// < .gif)
When the client clicks the "Submit" button the document is instantly assembled, ready for the attorneys further review, analysis, revision, and customization if necessary. The result is a further leap in productivity because the client is actually doing part of the work at no cost to the lawyer, freeing the lawyer up to focus on analysis and further customization of the document.
This is what the work flow looks like when using web-enabled document automation methods:
Unfortunately, lawyers have been slow to adapt to this process as well, because of their reluctance to use legal documents drafted or automated by someone else. However in order to automate their own documents they must either acquire the skill to do the job, or commit the capital to have a skilled professional automate their documents for them. For solos and small law firms these two constraints create formidable obstacles to using more efficient methods.
Since neither condition is common within smaller law firms (programming skill, investment capital), the result is that the law firm gets stuck using older less productive methods of document creation.
Vendors that provide web-enabled document platforms include, our own Rapidocs, and Exari, Brightleaf, HotDocs, DealBuilder, and Wizilegal, to name only a few, all claim that their authoring systems are easy to use, but I have yet to see lawyers without any kind of programming skill create their own automated legal documents in any quantity. Thus, law firms become stuck in a negative loop of their own creation which reduces productivity (and profitability) :
"My legal documents are better than yours; I can’t automate them for the web because I don’t know how; thus I will be less productive and be required to charge you more because of my own inefficiency."
Competition
In the consumer space, now comes the non-lawyer providers to take advantage of the solo and small law firm’s competitive disadvantage. Research by companies like Kiiac provide support the conclusion that 85% of the language in transactional documents is actually the same. In more commoditized areas, where legal forms have been standardized, the legal form content is 100% the same in all documents. Taking advantage of this consistency of legal form content, companies like LegalZoom, Nolo, CompleteCase, SmartLegalForms, and LegacyWriter , with their superior on-line marketing and branding machines, now sell legal forms by the thousands at low cost which provide a "good enough" legal solution for consumers who would do any thing to avoid paying the higher fees to an attorney.
Its true that the consumer doesn’t get the benefit of the attorney’s legal advice and counsel, and the accountability and protection that dealing with an attorney provides, but consumers don’t seem to care.
What can be done?
The "web-based legal document automation solution" , used by non-lawyer providers, is a disruptive technology that is eating away at the core business base of the typical solo and small law firm practitioner.
What can solos and small law firms do to compete in this challenging competitive environment?
The American Bar Association’s Legal Technology Resource Center reported last year in their Annual Technology Survey that only 52.2% of solo practitioner’s don’t have a web site. Even if this number is underestimated, it is shockingly low compared with web site utilization by other industries. If you don’t even have a web site, the idea of "web-enabled document automation" is still a "light year" away.
What can be done to encourage more wide-spread use of web-enabled document automation technology by law firms, particularly solos and small law firms? A follow-up post will explore some solutions, but I am open to ideas from anyone.
North Carolina Bar Regulates Legal Cloud Computing
02
Jun
A proposed Ethics Opinion of the North Carolina Bar that provides guidelines for attorneys using cloud computing services, commonly known as SaaS (Software as a Service), contains language that is troubling because of its potential impact on solos and small law firm practitioners who are creating virtual law practices. The Bar is soliciting comments prior to making the Opinion final. Here are some comments for consideration.
The Opinion states that to comply with the attorney’s duty to keep client data confidential there should be:
"a separate agreement that states that the employees at the vendor’s data center are agents of the law firm and have a fiduciary responsibility to protect confidential client information and client property."
DirectLaw is a SaaS vendor that hosts law firm data at a Tier IV Data Center that implements the security controls that a bank or major financial institution uses. The idea that our data center would enter into an agreement that would make its employees agents of a law firm is not realistic. There is not sufficient consideration to expose the Data Center to this kind of liability, and there is no way that they would modify their terms and conditions to meet the needs of a single SaaS vendor. I doubt that counsel for the Data Center would ever approve such language. The Data Center would just tell us to take our business elsewhere. Amending the contract terms just for SaaS vendors that service the legal industry is not likely to happen.
There are other approaches to providing assurance to law firms that client confidential data is secure and less burdensome.
I think a better guideline would be to suggest or require that SaaS vendors host their data at a data center that is a Tier IV Data Center. A Tier 4 Data Center is one which has the most stringent level requirements and one which is designed to host mission critical computer systems, with fully redundant subsystems and compartmentalized security zones controlled by biometric access controls methods. The Data Center should also be SAS 70 certified. The Data Center should also have PCI DSS certification if credit card data is stored within the Data Center. With these safeguards in place, a law firm should be considered to have undertaken reasonable due diligence to satisfy the obligation to insure that client data will remain confidential.
There are other problems with the North Carolina opinion. Another guideline:
"requires the attorney to undertake a financial investigation of the SaaS vendor: to determine its financial stability."
What does that mean? I am not about to divulge our private financial statements to just any lawyer who inquires. How is it relevant? If there are provisions for data capture and downloading data that is stored in the cloud, and the law firm has access to that data, what difference does it make if the SaaS actually goes out of business?
It would make more sense to simply require that a SaaS vendor carry Internet liability insurance for the benefit of its law firm clients. Law firms will have problems securing Internet Liability Insurance to cover data loss. Data loss as a result of a Data Center outage is not normally covered under a law firm’s malpractice policy. For solos and small law firm’s securing this kind of coverage would be a burden and cost prohibitive. It makes more sense to require the SaaS vendor to secure such coverage and make its law firm subscribers a beneficiary of the coverage.
Another guideline states that:
"The law firm, or a security professional, has reviewed copies of the SaaS vendor’s security audits and found them satisfactory."
How much does such an audit cost? Can solo practitioners afford such an audit? Who qualifies as a security professional? I think this requirement will act as deterrent to solos and small law firms who are seeking cloud-based solutions that they can use in their practice. I think that a less costly and more effective solution would be for an independent organization to issue a Certificate of Compliance to the SaaS vendor indicating that the SaaS vendors has satisfied or complied with well recognized standards. Like the Truste Certificate in the privacy area, this would give solos and small law firms this would provide stamp of approval that minimum standards have been satisfied. This would move the cost burden of undertaking due diligence to the SaaS vendor, rather than to the solo or small law firm practitioner.
Another guideline states:
"Clients with access to shared documents are aware of the confidentiality risks of showing the information to others. See 2008 FEO 5."
This guideline should be clarified because it is not clear what "shared documents" means. This kind of statement is likely to scare clients into thinking that a law firm that stores client data on the the Internet is putting the client’s data at more risk than storing the data in a file cabinet in the lawyer’s office.
As the American Bar American, through its Ethics 20/20 Commission, and state bar associations adapt ethical rules to deal with the delivery of legal services over the Internet, it is important to consider that the burden of compliance may have a different impact on solos and small law firms, than on large law firms. The rules should not act as a barrier to solos and small law firms exploring new ways of delivering legal services online which are cost effective for both the law firms and their clients.
For a similar point of view see Stephanie Kimbro’s blog post on the same topic.
Disclosure: DirectLaw is a SaaS vendor that provides a virtual law firm platform to solos and small law firms.
Nolo Announces Law Office Concept for Members of its’ Law Firm Directory
26
Apr
Nolo, the leading self-help legal publisher in the United States, launched a Law Firm Directory several years ago. I have listed my virtual law firm in this Directory for several years and found that it yielded pretty good results for the amount of money invested as the Nolo web site is a high traffic web site that attracts consumers looking for a lower cost way of getting their legal problems resolved. Since my law firm offers "unbundled legal services for a fixed price online" it is a perfect fit for the Nolo Lawyers Directory.
Nolo recently announced their concept of the Nolo Law Office which brings even more value to a law firm listing in the Nolo Law Firm Directory. This may sound like a commercial, but it isn’t. I just wanted to share the information about this high value concept that is a great complement to law firms using not only our DirectLaw Virtual Law Firm Platform, but other law firms delivering legal services online, as well as law firms that have a more traditional office-based practice.
If you sign up for the Nolo Law Firm Directory, you also get these goodies:
- Your website is linked to Nolo’s website which can contribute toward enhancing your firm’s visibility on the Internet.
- You get priority placement on Nolo’s partner lawyer directories which include: the Justia Lawyer Directory; the LLRX Lawyer’s Directory, Cornell University Lawyer Directory, and the Oyez’s Lawyer Directory.
- Up to 15 Nolo articles are licensed free of charge which you can published to your web site. This is excellent content that, if selected carefully, can add to a law firm’s web site.
- You can access over 300 fillable Adobe .pdf forms which can be used internally in your practice. These forms are not web-enabled in the sense that they can be completed by a client using an online questionnaire, but they are very useful as an adjunct to the range of document products you can offer. For example, a law firm using the DirectLaw platform can upload a fillable .PDF to the client’s secure MyLegalAffairs web space and the form can be sold bundled with legal advice through DirectLaw’s ecommerce functionality that supports non-Rapidocs forms and documents.
- You can access 160 ebooks available for download at no additional charge. This effectively gives you an in-house law practice library for free. Almost the entire Nolo catalog is available for a free download.
- You have unlimited use of Nolo’s OnlIne Will and Living Trust Applications that can also be used internally. These applications are not client facing, like the DirectLaw web-enabled automated document applications, but they can be used effectively internally. (Nolo does offer these applications directly to consumers).
- Finally you have use of the web-based MYCASE Law Practice Management System. This gives you a law practice management system essentially for free, the same kind of system that other vendors charge $49.00 to $69.00 a month (for solos practitioners). This is a new company that has entered the SaaS law practice management industry and competes with the likes of CLIO and RocketMatter. I haven’t done a detailed comparison of MYCASE with other SaaS practice management solutions, but its certainly worth evaluating because it is free to subscribers of the Law Firm Directory.
The fees for listing in the Nolo Lawyer’s Directory vary by practice area and territory, so I would experiment to see what combination has the highest return on investment. Having access to the Nolo Law Office concept is a real bonus that gives the entire package real value for even the smallest law firm.
How safe and secure is your law practice environment?
18
Apr
A new nonprofit organization has emerged to help lawyers assess the safety and security of their law practice environment. The organization is the International Legal Technology Standards Organization and it recently released a set of standards that law firms can used to evaluate:
- the law firm’s internal security standards; and
- help law firm’s make informed decisions about "cloud computing" vendors and other hosting arrangements where confidential data is stored outside of the physical office of the law firm
The Standards are much more detailed and comprehensive than the ABA/LPM’s eLawyering Task Force publication of Cloud Computing Guidelines for Law Firms.
Disclosure: I am on the Advisory Board of ILTSO and provided some guidance to the development of the standards.
The standards are being circulated for comment before final publication.
The standards offer a sensible definition of "reasonable under the circumstances" by recognizing that different types of law firms have different security needs, although all lawyers are bound to prevent the disclosure of client data. Law firms are categorized into three types of situations:
- "Bronze – this standard is appropriate in every law practice, including solo practices."
- "Silver – this standard is typically appropriate for firms of more than one attorney, or where circumstances or resources dictate."
- "Gold – this standard is typically appropriate for larger firms or those with additional IT resources, or where circumstances or resources dictate."
The idea of categorizing law practice environments into these three categories is a new idea, as some of the standards only apply to the Gold and Silver category. The intent is to recognize that law firms have different IT capabilities and the size of the law firm usually determines how the law firm will approach the problem of securing client and other firm data.
At this point of development, the law firm is responsible for undertaking their own self-assessment. Law firms can apply to the standards to their own law practice environment and if in compliance display the ILTSO seal.
At some point, I can see where ILTSO might undertake an independent assessment of a law firm’s security arrangements and if it compliance with the standards, award a certificate like the Truste certification which assesses an organization’s privacy policies. A small fee could be charged for this assessment and it would vary depending on whether the type of law firm practice environment is Bronze, Silver, or Gold. This would give assurance to clients that all reasonable efforts have been taken to secure the confidentiality of their data.
It will be interesting to see how the organized bar responds to these standards, as their are entities both at the state level, and the American Bar Association that are analyzing these same subjects.
The ABA Ethics 20/20 Commission, for example, has been holding hearings on cloud computing and security of data and has released a working paper on this subject.
Just last week, the Commission released its recommendations on outsourcing, which is a process that has an impact on the confidentiality of client data. The recommendations have not yet been posted on the Commission’s web site, but the ABA Journal reports that:
"The commission proposes revisions to the Model Rules recognizing that electronically stored information, including metadata, is material subject to confidentiality rules. It also proposed revisions directing lawyers to make reasonable efforts to prevent inadvertent disclosure of information relating to representation of a client."
ILTSO’s new standards would give concrete meaning to the definition of "reasonable efforts" and provide a detailed framework that could guide attorney assessment of particular outsourcing and cloud computing arrangements.
A positive impact of having this evaluation framework in place might be the accelerated adoption of technologies, such as cloud computing. Compliance with the guidelines would support a law firm’s assertion that the firm has taken all reasonable steps to secure client data to reduce its liability in case of a security breach over which the firm had no control.
An unanticipated consequence might be a slow down in adoption, as the lack of clarity in this area might give many lawyers a reason not to become "early adopters." Many lawyers might choose to wait until standards like ILTSO’s are accepted by a broad base of legal organizations and law firms.
Of course, by then, the "real" early adopters will have acquired a first mover advantage over law firms that are still thinking about the subject, to the those firms competitive disadvantage.
Online Legal Services: Is It Hype or a New Way of Delivering Legal Services?
09
Apr
We have been evaluating the experience of law firms that have subscribed to our DirectLaw Virtual Law Firm Platform to determine what are the factors that make for success. Subscribers to our service are mostly solo practitioners and small law firms who are experimenting with this new mode of delivering legal services online. We want to share their experiences as we learn from them about what works and what doesn’t work. When we have exemplary examples of success we will develop case studies from which we all can learn.
All kinds of lawyers have subscribed to our DirectLaw client portal which enables the online delivery of legal services:
- recent law school graduates who can’t find a job and forced to hang out their own shingle;
- lawyers who want to give up on a physical office for one reason or another and want to try working from anywhere, but still see clients face to face when necessary;
- lawyers who think they can copy LegalZoom and get rich quick by simply putting a site up that sells legal forms and documents online;
- lawyers who are in transition because they have been terminated by their law firm employer because of the impact of a constrained economy which is not growing;
- retiring lawyers, with deep experience and expertise, and who want to transition into a part-time practice, rather than give up the law entirely;
- “pure-play” virtual law firms, where the lawyer never sees a client face to face in an office setting or goes to court;
- more traditional law firms, and the experienced lawyers that run them, that want to extend their brand online by adding what we refer to as a “virtual component” or a “virtual law firm platform.”
- Less experienced lawyers who want to compete against older more experienced lawyers with an online service to distinguish themselves from more traditional law firms in their community.
Each of these lawyers see potential in the “virtual law firm” concept acquiring new clients and serving existing clients more effectively.
Almost all of our DirectLaw subscribers hope to acquire new clients by creating a dynamic, and interactive Internet presence that is more than a passive web site, which is no more than an online brochure.
Some law firms are struggling as "virtual law firms" and are not able to generate new clients and new sources of revenues. On the other hand, we know from our own direct experience in running a virtual law firm since 2003, that the concept can work, and our own success in selling automated legal forms directly to consumers through a network of more than 30 legal form websites, indicates that there is real demand for online legal solutions.
So what are the factors that contribute to success?
1. Your law firm web site needs to be findable on the web.
Our analysis indicates that a major cause of failure for law firms trying to market their services online is a poorly constructed front-end website that is not search engine optimized. DirectLaw’s client portal integrates with a law firm’s front end website and it is through the law firm’s web site that the client finds the law firm, and logs on to their own password protected and secure client space.
If the firm’s web site is not findable on the Internet, the site gets little traffic, which translates into no prospects and no new clients. Most lawyers no little about the art and science of inbound internet marketing and the techniques of how to make their web sites findable. Web design firms that create graphically intensive law firm web sites that look beautiful do a disservice to law firms unless the sites they develop are also search engine optimized and the web design firm stresses the importance of creating new legal content that is practice specific as a magnet for web traffic.
See: Law Firm Web Site Design: Tips and Techniques
2. You need to have a good reputation as a competent attorney in your community with an existing client base if you are going to make it online. There are some exceptions to this rule, but not many.
A major factor that contributes to online success is having a good reputation in a particular area of legal practice. See Case Study
“Pure play” virtual law firms launched by lawyers who can’t quite make it in the real world won’t make it online.
The most successful use of online virtual law firm technology is demonstrated by law firms who already have a successful traditional practice and a base of clients to draw upon. Online law firm technology enhances the experience for existing clients and increases the productivity of the law firm in serving these clients. Word of mouth referral from existing client’s, sends new clients to the law firm’s web site. New online prospects convert to clients because of the credibility of the attorney in the real world, and the potential for a face to face meeting when necessary. The online technology component complements the offline practice, and vice versa. This doesn’t mean that a “pure play” virtual law firm can’t work; it just requires a special type of practice to make a "pure play" business model work. A "click and mortar" law firm model seems to work best, at least during this period of early development of the online legal services concept.
This is a complex subject that requires more space than can be contained in a single blog post.
For further analysis and discussion of success factors see: Factors That Contribute to the Successful Delivery of Online Legal Services.
LawPivot: Another Legal Advice Web Site
29
Jan
Another interesting start-up has emerged out of Silicon Valley to provide crowdsourced legal advice to other start-ups for free.
Vertical Q&A web sites seems to be the next new thing among venture capital investors. Even Facebook rolled out this year a crowd-sourced Q&A service.
LawPivot, a legal Q&A web site founded in 2009, hopes to fill a niche by providing legal advice to the founders of start-up and early stage high-tech companies based in California at a legal fee they can afford — FREE. Legal advice is provided by an experienced network of high-priced business law attorneys, recruited from the top 200 hundred or so law firms, who hope to pick up new clients by entering into discussions by providing free legal advice services to start-up companies.
Free legal advice or the “free consult” has been employed by lawyers for years, pre-Internet, as a tried and true marketing strategy for acquiring new clients. Now many lawyers are beginning to offer free legal advice online from their web sites directly. See for example, VirtualEsq.Com . By next year there will be hundreds of these free legal advice services offered directly by lawyers from their web sites as the virtual law firm movement begins to scale.
However, free legal advice from an individual law firm’s web site, is not the same thing as a vertical web site that aggregates answers from many lawyers, giving consumers a wider variety of responses to their particular situation.
Free legal advice online is not a completely new idea. FreeAdvice has been doing it for years, and consumers can get answers to their basic legal questions from sites such as AVVO, RocketLawyer, and JustAnswer. What is new, is that LawPivot provides through its network of lawyers “real” legal advice that applies to the client’s particular situation, as distinguished from merely legal information. And this advice is reputedly to be "high quality" given the stature of the lawyers recruited to the LawPivot network.
However, genuine legal advice, [as distinguished from “legal advice” that is characterized as “legal information” ], like any legal service, has to be delivered in an ethically compliant way requiring that the client’s information be kept confidential, that an attorney/client relationship be established, and that the attorney providing the legal advice be a member of the bar within the jurisdiction where the client is located. Presumably LawPivot is addressing these issues. The LawPivot service is presently limited to California, but the company, according to its representations, plans to expand nationwide.
Although the company recently raised $600,000 from Google Ventures, the venture capital arm of Google, after a $400,0000 round from from a group of angel investors, it will be interesting to see how or whether it survives. At this point, neither the clients are charged for legal advice, nor are the participating attorneys charged an advertising fee. So there is no revenue, and apparently no business model. However, I doubt that the investors thought they were making charitable contributions, so there must be a business model lurking in the background somewhere?
Unfortunately, the only business model that is ethically compliant in the US, is one where the participating lawyers pay an advertising fee to play (get listed) and get exposure. Splitting legal advice fees between a law firm and a non-law firm , is a big “No, No” and an ethical prohibition that exposes the participating attorneys to bar sanctions which could lead to disbarment. Perhaps because Google is now involved as a major backer of LawPivot , and the company is planning to move to the GooglePlex campus start-up incubator, "they can do no wrong.!"
Many other Western common law jurisdictions, like the United Kingdom, have abolished the division of fees, but the rules against splitting fees with non-lawyers remains sacrosanct in the US, on the theory that splitting fees would compromise the independent judgment of the attorney. However, in the UK, lawyers are permitted to work for a profit-making company and provide legal advice directly to consumers, and no one seems to be complaining about compromised judgment. [ See: FirstAssist in the UK for an example ].
Charging clients an administrative fee to “use” the web site, as an alternative revenue source, has been tried before in an earlier Internet era, and it failed then. [ e.g. AmeriCounsel ]. I doubt that this model will work today when consumers are expecting everything on the web to be for free.
I think it is a good sign that innovation is happening in the legal industry, and that private capital is finally looking for a way to get a return by investing in the delivery of legal services. [See: Total Attorneys Receives Multi-Million Dollar Investment ].
I would like to see companies like LawPivot thrive, but at this point I don’t see the juice. Are advertising revenues sufficient to make this venture sustainable, or has LawPivot figured out another legitimate source of revenue that doesn’t violate US ethical prohibitions? Only time will tell.
Venture Capital Flowing Into Legal Enterprises: Total Attorneys Receives Infusion of Capital
22
Jan
Private capital is beginning to flow into companies that are operating at the intersection of the delivery of legal services and the Internet.
Total Attorneys, a Chicago-based company, just announced that they received a multimillion dollar investment from BIA Digital Partners, a Virginia-based venture capital firm. Total Attorneys is most known for the marketing services that it provides to law firms and the recent ethical controversy in some states surrounding the use of pay-per-click advertising on behalf of law firms. (Apparently this controversy has been resolved in favor of Total Attorneys in every state where it was considered by bar ethics committees.)
The company plans to extend its technology assisted services to law firms by expanding its virtual law firm Software as a Service offerings (SaaS). Total Attorneys mission is to become a leading provider of elawyering Services to solos and small law firms by providing a comprehensive suite of outsourced technology services, from marketing to web-based practice management tools to a robust client portal.
The company licenses virtual law office technology to solos and small law firms as a subscription service, that now consists primarily of a robust suite of "back-office" practice management tools. The pan is to expand the service into a more comprehensive "front-office" client portal, providing a total solution to solos and small law firms.
This expansion would entitle the company to claim that it is a leading provider in the eLawyering space and it would compete more directly with our own DirectLaw virtual law firm platform service and other web-based companies moving in the same direction. [ See: Legal Vendors Cloud Computing Association ] .
The concept of "technology-assisted service" is an interesting category for the legal industry for it describes a form of outsourcing which combines both a digitally-based service combined with human service. Thus Total Attorneys also provides "virtual receptionist services", and at one point virtual support services to bankruptcy law firms. One management solution for solos and small law firms it to out source to independent specialized companies functions which can be done more effectively and at less cost than the law firm can do itself using internal resources.
It is good to see competition heating up in the eLawyering space, which has been moribund for a long period of time. The eLawyering Task Force of the Law Practice Management Section of the ABA was created in 2000, more than a decade ago. For many years there was not much to report in terms of the innovative delivery of on-line legal services by law firms. The last 2 years has witnessed an explosion in elawyering industry developments as lawyers adapt to change — caused by a severe recession, widespread unemployment of recent law school graduates, and the challenges created by consumers who are seeking lower-cost and "good enough" alternatives to lawyers, [such as LegalZoom.]
Competition among a variety of vendors provides choices to law firms. Competition focuses attention on the fact that delivering legal applications as a SaaS is emerging as a new paradigm for enabling solos and small law firms to access complex Internet technologies at a fraction of the capital cost of developing these applications internally. Private capital moving into the legal industry will create more choices for law firms, and as a consequence more choices for consumers.
Creative legal outsourcing will enable solos and small law firms to become more productive and survive in an increasingly competitive environment.
Will LegalZoom Become the Largest Law Firm in the US?
05
Jan
LegalZoom has been beta testing a concept which links its marketing capabilities to a network of law firms that offer legal services under the LegalZoom brand. With some state bar associations accusing LegalZoom of the unauthorized practice of law, it might makes sense for the company to seek deeper alliances with networks of attorneys who are able to offer a full and ethically compliant legal service. Solos and small law firms, leveraging off the visibility and prominence of the LegalZoom brand, could reduce their marketing costs and enable these firms to better capture consumers who are part of the “latent legal market” on the Internet. It could be a win/win for both parties.
Unfortunately, linking the capital and management resources of profit-making organization with private law firms is almost impossible in the United States, given the regulatory framework that governs law practice. Unlike, the United Kingdom, which is in the process of deregulating the legal profession, enabling profit-making companies, from banks and insurance companies to retail chains like Tesco, to actually own a law firm, and/or split legal fees with a non-law firm, these practices in the US are strictly taboo.
In the US, law directories can charge a flat marketing fee for a listing, but sharing legal fees with a marketing organization can get you disbarred.
During the dot-com boom around 1999-2000, a company emerged by the name of AmeriCounsel that tried to create a hybrid organizational structure similar to the LegalZoom experiment. The company sought to enable a network of attorneys to offer legal services at a fixed and reasonable price and to mediate between the consumer and the law firm in terms of guaranteeing the quality of the legal services offered. The company failed during the dot-com bust for various reasons, including lack of financing, but on the way to failure, secured some opinions from state bar associations that blessed their model and provides a blue print for hybrid delivery systems which combine the expertise of a law firm with the marketing, management, and technological resources of a non-law firm.
One such opinion was issued by the Nassau County Bar Association New York State.
The Bar Association reasoned that the AmeriCounsel scheme was permissible because:
[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 Code of Professional Responsibility and by ethics opinions interpreting the Code.
In this model, AmeriCounsel provided technology and administrative services to link the client with the lawyer, but the law firm made no payment to AmeriCounsel. Instead, a separate administrative/technology fee was paid by the consumer to AmericCounsel for using the web site and gaining access to the lawyer. (This is not a practical scheme in today’s web environment, in my opinion), Moreover, AmeriCounsel did not choose the lawyer. The client was able to compare the credentials of different attorneys and choose their own lawyer. Thus no legal referral was involved, which would not be permitted in New York, as only an approved non-profit organization can make legal referrals.
In my opinion, this model, forced on AmeriCounsel, by the Rules of Professional Responsibility, is cumbersome, hard to implement, and was not economically viable for AmeriCounsel. Perhaps this was one of the causes of its failure.
Almost a decade later, companies that want to enter into this kind of hybrid relationship with lawyers, have to follow the same rule structure, as the ABA Model Rules of Professional Responsibility as the rules have not changed in any significant way. changed. It will be interesting to see whether the ABA Ethics 20/20 Commission, which was set up just last year, will address these issues at all.
Perhaps there should be a “safe harbor” that enables organization’s like LegalZoom to experiment with new patterns of legal service delivery that could operate for a limited period of time in a specific state, like California, The experience would be evaluated carefully as a basis for rule and policy change. The evaluation would be aimed to see if client’s interests are compromised in any way, and whether the delivered legal service is less expensive, without compromising the quality of legal service.
Instead of creating legal profession regulatory policies that are based on the legal profession’s idea about what is good for the consumer, policy could be based on real experience and facts. Experimentation is good. It leads to change, and in other industries improvement of methods and approaches over a period of time.
Of course, I don’t believe that this will ever happen in the US, at least not in my professional lifetime.
