a trend that the Texas Judicial Council has increased its attention to resources for pro se litigants.

The particular genius of this approach is that rather than dissuading people from consulting lawyers, it subtly helps attendees better appreciate the necessity and value of professional legal advice.

For example, despite a few gratuitous (IMHO) pointed asides about online legal document template vendor LegalZoom, in his presentation on basic contracts Jason Snell was able to demonstrate through a few “dos and don’ts” slides that no matter how simple a contract seems, there are any number of subtlties that can be overlooked and prove costly down the line. For example, an improper signature on a contract could make you personally liable rather than your company.

So instead of dreading and maligning the legal DIY trend, enterprising lawyers could profitably co-opt it.  In the example of “basic” contracts like contractor agreements and leases, there is a general public perception of high cost/low value to engaging a lawyer to draft what is perceived as a simple document. However, a competitively priced service that reviews agreements might seem like a prudent and attractive bargain.

While the general public might be reluctant to pay for a lawyer’s contract writing skills, they will pay for peace of mind — even if the cost ends up being the same.