In “Vertically Integrated Legal Service,” Richard Susskind and Neville Eisenberg consider the potential impact of vertical integration in corporate law firms. “Full-scale vertical integration in law as a business model and in operational terms,” they write, “can be regarded as transformative, unlike much of the current work on innovation in law firms which has been focused on improving old processes or applying technology to streamline traditional ways of work.” Susskind and Eisenberg suggest that if law firms do begin to vertically integrate, it would transform the landscape of legal service providers “in terms of the range of providers, the sophistication of clients, and the more widespread deployment of knowledge management and technology.” While their article was concerned primarily with the corporate legal marketplace, Susskind and Eisenberg’s argument raises important questions around the impact integration might have on more personal, individual legal needs (sometimes referred to as “PeopleLaw”). In this article, we explore this line of thinking, asking questions such as: What potential does this type of integration and consolidation have to transform how the more individually oriented side of the bar reaches and serves its clients? What are the opportunities and challenges? What are we seeing develop in this space?
Vertical integration in PeopleLaw?
There are two ready-made examples of legal organizations attempting to vertically integrate legal services for individuals and small organizations: LegalZoom and Rocket Lawyer. LegalZoom (founded in 1999) and Rocket Lawyer (founded in 2008) are, on first glance, primarily online-based legal technology platforms. They both bill themselves as legal service providers for small businesses and “average” people. Indeed, many features of LegalZoom’s and Rocket Lawyer’s core business—wills, estates planning, divorce filings, small claims, basic company incorporation—were traditionally priced out of (and therefore underserved by) the wider legal services market. While each organization started off as offering forms for basic legal problems, over time, each organization has attempted to increasingly control the entire supply chain of personal legal services: from technology-assisted self-help all the way through to more complex, lawyer-based service.
What potential do integration and consolidation have to transform how the more individually oriented side of the bar reaches and serves its clients?
Take wills as an example. On LegalZoom’s 2001 website (two years after its founding), a standard last will and testament was $55. Other “premium” options were offered at escalating prices with additional perks, such as free unlimited revisions for set lengths of time. (As a counterpoint, using a sample hourly rate of $183/hour based on a 1999 Altman Weil survey, LegalZoom estimated that they were saving the customer $311 in producing a standard legal document.) LegalZoom’s pitch was, in essence, that a lawyer’s time was often cost-prohibitive, and that their standardized, form-based service would save you time and money while still delivering the legal product you were after. You would only need to fill out a questionnaire, pay $55, and your legal document would be prepared, reviewed, and filed within 48 hours.
It is important to emphasize what LegalZoom did and did not offer through its services. LegalZoom would handle the “process” work associated with individual and small business legal needs—identifying, filling out, and submitting the requisite documents—and then direct customers elsewhere for any legal questions that arose from the process. There was no “lawyer” directly involved, and certain needs could be too complex for their system. Indeed, in early days of LegalZoom, if you wanted to talk to a lawyer, they referred you to an outside phone service, Tele-Lawyer, Inc., which they described as lawyers “experienced in the areas of law covered by LegalZoom and [who] can professionally answer your questions related to any of our online questionnaires.” In this way, and in the early days, LegalZoom was simply providing basic online forms and backend processing.
Rocket Lawyer took a similar approach when it launched in the late 2000s. Like LegalZoom, they had forms, checklists, and tools to assist customers in populating the legal documents needed to accomplish their goals. If you had questions that only a lawyer could answer, they maintained a directory of lawyers by state and practice area, but these lawyers operated out of local law offices and were not affiliated with Rocket Lawyer beyond appearing on the website’s directory. Again, there was a clear separation between process work and the type of expert and everyday legal services that Susskind and Eisenberg attribute to the domain of traditional lawyers.
Fast-forward to today, when both LegalZoom and Rocket Lawyer have begun to expand their service offerings in important ways. Notwithstanding regulatory challenges, they have, in effect, begun to vertically integrate. Going back to wills: on LegalZoom’s website today, you will still find a complete suite of last will and testament options designed by the company that you can independently fill out. (Of course, there are also many more options now than in 2001, including divorce papers, deeds, and even basic business services like LLC formation, corporate dissolutions, 501(c)(3) formations, and IP issues). However, 20 years later, you will also now find LegalZoom has integrated more formal and dedicated attorney options. For instance, the company now includes an “Attorney Assist” option—or, as LegalZoom describes it, “real attorneys in our network [who] can review your estate planning documents to make sure they’re done right and answer your pressing questions.” Moreover, you can bundle this service, which includes the self-help forms with backend personal lawyer help, during check out. (This is very similar to TurboTax, which offers bundled professionalized, human tax advice options along with their guided, do-it-yourself forms, which is perhaps not surprising given that LegalZoom’s leadership now includes many leaders from the former.) The services are also offered as plans; for instance, if you are a business, you can get a “Business Advisory Plan” through LegalZoom, for under $35 a month.
Both LegalZoom and Rocket Lawyer have begun to expand their service offerings in important ways. They have, in effect, begun to vertically integrate.
It should be made clear that these lawyers do not work for LegalZoom directly, and LegalZoom is not a law firm. And, in that sense, it is not “pure” vertical integration. However, as they state on their website, “Attorneys in our network are vetted by us and ready for you.” Indeed, LegalZoom advertises these outside lawyers as its own LegalZoom “network,” to which it offers customers access for a fee, including for reduced and consistently priced access. While LegalZoom’s basic customer service can still assist you with questions that might come up as you fill out their forms, by paying LegalZoom for access to lawyers through Attorney Assist, you gain the ability to schedule appointments for more personalized legal needs.
Rocket Lawyer’s On Call service operates along similar lines. After filling out an online form about your legal problem, you are assigned to a Rocket Lawyer representative, who then helps you connect with an in-network lawyer within one business day. In addition to promising reasonable negotiated prices with no surprise fees, Rocket Lawyer also advertises the initial phone consultation with your lawyer as free.
As part of this, Rocket Lawyer was one of the first organizations to enter Utah’s regulatory sandbox, a partially (and perhaps temporarily) deregulated space for legal innovation under the ultimate oversight of the Utah Supreme Court. Rocket Lawyer is making use of the opportunity to continue its push to integrate within the PeopleLaw market by employing lawyers of its own to provide legal services to customers. “By being able to employ lawyers directly, we are now going to be able to provide a great customer experience at a fraction of the cost,” said Rocket Lawyer CEO Charley Moore, in a recent ABA Journal article. Per the ABA Journal, Rocket Lawyer has already hired a director of attorney services and associate general counsel in Utah to oversee its lawyers, with plans to expand as demand increases. Other states are enacting similar reforms that will, at least temporarily, adjust regulations barring legal service entities from nonlawyer ownership and alternative business structures. Arizona recently joined Utah in allowing for such innovation, and other states like California, Connecticut, and Florida may soon follow suit.
Time will tell whether and to what extent these regulatory shifts in the United States remain in place—or expand.
This particular vertical integrative approach in the PeopleLaw sector presents questions for the legal profession. If given the regulatory green light, how high could these companies reach into increasingly sophisticated legal work? Are movements towards a more vertically integration good or bad for consumers with respect to price and/or quality? Will we also see more horizontal integration—for instance, between LegalZoom and Rocket Lawyer—or is there enough space in the market for multiple full-service offerings?
The shifting regulatory landscape
In the context of regulatory reform, we are also seeing states expand the boundaries around who may practice law. As covered in an earlier issue of The Practice, new models of paraprofessionals are now entering the legal services market in states across the country. Indeed, one early iteration of legal paraprofessionals, Washington State’s limited license legal technicians (LLLTs) program, in many ways presaged the type of vertical integration underway at companies like Rocket Lawyer and LegalZoom today. The first cohorts of LLLTs were authorized to practice law in the state on a limited basis; they were able to advise only in the area of family law. The program was designed to reduce the cost of legal services and help narrow the access-to-justice gap, but in practice many LLLTs found it difficult to provide their services much below the cost of a fully licensed lawyer, largely because the individuals worked within traditional legal organizations. Put differently, law firms vertically integrated the LLLTs into the businesses. Washington decided to sunset the LLLT program because it fell short of its participation and access-to-justice goals. With these new regulatory shifts, however, it remains to be seen whether legal technology companies or other organizations can provide a more suitable model to house such legal paraprofessionals and succeed where the LLLT program fell short.
It should also be noted that while these changes are new in the United States, similar shifts have occurred elsewhere. The United Kingdom’s Legal Services Act, which went into effect in 2012, made a number of similar regulatory changes, such as the introduction of alternative business structures in the legal services market. Similar regulatory changes are in place in Australia. Time will tell whether and to what extent these regulatory shifts in the United States remain in place—or expand. In the meantime, the new business formations possible in states like Utah and Arizona have made it possible for companies like Rocket Lawyer to inch closer to realizing vertical integration in the part of the legal services market geared toward individuals and small businesses. As we see below, these shifts have further implications for other types of integration and consolidation in the PeopleLaw sector of the legal services market.
Setting aside the type of vertical integration that Susskind and Eisenberg discuss in “Vertically Integrated Legal Services,” other instances of integration and consolidation are underway that could portend significant changes to the personal side of the bar. Not unlike LegalZoom’s and Rocket Lawyer’s fee-per-month access to their curated networks of lawyers, legal plans of various stripes are now available to individuals. Some legal plans have come about more or less organically within the legal services market, while others have external roots.
Outside players like insurance companies are now getting in the game.
LegalShield offers a useful example of a company that specializes in flat-fee legal plans. Founded by an insurance salesman after he was in a car crash in 1969 and faced difficulties paying legal fees, LegalShield today represents a network of 39 law firms across the country and more than a million users. In short, LegalShield operates as a conduit that connects its customers to one of those 39 firms or a wider network of referral lawyers. By paying a base fee, users get access to a defined range of legal services (called “benefits”) such as standard will preparation and defense of moving violations, and they have the option to purchase “add-on” services like supplemental hours of attorney time toward trial defense beyond what is covered under the base plan. The 39 firms in the LegalShield network are paid a fixed fee by LegalShield “on a per capita basis,” meaning the fee is fixed to the number of memberships that rely on the given provider firm rather than the specific type or instances of legal services rendered. Thus, LegalShield manages the intake and the technology, while the legal work is done by law firms and lawyers.
While flat-fee and pre-paid legal plans are not a wholly new phenomenon, they do not all exist squarely in the confines of the legal profession—outside players like insurance companies are now getting in the game. After all, these plans are often referred to as “legal insurance.” It should be no surprise that insurance giant MetLife, mostly known for providing life and auto and home insurance, is also now also a major player in the legal plan ecosystem. Indeed, “MetLife Legal Plans” operates in much the same way as a life insurance policy. “MetLife Legal Plans gives you access to expert legal help so you can navigate life’s big moments confidently,” the website reads. Insurance companies like MetLife might easily view legal coverage as something they ought to be providing their customers alongside their other insurance offerings. After all, an individual’s legal needs are to a greater or lesser extent unpredictable and the costs when they are needed are often exorbitant. In many ways, an insurance model makes sense.
As with many other insurance offerings, one of the primary ways people access legal plans through MetLife is through their employers as a benefit. An employee of an organization that offers MetLife Legal Plans will have the option to opt in the same way they might opt in for a life insurance or long-term disability policy. Even the language MetLife uses to frame their legal plans is couched in insurance industry lingo. “The only pre-existing matters that are not covered are those for which you retained an attorney before becoming eligible for plan benefits,” the website states in its FAQs. Thus, through companies like MetLife, access to justice might be reframed as a responsibility of employers as much as it is of the individuals in need of legal services. And, again, with recent regulatory shifts, these questions are not purely hypothetical—these companies might well gain the ability to expand into providing legal services directly to consumers in addition to their current network-referral roles.
A company like Fidelity is keen to view the needs of their clients holistically—and provide the services to match.
These examples raise a number of challenging questions. If network-based plans like LegalShield and MetLife Legal Plans gain traction, what might it mean for long-term and everyday practice of small firms and solo practitioners? Would it necessitate consolidation under these types of companies? How should the profession think about employers playing an elevated role in providing for the cost of legal services? Would access to legal service increase?
Adding law to other services
In the examples above, law has been the focal point of the service: for LegalZoom and Rocket Lawyer it was about expanding services across the supply chain from technology-enabled forms to live lawyers, and for a company like MetLife it was supplying legal services as another insurance option alongside life and home. But the integration of legal services is also occurring from “nonlaw” organizations.
Consider how a company like Fidelity approaches legal services. On the one hand, at its core, Fidelity is a financial services company, offering its clients a standard suite of wealth management services. On the other hand, the firm is keen to view the needs of their clients holistically—and provide the services to match. And recognizing the link between the law and traditional financial services such as estates, Fidelity has increasingly sought to integrate “legal” services into their offerings, although it should be made clear that they do not provide legal services as such, given the regulatory landscape. In recent years they have sought to offer a source of information to their clients around the legal needs that may arise—and in the content connect them with lawyers. For instance, Fidelity’s Estate Planner, a free online service for their customers, “guides you through the estate planning process” including “help[ing] you get informed, organized, and connected to an attorney so you can secure your wishes, now and for tomorrow.” From there, the firm provides a curated readout of how to connect with an estate planning attorney, a comprehensive list of the questions to ask, primers on fees, and other key information. Interestingly, Fidelity also has a partnership with LegalZoom, including a 20 percent discount. Indeed, the page includes a quote from a firm vice president noting, “Getting organized and having a system is half the battle in estate planning, and that extends to finding an attorney. In fact, more than half of Americans aged 55 to 64 don’t have a will in place today.”
Fidelity is not the only one making these efforts. Interestingly, MetLife recently also got into the law business, acquiring Willing, a digital wills and trust company, in 2019. A MetLife executive explained the purchase at the time, noting that Willing “compliments Hyatt Legal, our existing legal services offering, and positions us to lead the industry by offering customers more choices in how they address their estate planning needs.” And, just like MetLife, LegalZoom, and Rocket Lawyer, Fidelity is not providing legal services directly. Rather, Fidelity is increasingly linking the latter into their traditional service offerings, subject to regulatory permissibility.
The task will be assessing what works, what doesn’t, and how best to increase access while also maintaining quality.
From this context, there are key questions for the legal profession. How might a large, nonlaw service firm like Fidelity interact with traditional players in the legal services market? How would regulatory changes impact current setups? For instance, might we see a firm like Fidelity hiring lawyers alongside financial planners to provide seamless service? Is this good or bad for the average consumer? How does price and quality play out?
Questions going forward
In her article “Access to What?,” Rebecca Sandefur holds on this question of what the access-to-justice gap looks like in the United States and what the legal profession might (and might not) do about it. “Most of the civil justice problems that Americans experience receive no legal attention of any kind, ever,” she writes. “They never make it to court. They never receive consideration from any kind of legal professional such as a lawyer.” To Sandefur, one way we might approach this appalling fact is by conceiving of justice as something altogether separate from legal services.
The examples noted above could offer some paths forward in addressing this gap, whether through an integrated service platform à la LegalZoom/Rocket Lawyer, through a legal plan offered through a traditional insurance provider like MetLife as a component of employment benefits, or via an individual’s “nonlaw” interactions such as with one’s financial advisors. But questions remain. Some are internally focused to the legal profession, such as how the regulatory system will—or will not—adapt to increased pressure from new forms of providers. Others are broader, including what impact integration and/or consolidation of legal services has on the quality and the price of them. What is clear, however, is that new models of providing personal legal services are forming, so that the task will be assessing what works, what doesn’t, and how best to increase access while also maintaining quality.