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Vol. 40, No. 1

LegalZoom, Avvo, other companies: Friends or foes? NCBP panel suggests a new view

by Marilyn Cavicchia

In recent years, it’s not uncommon for the names LegalZoom and Avvo to come up at meetings of the National Conference of Bar Presidents.

After all, those two companies, along with others, are at the forefront of changes in the legal profession that some find threatening, others find promising, and still others find simply inevitable. Chiefly, these changes involve technology-driven corporations and nonlawyers performing law-related functions that, in the past (and in some jurisdictions, today), would have been considered unauthorized practice of law.

At its 2015 Annual Meeting, however, NCBP went a step further, inviting executives from both LegalZoon and Avvo, as well as Neota Logic, to be plenary panelists.

LegalZoom was represented by Chief Executive Officer John Suh; Avvo by Director of Industry Relations Dan Lear; and Neota Logic by Co-Founder and Chief Strategy Officer Michael Mills. Completing the panel were Renee Newman Knake and Thomas Rombach. Knake is professor of law and Foster Swift Professor of Legal Ethics at Michigan State University College of Law and co-director of the Frank J. Kelley Institute of Ethics and the Legal Profession. Rombach is president of the State Bar of Michigan and a member of the NCBP Executive Council.

The panel discussion, which was lively and, at times, uncomfortable, was moderated by Frederic S. Ury, a member of the ABA Commission on the Future of Legal Services and past president of both NCBP and the Connecticut Bar Association.

‘The time is now

“This is a tsunami,” Rombach, said, adding, “This is one time where the legal profession is not going to be able to regulate our way out of this.” Because of inefficiencies in the traditional legal delivery model and resulting gaps in service, he explained, current restrictions regarding what constitutes legal practice and who is allowed to practice no longer sit well with the public—or with the courts.

Not only are lawsuits against LegalZoom and other technology-driven firms no longer working, Rombach said, but now the tables have turned: LegalZoom is winning lawsuits for restraint of trade rather than losing them for unauthorized practice of law.

Many restrictions and regulations around legal practice are not constraining LegalZoom, Avvo, and others, but are constraining lawyers, Rombach believes. “We’re doing it to ourselves,” he said. “We’re trying to run a 100-yard dash with shackles on.” The time to take a hard look at such regulations is “now,” Rombach stressed, “not 10 years from now.”

Agreed Lear, “I think we really need to be thoughtful about some of our regulatory restrictions.” In some jurisdictions, he noted, strict adherence to the current rules would require that a lawyer or firm that is active on Twitter file every tweet so it can be reviewed as an advertisement.

Whether a lawyer likes or dislikes the fact that there are now corporate players on a field that used to be only for lawyers, Rombach said it’s critical to acknowledge that the course of legal history has changed and there’s no going back. Otherwise, he said, “We’re destined to be in the dustbin of history, along with the dinosaurs.”

Gaps in service

Rombach compared the gap in legal services with a historical example from his own state: Ford Motor Company. One thing that made Ford so successful, Rombach said, is that those working on the assembly line could afford to buy the product they were making.

A family of four with a household income of $94,000 or less would be unable to afford service for legal needs that recur two or three times a year, Rombach said; in Michigan, the median income for lawyers is below $94,000—which, he noted, means that many lawyers would be unable to afford their own services.

Suh made no bones about the fact that the purpose of LegalZoom is not to help consumers who are under or near the poverty line, but what he said were the 84 percent of individuals and 99 percent of businesses that would not qualify for free legal aid but can’t easily afford legal representation.

Similarly, Lear was frank about his company’s profitability aims, but also passionately defended the idea that profit and public good are not necessarily mutually exclusive.

“We will never, ever, ever solve the gap in legal services if we decide that every single, little thing requires the individual judgment of a lawyer,” he said.

But is an automated service for, say, filling out LLC forms or performing discovery as good as what can be done by a lawyer? “We will make mistakes,” Suh admitted, adding that LegalZoom tracks such errors and has the data to prove that it makes fewer of them than the typical solo lawyer would.

As for large firms, Mills said that they have resisted electronic discovery review “time and time again,” saying that their lawyers are smart and know whether something is privileged. But technology has been proven to perform discovery review better than humans working alone, he said, adding that it’s important to remember that even with software, there’s still a person involved.

What’s in it for lawyers?

It’s only natural that the corporations that have fairly recently entered the legal arena would assert their right to be there. What lawyers might not realize, the panelists said, is that this changed landscape offers some real advantages for them, too.

Recalling when she was a young lawyer and performed many tedious processes over and over, Knake said, “I don’t think it’s a problem that machines can do a lot of the document prep that I was doing.”

Later, as a law professor, what she was teaching “started to feel a bit hollow for me” because she felt she was doing nothing either to help close the gap in legal services or to prepare students for the new legal landscape. Her school then began to use its “institutional capital” and credibility to bring people together who wouldn’t otherwise collaborate. An executive from LegalZoom now teaches at the law school, she noted.

Working together “rather than operating in isolation and in parallel” with the technology-focused companies helps both the public and lawyers, Knake believes.

Said Lear, “Technology gives us an opportunity to focus on those things we really love to do.” For lawyers, he added, that means solving complicated problems rather than filling out simple forms.

Mills tied lawyers’ technology use not just to their efficiency but also to their earning potential. “Too many lawyers earn too little because they practice law as if the Industrial Revolution never happened,” he believes.

The model for delivery of legal services doesn’t have to be all one way or the other, he noted; many legal aid organizations use Neota Logic and its online, interactive guidance to “leverage their limited resources” by more efficiently assessing the client’s needs.

Neota Logic is currently working in New Mexico to create a statewide site to provide pro se information and referral to the right services if needed. Technology does the first step of “filtering, finding, targeting, and routing,” Mills said. Many consumers’ first impulse would be to Google their legal need, he added, but a site that uses Neota Logic would do a much better job of getting the consumer to the best resources.

What about lawyer referral services? If LRS is to be a vital part of closing the gap, Ury said, affordability must be considered. For many consumers, being matched with a lawyer who charges $300 an hour is not helpful, he added.

“You have to take a fundamentally different approach,” Suh said. “You have to learn to triage.” That is, lawyers need to discern which matters and which processes require their individual attention and which ones could be handled by LegalZoom or another such service.

Lear believes the legal field is one where “there’s so much room to grow”—not just for his company and others, but also for lawyers and firms who can persuade consumers to buy more legal services by making sure their price point and delivery method are as attractive as possible. The small business sector and the middle class are a $100 billion market, Suh said, agreeing that there’s room for anyone with a good, consumer-focused model.

Collaborate or compete?

Suh knows LegalZoom is being discussed often within the legal profession and at law schools. In fact, one law professor recently told him, “'I teach a class on you.’” Suh’s response: “‘Then why don’t you call me?’”

Similarly, he would like to hear from lawyers and law firms who know that technology is key in closing the service gap and focusing on the most interesting and lucrative aspects of their practice, and who don’t want to “go it alone” and create their own systems to perhaps compete with LegalZoom.

His company already has the capital and a team in place, in ways that would be challenging for a lawyer to replicate, he said. For example, LegalZoom recently recruited a chief technology officer who had been with Experian. Currently, there are structural reasons why a law firm wouldn’t be allowed to hire a CTO unless he or she also had a JD, Suh noted.

Suh said he was uncertain exactly what a collaboration between lawyers and LegalZoom would look like but that this would emerge through open discussions. “Let’s have that ‘first date,’” he said.

Lear said he spends a lot of time traveling to meet with state and local bar leaders and would like to bring a similar panel, or a discussion on lawyer advertising rules, to any state. Mills said Neota Logic will provide its software to any bar association that wants it.

Whether the goal is to collaborate or to compete, Rombach said, it’s essential that lawyers and bar leaders figure out the bar association model and legal service delivery model in order to focus on what lawyers do best. To his mind, he added, that’s offering customized services that meet more complex needs.

It’s in lawyers’ best interests, Rombach believes, to focus on that rather than on trying to reclaim the entire legal profession as it once was.

“The vote’s already been taken,” he said, “and the customer is walking.”