Disruptive Innovation in Legal Services

Volume 1 • Issue 2 • January 2015
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LegalZoom, Rocket Lawyer Make Inroads

Highlighting key stories about the profession you may have missed.

LegalZoom, now at Sam’s Club

Looking for legal advice at the local bulk warehouse store? Perhaps not—but now you can find it there. A partnership between Sam’s Club, part of the Walmart empire, and LegalZoom, announced in October 2014, has LegalZoom products now being sold through the store.

They’ll be available to anyone who pays the club’s annual $45 membership fee, though the products are part of a new effort from Sam’s Club to serve small business owners and entrepreneurs, which make up a significant part of its customer base. As much as 70 percent of small business owners don’t seek legal help because of perceptions about cost and lack of knowledge, says Sam’s Club representative Seong Ohm.

On offer are a $299 estate planning package and a discount on other LegalZoom forms, such as incorporation and trademarking. Purchase of the package includes a half-hour of consultation with an attorney and a 25 percent discount on that attorney’s standard rates for any further services. (Since it is not a law firm, LegalZoom cannot provide legal advice, but it maintains a network of attorneys to which it refers customers.)

The partnership heightens the profile of the company, which has been the target of unauthorized practice of law suits in a handful of states. LegalZoom CEO John Suh says that after 12 years of operation, the company has become the largest former of small businesses in the United States. 2011 revenues, the most recent year for which figures were available, were $150 million.

“Here come the Americans”

In other big changes for the company, LegalZoom received a license to operate as an alternative business structure, or ABS, in the United Kingdom in January 2015. (“Here come the Americans,” crowed one U.K. publication.)

It is the first U.S. company to receive ABS status, but it’s not LegalZoom’s first step into the U.K. market. The company began offering legal documents online in 2012 through a partnership with QualitySolicitors, a U.K. chain targeting the consumer market. The new LegalZoom Legal Services will be headed by a co-founder of the U.K. firm, Craig Holt.

Statements from LegalZoom emphasized its ability to offer services to underserved markets. “Our expansion efforts in the United Kingdom are an opportunity for LegalZoom to work more closely with attorneys,” LegalZoom co-founder Edward Hartman said in a statement. “We are always searching for innovative ways to create a better customer experience and provide greater access to the law.”

Because U.K. laws offer greater flexibility than in the United States, the ABS license will allow LegalZoom to integrate attorney consultations with its forms business for the first time. In the United States, LegalZoom offers prepaid legal review but cannot share fees with the lawyers to whom it refers customers.

Jacoby & Myers may be the next U.S. firm to receive an ABS license. It, too, has formed a partnership with a U.K. law firm and has said it will likely apply.

ABA and Rocket Lawyer partner

In August 2014, the American Bar Association announced a partnership with Rocket Lawyer, the legal forms and attorney advice company. The pilot program will see ABA lawyers use Rocket Lawyer’s mobile platform to provide consumer advice.

Rocket Lawyer offers a flat fee service, paid monthly, to access personal and small business legal forms, as well as on-call attorney advice about those forms. Though somewhat similar to LegalZoom, it is unusual in the marketplace for offering technology linking lawyers and consumers, such as video conferencing and a smartphone app, through which subscribers of the service can ask questions and receive rapid responses from lawyers. The pilot program involves several hundred ABA attorneys in a handful of states and is currently underway.

Many legal observers expressed surprised at the move. However, at the Center on the Legal Profession’s conference on disruptive innovation, held in spring 2014, then president of the ABA William Hubbard indicated to the crowd that he intended to use his tenure to explore ways to broaden access to justice. Presidents of the ABA serve for a period of one year; Hubbard has since been replaced by James R. Silkenat. “The American Bar Association welcomes the opportunity to explore ways to expand legal services to those who need a lawyer’s counsel but are not currently being served for reasons ranging from affordability to ease of access,” Silkenat said in a statement.

Charley Moore, Rocket Lawyer founder and CEO, called it a “pioneering effort to democratize access to legal counsel using technology.”

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Disruptive Innovation in Legal Services Volume 1 • Issue 2 • January 2015

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