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What Solos Can Learn From Legal Zoom: Value of the Subscription Service

by Carolyn Elefant on May 30, 2012 · 10 comments

in Client Relations, Solo Trends, Tech & Web

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Having been out of the country last week and on travel the week before,  I missed out on the legal blogging commentary  on the Legal Zoom IPO.  But while there’s been passing commentary from observers on how the IPO may impact solos, with the exception of Scott Greenfield (who’s kind of a solo  but not of the how-to-start-a-practice genre), I’ve not seen any more commentary on the impacts for solos.

One thing is clear, now that LegalZoom has filed the required disclosures for the SEC (which as John Wallbillich notes  were filed by high-powered megafirms, and not LZ’s DIY docs, just so you know):  Legal Zoom versus the lawyers isn’t just about DIY anymore.  Up until now, most solo and small firm lawyers could mock LZ, joke about how they’d get fat and happy fixing the inevitable mistakes that would arise when folks filled out forms on their own.  But LZ is throwing down the gauntlet, using its current and future capital to offer subscription services provided by attorneys.  While LZ’s DIY forms do well enough (490,000 documents sold reports Richard Granat ), what’s really going to lure  investors, predicts Wallbillich is the subscription-based model that LZ is rolling out where for a $14.95 fee  you can have an attorney on call to assist with personal business matters.

How do subscription fees help Legal Zoom?  For starters, it’s a regular source of revenue.  Second, it allows Legal Zoom to offer attorney-value add services, so it’s no longer selling pure DIY (my thought here is that LZ saw the writing on the wall; charging for forms that are available free on line or that are essentially one-off deals would eventually become a loser’s game unless there’s a bigger back end). Third, by generating another stream of revenue, LZ can bring actually employ lawyers in various jurisdictions to open up LZ affiliates (hiring a big clever firm to come up with contracts that can bypass  the non-lawyer ownership regulations).

Much of that is down the road which is why solo and small firm lawyers need to act now.  If LZ can offer subscription services, no reason that you can’t.  Many lawyers offer “membership” or monthly packages to small business, but Lee Rosen  has devised a subscription DIY divorce plan and this summer, I’m to implement something similar for my practice areas.  The concept isn’t even something unique to lawyers; a few years back, I blogged about the tollbridge agreement  concept in other industries.

Of course, subscription fees can pose ethical challenges.  A fee agreement will need to be structured to make clear that each month of registration represents a deliverable service so that fees can be treated as earned on receipt and go straight to the operating account.  Probably also wise to stay on top of those who’ve signed up for subscription fees to ensure that they’re using the service – just precautionary to preempt any potential complaints.

Personally, I think the LZ IPO is a good thing.  Maybe, as Greenfield contends, it will  put downward pressure on price, but in my view, it simply forces us lawyers to be more creative in developing services that meet a wide range of clients and more adept at communicating the value that we deliver.  Legal Zoom may have laid down the gauntlet, but solo and small firm lawyers have just begun to fight.

  • http://samglover.net/ Sam Glover

    This isn’t really a subscription service for consumers. The services offered are no different than any of the existing pre-paid services, and of the same questionable value. The service LegalZoom is really offering is to the lawyers who sign up: a lot of leads who already know how to find their credit card.

  • myshingle

    Good point, Sam and one that I should have amplified. What I thought was different about LZ from other pre-paid models was first, that (1) it is being marketed to the end consumer as opposed to an employer (though PPL’s are also sold to individuals as well) and (2) the plans are aimed at start-up businesses whereas PPLs seem to address less sophisticated mom & pops and consumers. Agree that the value is questionable and wonder about conflicts and confidentiality issues as well.
    There is a larger discussion going on about whether LZ is disruptive or just “distinctive” (which can be a plus or a minus) Your comments suggest – and I would agree – that it falls into the latter category.

  • http://samglover.net/ Sam Glover

    I definitely don’t think LegalZoom is disruptive just because it sells forms online instead of from the shelves of Office Depot. Or pre-paid legal services direct to consumers and businesses instead of primarily through employee plans. It’s moving into new markets, but not disrupting them (unless you ask Richard Granat, of course).

  • Steve

    In practicing at BigLaw and solo all these decades, I used to think my forms were my assets.  Now, in the corp & corp finance area, at least four Silicon Valley-based firms are giving away as a loss leader, good forms.  But they can do the IPOs, or make key introduction to wealthy clients, if such lucrative event were to come to pass.   Meanwhile, if you have any advice on how to start an online subscription service for businesses…I just saw the Rosen NC site on divorce….please advise, even if privately,  Carolyn.Thanks.

  • shg

    Rarely has anyone applauded this:

    “it simply forces us lawyers to be more creative in developing services that meet a wide range of clients and more adept at communicating the value that we deliver.”

    So, maybe law and sell hardware?  Use Fords and an occasional Chevy? Go from wanting to be a top notch T&E lawyer to doing $50 wills through the Pennysaver? Is that what you mean by more creative? 

    It seems that the best that can be said is it won’t be the end of the world. But a “good thing”?  Nah.

  • myshingle

    Maybe I am being too optimistic, but I think that it’s time for lawyers to rethink what they do and to devote some time to doing work that matters – and have the ability to articulate that value to clients. One example – we keep confidences. Legal Zoom might or might not. Those lawyers who think that attorney-client privilege is worth sacrificing to live blog their own trial or participate in shpoonkle don’t seem to care about confidence or understand why it matters. These lawyers will get beat at their own game and that, in my view, is kind of a good thing.

  • http://www.viviancrodriguez.com/ Vivian Rodriguez

    I think it’s a good thing too—for different reasons:

    1.  “downward pressure on prices” –hmm. no..not unless that is the sole criteria for hiring a lawyer.  Let’s face… free, forms and value-added at $14.99 ?  I don’t think so.  The client gets what they pay for—and clients know this.  To be sure there are always going to be consumers that look for that, and that is fine–as a solo, I’m not the lawyer for them; and I’m willing to bet that quite a few of your readers are not either.  All this does is make solos think about their practice and find ways to add value and selling “access” to their expertise (experience if the solo is not certified), at higher price points. 

    2.  It is good that LZ can get the public at large accustomed to the “packaging” of law on a large scale.  For those of us who “niche”  (sorry for all the stereotyped marketing terms), it’s a great opportunity to provide good service (or add value, if you prefer) and make a decent living.

    3.  Finally, if it takes an LZ IPO to get us solos to wake up to new ways of doing things, well…frankly, we deserve everything we got coming!

  • http://twitter.com/rozman7 Alexander Rozman esq

    There seems to be a lot of misinformation about how the LZ attorney plan actually works.  I was the LZ plan attorney provider for Illinois, Indiana and New York.  I filed a federal complaint against LZ for the way they ran the attorney services plan.  Here is the link:
    https://twitter.com/rozman7/status/210780111132299266

    Alex Rozman esq
    Rozman Legal Group PC

  • FB

    I read your complaint. I hope you win.

    I am a regular reader and always thought highly of My Shingle because of its stance for solo and small firms. I am now disappointed and shocked that some lawyers are happy to see the profession being turned into a commodity-producing intake form…

    When are we getting online forms to diagnose and get a prescription for cancer?

    Pathetic…

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