Law That You Can Afford : Self-Help Law, Limited Legal Services : MyLawyer.com : Law That You Can Afford

Last Friday, We The People USA, , the legal document preparation company that operates through a network of franchisees,  voluntarily filed for chapter 11 bankruptcy protection.  The company and its affiliate, We The People LLC, are subsidiaries of Dollar Financial Group, Inc.  While the companies apparently had $24 million in sales and 138 franchised locations in 2006 , there are only eight remaining franchises and the companies lost $2.4 million on only $1.4 million in revenue in 2009.  By the end of 2009, operating revenues were less than $15,000 per month. For more information click here.

Several years ago I took a closer look at the We the People model and wondered how long it would take to fail. We the People established a network of physical retail stores, some run directly by the company, but most were franchised locations. Customers would complete a paper questionnaire, submit it to the store owner with full or partial payment. The store owner would fax the questionnaire to a central processing center where a paralegal or non-lawyer would input the data from the questionnaire into a desk-top document assembly program which would create the document ready for return to the customer.

Because there is so much friction in this system, the price per document was very high, when compared with comparable documents available over the Internet from either legal form web sites, or paralegal document preparation sites such as LegalZoom. The combination of the cost of real estate,  franchises  fee, the cost of advertising a physical location, and the consistent trend towards reduced pricing for common legal documents was obviously too much for the franchisees of We the People to bear. Plus some franchisees were being harassed by state bar UPL Committees. Because each franchisee purchased a dedicated territory it was never possible for the parent company to create an Internet-based strategy which would enable customers, for example, to purchases documents directly off the Internet, and then pick up the document at a local store, or simply effectively use the Internet to drive traffic to the physical locations maintained by We the People network.

There is a parallel between Turbotax which is a pure play Internet-based tax preparation service and H&R Block which maintains a comparable network of physical locations. Just this week, H& R Block reduced its projections for 2010, attributing the decline to the fact that more people are turning to do-it-yourself services due to the weak economy. This is despite the fact that H&R Block has an online offering. On the other hand, Intuit which operates Turbotax - reports an increased by 11% in projected usage in 2010, and has raised outlook and guidance for 2010 fiscal results. Web-based document preparation services, like LegalZoom, seem to be thriving, while land-based independent paralegals, where they exist, are hurting for business.

High pricing, expensive office space, fixed office hours, commoditized product offerings, expensive advertising, little or no interaction with customers over the Internet, obsolete technology, and low productivity --- all conspired to kill We the People.

Does this business model seem familiar? It looks like the same business model used by many (but obviously not all) community-based solo law firms who wait patiently for clients to knock on their doors to buy their services.  There are lessons to be learned  for "retail law firms" that serve moderate to middle income clients from the We the People failure.

Is it too late for solos and small law firms to change?

• Email This
• Print
• Comments
• Trackbacks
• Share Link

It seems like LegalZoom's practices are finally catching up with it. The company is being sued in Missouri on the grounds of unauthorized practice of law and the plaintiff's are requesting class certification. To give an example of how popular LegalZoom's services have become, LegalZoom in its petition for removal to Federal court claims that it has served over 14,000 Missouri residents in a five year period, generating over $5,000.000 in sales. Missouri is a relatively small state, so you can get some idea of what kind of business LegalZoom is doing nationwide. No wonder the legal profession is getting nervous and starting to pay attention to this disruptive player in the legal industry.

A good discussion of the case can be found on the IPWatchdog Blog in an article by the Blog's Founder Gene Quinn.

Click here for a copy of the Missouri Complaint,  LegalZoom's petition for removal to Federal court, and a copy of a letter from the North Carolina Bar requesting that LegalZoom Cease and Desist from operating within North Carolina because it is violating North Carolina's UPL statute when it prepares incorporation papers.

In its defense, LegalZoom in its removal petition,  claims that it is:

" a company whose principal business consists of providing an
online platform for customers to prepare their own legal documents. Customers choose a
product or service suitable to their needs and input data into a questionnaire. Where applicable,
the LegalZoom platform then generates a document using the product and data provided by the
customer."

It this were the case, LegalZoom would be functioning only as a "scrivener" transcribing the client's information into a form. It is well established in some states, including California, where LegalZoom is based, and also Florida for example, that non-lawyers, often called "legal technicians" can help consumers prepare legal documents, as long as they don't give legal advice.

The question of whether LegalZoom's  staff do more than they say, and actually provide legal advice, even if it is limited legal advice, is a question of fact to be determined. It  would be interesting to see what the discovery process turns up and what the  LegalZoom, "platform" actually does and how it works.

For comparison, We the People, a retail chain of 35  "Legal Document Preparation stores  operating in six states, operates under the same principles. Customers complete paper questionnaires which are faxed to a central processing center where a technician simply inserts the client's data into a desktop document assembly program which generates a form. (This is  the same process that many lawyer's use, except lawyers provide legal advice and analysis).  This document preparation process is essentially the same as LegalZoom's except that it takes place off the Internet through a network of retail stores. We the People has been attacked by the Bar in several states for UPL, but the company has worked hard to assure bar authorities that its staff and franchisees don't provide  legal advice.

In theory, We the People, stores are able to reach a market of customers that do not have Internet access and prefer to deal with a human being directly. This market base is likely to have even lower incomes, and ignored by  both attorneys as a target market, and have too much income to qualify for legal aid.  Ironically, however, the We the People pricing is even higher than the LegalZoom pricing, probably because of the cost of maintaining a  retail location. Yet the remaining We the People stores, ( down from a high of 140 stores), seem to be sustainable, if not thriving.

Both companies provide a needed service in the sense that they provide an alternative to consumers who are willing to invest their own time and resources to make sure that the forms offered are the correct forms for their particular situation. Neither company can advise a consumer about what form they should use for their situation, as that would be a form of legal advice. Consumers may be taking a risk when they buy from a self-help document preparation forms company, but it seems this is a risk that consumers are willing to take to avoid what are perceived by many as high legal fees for the same  transaction. For these consumers, what they get is a "good enough" result at a price they can afford.

The other reality is that it is deceptive for LegalZoom and We the People , to claim that using their services will save hundreds or thousands of dollars in legal fees, when two very different category of services are being compared: 
 

• one a legal information service;
• and the other a true legal service from a licensed attorney.
  
  The content of the services are fundamentally different and to compare the services to each other is like comparing "apples' and " oranges". 
  
  Sometimes you get the same legal result when you use a document preparation service, but often you don't.  Apart from UPL issues, it seems to me that this is a misrepresentation in advertising and these claims should receive closer scrutiny from state consumer protection agencies. (Although I am sure that many of LegalZoom's satisfied customers would say that they don't need any protection).

Both companies demonstrate the principle that you can solve certain legal problems by having access to "legal information." Legal information by itself is a problem solver for many consumers, and the access to legal information and legal forms on the Internet, has simply accelerated this trend at a much faster rate in the last five years than the self-help law book industry has been able to accomplish in 30-35 years of its existence. This means that lawyers will have to do more to demonstrate their value to the consumer, particularly solos and smaller law firms that serve the broad middle class.

A better solution for consumers, as we have advocated in these pages, is for attorneys to offer legal forms bundled with legal advice at an affordable price, perhaps slightly higher than LegalZoom, but offering much greater value, over the Internet. This is often called. "unbundled legal services," enabling a consumer to purchase just the legal services they need, and no more.

Using virtual law firm technology, like DirectLaw's virtual law firm platform, lawyers can be even more efficient that the LegalZoom or We the People models, because the entire document assembly process is software driven creating a legal document instantly from the user's input, ready for the lawyers further review, drafting, and advice-giving. The increased productivity that results from a web-enabled document automation process enables the lawyer to offer a very price competitive service that in fact offers more value. The value of each sale is lower, from the attorney's point of view, but volume can be much higher if effectively marketed. (Neither LegalZoom nor We the People have such a technology in place. No wonder there prices are so high for what you get!).

As long as the legal document preparers don't give legal advice, they should be able to coexist with the legal profession, for certain kinds of common legal transactions, but not all.

But lawyers will have to work harder to provide their value and start offering true legal services online over the Internet. Driving non-lawyer legal document preparers out of business on UPL grounds is not an answer. At the end of the day prosecution efforts, will seem to the consuming public as just another attempt by the legal profession to maintain high legal fees for common transactions, while avoiding the cost of innovation.
 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Attorney Louis Pepe, a Connecticut attorney and Chair of a Connecticut Bar Task Force examining non--lawyer legal information web sites, believes that these web sites are breaking the law by providing legal services in a state in which they're not licensed to practice, as reported in the Connecticut Law Tribune.

There are differences between  legal information web sites that provide legal information and legal forms only, and web sites that offer something called "legal document preparation services" where a paralegal or other non-lawyer reviews a document and assists in preparation prior to sending the form back to the client.  Rather than making a distinction between the different kinds of web sites, Pepe's  Task Force lumps them altogether into a single "evil" category. If it's not a  law firm web site, it has no place on the web, at least as far as the Connecticut Bar is concerned.

As reported by the Tribune, "the task force filed its report with the Department of Consumer Protection alleging that the on-line legal providers also were engaged in deceptive advertising because the companies are offering legal advice by providing relevant legal documents."

Can it be that the provision of just a legal form constitutes the "unauthorized practice of law?"  If that were the case why don't we just ban self-help legal software and self-help law books from Barnes & Nobles book shelves? All of the legal information web sites that I know of,  have a clear disclaimer that they are not a law firm and do not purport to give legal advice.

Does Pepe think that a consumer can't tell the difference between an attorney and a legal information web site? Is any publication - whether print-based or web-based -  that is a legal form the "unauthorized practice of law?"

In my opinion, there is a good argument to be made that a legal information web site that states that it's services and products are the equivalent to what a lawyer provides is a misrepresentation. It would be a misrepresentation in advertising, and consumer protection agencies should monitor the claims made by these providers. However, the claim that the mere provision of a legal form is the "unauthorized practice of law" is an abuse of the legal profession's self-regulatory power to protect the consumer from harm.

Catherine J. Lanctot has written an interesting article on the subject in “SCRIVENERS IN CYBERSPACE: ONLINE DOCUMENT PREPARATION AND THE UNAUTHORIZED PRACTICE OF LAW,” 30 Hofstra Law Review 811 (2002, 44 pp, pdf), where she argues that those who wish to apply UPL enforcement against such software products or document preparers ”must not lose sight of the broader implications.”  Not only do they risk constitutional challenges, but :

“[W]e must consider the ramifications of such enforcement. The public reaction would likely be negative. Enforcing unauthorized practice of law statutes against online document preparation services would be neither painless nor popular. The lay public, which already detests lawyers, generally perceives unauthorized practice of law enforcement as yet another way for the legal profession to line its collective pockets at the expense of consumers. . . .

“In addition, it is at least possible that these websites are managing to provide some consumers with a necessary service—basic legal documents at an affordable price. At a time when the bar seems to have abdicated its responsibility to provide routine, noncomplex legal services to the poor and middle class, it could well be counterproductive to try to shut down one vehicle for serving those unmet needs.”

If  the Connecticut Bar can't distinguish between their self-interest in maintaining a monopoly over the delivery of legal services and the public's right to legal information whether in the form of a book, a desk-top software program, or a web-based software program, perhaps the citizens  of Connecticut should either strip the bar of its self-regulatory power, or further define what the "practice of law" means. That is what the citizens of Texas did, when the Texas Bar attempted to ban self-help law books and self-help legal software from being sold in the State of Texas.

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

There has been some recent blog comments [See: Carolyn Elefant 's Blog  [about  the meaning of Robert Capps article  in this month's WIRED Magazine, (September 2009) about the concept of "Good Enough",  "Good Enough" solutions, (when cheap and simple is just fine). , and my quote about how this concept applies to the legal profession.

When I was interviewed for the Wired Article, I didn't know the focus of the article, and I was simply reporting my experience in offering limited legal services to consumers for a fee they can afford. I wasn't saying at all that lawyer's should do less competent or less excellent work. Rather I was thinking about how legal transactional events between consumer and lawyer can be restructured to get to the "good enough result" that many consumers seem to want.

My best example is one that I participate in daily, and which I mentioned in previous blog post. Divorcing couples opt for a quick settlement, even if they don't get "every right" they are entitled to in the interest of reducing their legal fees and getting on with their lives.

Divorce lawyers can charge from $5,000 - $10,000 (low-end of fee schedule) for even a relatively simple divorce. case. The lawyers will say there are no simple divorce cases. But that is from the the viewpoint of the lawyer. From the consumer point of view, they have a choice to spend $5,000 for each counsel who is representing either party- or to take the money and use it to get on with their lives. The question is--  what is the ROI from the consumer's point of view?  Sometimes the investment of $5,000.00 in legal fees is worth it. ($5,000.00 is really a low end estimate). Consumers don't think so, or there would not be thousands of pro se litigants representing themselves in family court. Pro Se Representation is a good example of a restructuring of the lawyer/client relationship to get a "good enough result." The success of LegalZoom -  admittedly a service which is a very small step above a bare legal forms service is more evidence of consumer preferences.

So is the movement towards "limited legal services." Lawyers, mostly solos and small law firms, that think that otherwise and think that full service representation is the only way to go are not facing consumer reality. These lawyers are living in a dream world.

Consumers want solutions to their legal problems. If they can get legal solutions in a different form than a traditional legal service from an attorney that is "good enough" at much less cost, they will turn away from the legal profession and seek those alternatives if they get a result that satisfies their expectations. 

 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

 A new web site based in Florida: http://www.idivorce.com     offers a set of automated Florida divorce forms for free. The user scrolls through a set of friendly but numerous screens, and inserts their financial information and other information. Once completed, the forms are instantly available and can be printed out from the web browser. The generated forms are not in Adobe .PDF format, as distributed by the Florida Supreme Court, but they seem to meet all of the court requirements any way, so they should be accepted by Florida court clerks.

The interesting feature of the site is that the forms are not only automated, which requires a capital investment, but also free. Apparently the research, development, and administrative costs will be offset by advertising revenues generated by Google Ad Words and other advertising networks. I see this as a trend in the sense that as legal forms continue to become more transparent in the sense that the legal profession can no longer control legal information distribution, they become commodities and the cost of legal forms themselves goes down to zero.

It will be interesting to see if this site generates enough advertising revenues to justify expansion to other states outside of Florida. Meanwhile it will be a useful site for Florida consumers. It would be useful if the site mentioned on the home page that only Florida divorce forms are available at this time, but there additional states are planned. 

• Email This
• Print
• Comments
• Trackbacks (1)
• Share Link

We the People is a chain of legal document preparation retail stores that offer preparation of simple legal documents for a flat fee. No legal advice is provided as each store is operated by a non-lawyer. A consumer completes a paper questionnaire with facts about their individual situation. From this information, a centralized document processing center creates a customized legal document often using specialized legal software programs. The chain has been filling a need because it is expanding rapidly and reportedly generates approximately $24,000,000 a year in sales volume at retail. For many consumers, this chain provides a needed service at a cost which is much less than the cost of traditional legal fees. However, the consumer receives no legal advice and purchasing from a We the People store is not at all like using a traditional attorney.

The chain was recently acquired by Dollar Financial Group, one of the largest networks of check-cashing stores in the US, Canada, and the United Kingdom. Dollar is a $400 million public company that trades on the over the counter market, so it has access to capital and sophisticated management resources. DFG's plan is to expand the We the People chain from 138 stores to hundreds of stores nationwide. It is not yet clear whether they will be successful in this expansion effort.

In prior years, some state bar associations have attacked individual We the People stores for violating state UPL statutes by providing legal advice directly to consumers. Many, but not all, of these conflicts have been settled since the Dollar acquisition.  Dollar has assured state bar associations that store owners will not cross the line and give legal advice.

The fees that We the People charge are higher than similar services offered over the Internet . (We the People typically charges $399.00 for a no-fault divorce compared to $199.00, the going rate from many on-line web sites. See for example: LegalZoom. ). However, for those consumers who want to deal with a person face-to-face, or for consumers who don’t have easy access to the Internet, We the People is a lower cost alternative than traditional legal services.

Many lawyers complain about We the People, but fail to understand that for consumers any solution to their legal problem, is better than a solution that they can’t afford. Consumers are willing to get a “good enough” solution,  rather than have no solution at all.  Moreover, many lawyers will say that they are not interested in serving clients who can’t pay their legal fees, so why does the legal profession continue to try to regulate out of existence non-lawyer document preparation services that serve consumer needs?

Disclosure: We operate, through an affiliated organization, web sites that offer on-line non-lawyer document preparation services. [See for example: The Name Change Law Center  and The Divorce Law Information Center.

 

• Email This
• Print
• Comments (2)
• Trackbacks
• Share Link