What Lawyers can Learn from LegalZoom
Unless you've been asleep for the last five years, you have probably heard of
LegalZoom, the California-based,
non-lawyer legal document preparation company that claims it has delivered over
1,000,000 wills to consumers, and that it is the largest incorporation company
in the country.
LegalZoom is only one of hundreds of legal form web sites that have emerged during the last 10 years and are eating away at the market share of solos and small law firms. LegalZoom has been challenged by some state bars with the unauthorized practice of law, but hasn’t lost a case yet. They are serving thousands of customers who ordinarily would be served by solos and small law firms. They must be doing something that is in demand because they continue to grow at the expense of solos and small law firms.
LegalZoom, and non-lawyer legal form web sites like it, has a business model that consists of the following elements:
No physical offices, and thus no extensive rental costs to pass on to customers;
Limited services offered at a fixed price that can be easily compared with other providers including law firms;
The use of web-enabled document automation technology to reduce costs and increase productivity;
Access on their web site to thousands of pages of free legal information on hundreds of subjects;
Money-back guarantees to comfort consumers; and
Reliance on informed consumers to do part of the work, such as filing their own documents or executing their documents on their own based on provided instructions.
Consumers don’t seem to care that they are not dealing with a law firm. As lawyers, we know the service they are selling is risky for consumers, but for consumers it delivers a “good enough” result. LegalZoom would not be growing at this fast a rate if they weren’t offering something that consumers want and value.
How to Compete Against Legal Zoom and Other Non-Lawyer ProvidersUp to now, solos and small law firms have found that it is difficult to compete against LegalZoom because they do not have the capital, resources or time to create the Internet, marketing, and management technologies that enable LegalZoom to be effective. The strategic choices have been either to charge traditional legal fees by the hour and hope that you have enough clients who can afford your fees; or develop a specialized practice niche with a referral reputation that is so widespread and solid that the cost of legal fees are not an issue.
In the new, competitive environment that solos and small law firms face in the current economy, the keys to survival are to expand the strategic options available by opening new client markets, reducing the cost of services, and delivering legal services in a way that distinguishes your firm from other firms in the pack. It is time for solos and small law firms that offer personal legal services to the broad middle class to rethink their law firm business models. The current depressed economy is not going to change tomorrow. It is the “new normal.”