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

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.