Currently, there’s a cross-blog debate raging over the sustainability of the virtual law practice, with Jay Fleishman, Susan Cartier Liebel, Richard Granat of Direct Law (a MyShingle sponsor) and David Bilinsky all weighing in. Take a look at all of the posts to see the wide array of opinions on virtual legal services.
As for me, I’ve always had reservations about the viability of a purely unbundled, forms-based virtual law practice as a stand-alone business model (as opposed to a component of full service firm) primarily because I can’t make the numbers work. When a lawyer’s business portfolio consists of one-off, low cost matters at $300 or $500 a pop, then the only way to make real money is on volume. And building a volume practice, whether in the brick-and-mortar world or online requires a serious time or financial investment in marketing – either through paid ads, or persistent blogging, social media use and self-promotion.
Of course, even brick-and-mortar firms had to make these marketing expenditures even before online, non-legal service and DIY providers came on the scene to challenge lawyers’ monopoly. Now, however, virtual law firms have to combat not just competition from other lawyers but also from online providers. Up until recently, lawyers marketing virtual online services could claim that they bring to the table a lawyer’s judgment that self-help companies don’t provide. That’s no longer true. Perusing Legal Zoom’s offerings as I frequently do, I noticed that they’ve rolled out various packages that include services from actual lawyers. For example, both the $249 Living Trust or the $69 will include attorney support and an annual legal check-up with a lawyer for an extra $10-$20.
There’s no reason why Legal Zoom won’t continue to grow its legal offerings by contracting with lawyers to provide service to Legal Zoom clients. Moreover, because Legal Zoom has enormous resources, it can out-advertise and potentially outperform a mom-and-pop virtual law firm while undercutting the cost. Yes, it’s true that a solo virtual firm can provide more individualized attention – but they’re going to have to charge more, and there’s no guarantee that the LZ crowd will pay. In many ways, LZ customers are much like those who frequent Walmart. Walmart customers (and I include myself in this category) readily forego the personal touch of the Main Street hardware or pharmacy for rude service or a messy store in exchange for the convenience of being able to buy a wrench or diapers at 11 pm at a fraction of the cost at the mom-and-pop. But if those same customers need to buy a diamond engagement ring, they’ll seek out the personal service of a jewelry store even if it means paying more. Likewise, LZ customers doesn’t care about personal attention or expertise for a will where their only asset is a house or for an LLC when they’ve got $5 in the bank account. But if they need to provide for disposition of $30 million in lottery winnings or prepare for an IPO, they won’t give Legal Zoom – or an unbundled online lawyer – a second glance.
What’s the best way for lawyers to get the word out about our competitive edge? I suppose all of the solos who compete with Legal Zoom or other non-legal providers can blog until we’re blue speak at Chamber of Commerce and Kiwanis Club meetings and show clients our policy when they come into our offices or online portals. Yet these individual messages, while helpful, are like trying to fend off the hurricane that is Legal Zoom advertising with an ordinary umbrella.
So, I’ve got a better idea. The companies that provide legal malpractice coverage to thousands of solos, earning millions off our premiums (for example, my provider, CNA which I love, had a net income of $126 million for the second quarter of 2011)should sponsor a series of ad campaigns – on radio and TV and online – to combat the Legal Zoom effect. The ads could inform consumers about what legal malpractice insurance is and how it can help them in a way that Legal Zoom and other DIY providers cannot. Malpractice insurers pay thousands of dollars to support bar associations and my guess is that they see very little value from that investment. By supporting a solo campaign against DIY providers, insurance companies will help keep solos in business – which can translate directly into more premiums for the insured.
So how bout it, insurance providers? If you really want to help us solos, this is a powerful way to do it. Who’s on board?