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Who’s Afraid of LegalZoom?

by Brenda L. Speer on June 12, 2012

Not this solo in Colo. A recent blog post titled “LegalZoom’s War on GPs and Solos” by Larry Bodine on his LawMarketing Blog commented on LegalZoom’s recent IPO filing. Larry stated that LegalZoom “is capitalizing on consumers’ willingness to buy cheap, do-it-yourself forms as opposed to paying a lawyer to do the job right in the first place.” (The emphasis is mine.)

I couldn’t agree more. Based on results I’ve seen obtained by clients who’ve used LegalZoom, they’re no better than do-it-yourself. And I know why—the key ingredient missing in the legal document services (per its satisfaction guarantee) provided by LegalZoom is the attorney-client relationship, in particular, the latter half of the phrase attorney and counselor at law. As I’ve noted on my blog, do-it-yourself legal is perilous, whether done unaided or with the aid of LegalZoom.

Clients hire attorneys because they need help with a legal matter and they select someone they trust—the same reasons any of us hire a professional to serve us, be it an accountant, plumber, or hair stylist. (I am extremely particular about my stylist and have been a loyal client of mine for more than 17 years.) For example, as an attorney, I can form an entity for a client, just like LegalZoom. But unlike LegalZoom, as my client’s counselor, I also can discuss the particulars of his or her situation and provide them legal counsel and guidance in determining which entity structure is best.

LegalZoom’s model relies on the client to somehow innately possess the legal knowledge to know which entity structure is best and what needs to be done, then acts as a mere scrivener. If the client already knows what needs to be done and how, then why do they need LegalZoom, or an attorney for that matter? I say clients need attorneys precisely because they don’t know what needs to be done and they want counsel.

The disclaimer makes clear, with LegalZoom, there is not only no counselor-at-law component, but also there is no attorney-client relationship with its attendant benefits. The disclaimer states in part (with my emphasis and embedded comments):

“The information provided in this site is not legal advice (I suspect their users think it is), but general information on legal issues commonly encountered. LegalZoom is not a law firm and is not a substitute for an attorney or law firm (Okay, so no legal advice and no attorneys; then how is this legal service?). Communications between you and LegalZoom are protected by our Privacy Policy, but are not protected by the attorney-client privilege or work product doctrine (That’s extremely disconcerting). LegalZoom cannot provide legal advice and can only provide self-help services at your specific direction (Oh, I get it, the users supposedly know what they’re doing); LegalZoom cannot provide any kind of advice, explanation, opinion, or recommendation to a consumer about possible legal rights, remedies, defenses, options, selection of forms, or strategies (So what exactly does it do?). […] LegalZoom.com, Inc. is a registered and bonded legal document assistant.” (I wonder, does the user even read the disclaimer or grasp its meaning and the potential adverse impact on their legal rights?)

Solos and small firms can learn a valuable marketing lesson from LegalZoom though. Don’t underestimate the competition, as LegalZoom apparently has per these gems on page 62 of its IPO (LegalZoom’s disparaging remarks notwithstanding, it has seen the enemy and we are them: trustworthy, competent, independent legal professionals.):

“When in need of legal help, small businesses and consumers lack an efficient and reliable way to find high quality, trustworthy attorneys. […] Attorneys are frequently unable to predict the time required to address a client’s legal matter, sometimes billing thousands of dollars to research a legal issue they have not previously encountered. This can be particularly true of generalist attorneys that offer many disparate legal services to members of their local communities. Unlike attorneys at large global law firms or specialty boutiques who handle high volumes of similar matters and develop expertise in specific domains, generalists can find it difficult to efficiently address a client’s particular legal issue due to their lack of specialized expertise.”

So, no, I’m not worried that LegalZoom’s IPO will be the death-knell for solos and small firms. It may even be a boon, as I’ve experienced. First, the client messes things up by using LegalZoom’s do-it-yourself legal document services and then they hire me (or you) to fix it. Voila! Double the dollars unnecessarily spent in the legal marketplace by consumers. Which begs the rhetorical question: what service does LegalZoom confer upon consumers?

{ 4 comments }

Barb Cashman June 12, 2012 at 10:58 am

Great post Brenda, I think we need to keep demonstrating value to the public and potential clients, to educate them about what the real options are and to remind folks of the value of a relationship – an attorney-client relationship!

Brenda Speer June 25, 2012 at 10:32 am

It’s all about the relationship. That’s how we attorneys provide value to and serve our clients well.

Kent Olsen June 22, 2012 at 10:59 am

This is exactly what I tell my clients or anyone inquiring about do-it-youself legal documents. My firm makes a good living on straightening out things that people mess up trying to do themselves.

Brenda Speer June 25, 2012 at 10:36 am

When a client chooses DIY, they are choosing, albeit probably unbeknownst to them, to pay a little bit up front and a lot more later to have an attorney fix it. DIY is not a win for the uninformed legal consumer.

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