Practical Tips and Useful Advice for Lawyers in Practice
Monday, February 15, 2016
What LegalZoom is Telling Us (Solo and Small Firm Attorneys)
Back in September I attended the fantastic Clio Cloud Conference in Chicago. I mention it because one of the keynote speakers was John Suh, the founder and CEO of LegalZoom.
When I noticed this, I approached someone I knew at Clio and said, “Really?!? You are having the LegalZoom guy speak to a group of practicing lawyers?”
His response was, essentially “Barry, you are not the only one asking about it. I suggest you keep an open mind and hear what he has to say. You may find it interesting.”
LegalZoom CEO John Suh told us that LegalZoom’s plan was/is on 3 levels. Most lawyers are familiar with level 1, where they provide legal forms for a certain segment of the potential client world. He repeatedly used the phrase “access to justice” to describe the problems facing the consumers LegalZoom is trying to serve.
His analysis goes as follows: For people in the top 1% of income, where money is no object, they can and do get top quality legal help. Then there is the bottom 15% of income, which LegalZoom wants nothing to do with (I guess these poor people should get their “legal services” from the government, or go unrepresented.) So much for “access to justice”.
Then there is the 84% of "middle income" people (16-99% of income), who he says don’t have “access to justice” because most lawyers are not prepared to provide this in an affordable way.
LegalZoom’s second level of service was/is to supplement their forms with the ability for their customers to call a lawyer at LegalZoom for help with the forms. Yes, sometimes the law involves more than filling out forms.
At the third level, and what LegalZoom is rolling out next, is a widespread pre-paid legal plan. They intend to have the largest and most expansive pre-paid legal plan in the history of civilization. I know this must be big because they advertise on my favorite show, Shark Tank. Under these plans the customers would be billed monthly and can then obtain legal advice from attorneys who participate in the plan. This will be a great thing for attorneys, Suh claimed, because it will create 20-30,000 new legal jobs.
He then continued that of course, for this to work, the legal services would have to be at the highest possible level, and the attorneys would have to be well vetted and subject to ongoing review by the customers. And if the attorneys don’t pass muster, before or during their involvement, they are out.
LegalZoom has "done studies" of attorneys and work quality and efficiency. Suh summarized his findings this way…
Big law firms are pretty efficient, with their attorneys working at 75% efficiency. That is, they spend 75% of their working hours doing actual legal work for clients. Their quality is good and they use technology relatively well.
The most efficient firms are those numbering between 10-20 lawyers (“boutique" firms), who spend 80% of their working hours doing actual legal work. Boutique firms are also more efficient because their lawyers tend to be “in their prime” (ie – no newbies and no dead wood older partners). These firms tend to use the newest technologies most efficiently.
The least efficient lawyers are the solos and small firms. According to Suh, they/we work at 40% efficiency. We spend only 40% of our time doing actual legal work for our clients. We often focus on several areas of law and are not at a high level on any particular one. And, we are behind on technology.
LegalZoom’s plan is to use boutique law firms for their pre-paid legal plans. The 20-30,000 new legal jobs are going there. They expect to pay the boutique firms well, in the realm of pre-paid legal, and for the firms to accept way less than their usual hourly in exchange for volume (and prompt payment) from LegalZoom. Will that work? Time will tell.
John Suh made it clear that this pre-paid legal opportunity, and the legal work and income related to it, will NOT be made available to solos and small firms. He said solos could not stand up to the vetting and review process. He said we would not be able to serve the pre-paid legal clients well because we could not be counted on to be there, and to follow up, and to work efficiently.
He said it. I was there. There was a gasp in the room....though maybe it was just me.
At first I couldn’t pinpoint what was so upsetting about this. But then it struck me…
HE IS RIGHT!!! But also very wrong.
He is right that….solos are not as efficient in our work because we spend time on marketing, and billing, and collections, and evaluating new matters, and personnel issues, and all the other things that comprise being in practice.
He is right that….we sometimes venture outside our best practice areas.
He is right that….we are not all/always on the cutting edge of technology.
He is right that….it would be difficult to guarantee all-day availability for calls from pre-paid legal clients at a reduced hourly rate.
But he is WRONG (and disingenuous) when he talks about an access to justice problem for middle class people.
He is WRONG to throw a blanket over the 16-99% income levels, as if people across the entire income spectrum have the same legal needs and the same issues about access to legal services.
He is WRONG if he thinks good clients want to commoditize legal service and get it through a monthly plan. Good clients don’t want that…they want their own lawyer, who they can talk to about the specific matter, and who knows them well enough to offer contextual advice.
I don’t know if he thinks small firms and solos are destined to remain inefficient, and unknown to the many clients who should be able to find them. But if he thinks this, he is WRONG.
This is NOT an "access to justice" problem. It is a disconnect between the clients' actual needs (quality, affordable legal services) and our ability to provide this AND make the value of our services known to the optimal clients.
WE (solos and small firm lawyers) should be serving this market WAY better. We are uniquely qualified to do this IF/WHEN we up our game. Our fees should be commensurate with real value, that clients can see and understand (and appreciate). Clients want and deserve personalized legal services.
Good lawyers want good clients, and this means way more than "people who can pay". Good clients realize that legal service is not a commodity, that there is more to quality than cost. They understand that legal issues exist in a larger context. They understand that when a valuable service is being provided, reasonable and appropriate fees will be charged. Good clients appreciate the value that a good attorney brings to a situation.
As a solo lawyer, I never minded that LegalZoom was doing the forms and advice thing. One simple reason for this….I didn't want these DIYers as clients anyway. Ironically, sometimes they end up being clients on larger matters, after the DIY documents, done on the cheap, blow up on them. Even then, they still are generally not great clients.
I don’t think most legal issues can be resolved with some “access to justice” in the form of a consultation with a lawyer on a pre-paid legal plan.
I don’t think quality clients want their lawyer through a pre-paid legal plan. But they want their lawyer to be great, and responsive, and transparent, and to charge fairly. Can we solos and small firm lawyers honestly say we are doing this? If we are not, we better improve.
We then have a bigger challenge: Making sure our best potential clients know what we offer and how they can work with us.
With cudos to Jim Ignatowski, who gave me inspiration in a memorable Taxi episode, I will say the following.....
We solo and small firm lawyers will address these issues by making the value of our services known to clients who want and need us........OR FAIL TO DO SO!!!!