Case study
LegalZoom in the US
Trend Report 2021 – Delivering Justice / Case Study: LegalZoom in the US
Author: Manasi Nikam, Knowledge Management Officer
Introduction
The traditional justice system often fails to meet the everyday legal needs of people. To bridge this gap, the people-centred justice movement emphasises on delivering outcomes that people want to their legal problems. LegalZoom, a technology-based venture, prioritises the needs of the underserved sections of society and provides effective and user-friendly solutions to the most typical and common legal problems.
LegalZoom is an online legal services provider based in the United States of America. LegalZoom’s goal is to ‘make legal help accessible to average Americans’ (LegalZoom no date.-a). It provides legal documents to small businesses and individuals without requiring them to hire a lawyer. To small businesses, it offers documents required for business formation, business name registration, intellectual property (copyrights, patents). To individuals, the company offers documents required for personal use such as wills, uncontested divorce, power of attorney, name change and prenuptial agreements (Shipman 2019). Since 2010, the company has offered legal plans in which customers receive lawyer-provided advice (hereafter termed as legal services), again for a relatively modest fee (LegalZoom n.d.-a).
Established by law school graduates Brian Lee and Brian Liu, along with Edward Hartman- an internet entrepreneur and litigator Robert Shapiro, LegalZoom has become a forerunner of legal innovation in the US. It has served over 4 million customers to date (LegalZoom n.d.-a). It is the largest provider of legal services to small businesses as well as largest filer of trademarks, having filed over 250,000 trademarks, in the USA (Chowdhury 2017). The company estimates that an American citizen uses its forms to write a will every three minutes (Minkoff 2019). LegalZoom’s network of lawyers are eligible to serve clients in all 50 states in the USA (Chowdhury 2017). The company’s simple but unconventional approach to resolving ordinary people’s legal problems and its large customer base make it particularly well-suited for this case study on how the private sector can pave the way for people-centred justice.
How does LegalZoom work?
LegalZoom offers online legal help to people in the form of legal documents and advice. It offers several types of legal documents to customers based on their needs. First, the customer is required to indicate the type of document he or she needs. After that, a software asks the customer to answer a series of questions specific to the legal document requested and to assess the individual’s needs, marital status, location. Based on the answers provided by the customer, the software adds or skips questions (McClure 2017).
The final product of this process is a customised document that addresses the individual’s specific needs. An employee of LegalZoom then reviews the document to check for spelling, grammar, punctuation and checks for overall consistency and completeness (LegalZoom n.d.-b). The finalised document is then sent to the customer or the relevant government department via private shipping carriers, USPS or electronic delivery. Along with the finalised document, customers also receive detailed instructions and information on next steps. Once the document reaches the specified destination, the customer is notified (Ciulla 2018). This self-help service is accompanied by an option of getting help from a legal professional who will undertake the documenting work on behalf of the customer (LegalZoom n.d.-c).
Along with the document preparation service, LegalZoom also offers individuals and small businesses legal advice from lawyers on a subscription basis. This allows subscribers to select a lawyer from LegalZoom’s network of lawyers and consult with him or her for 30 minutes for the duration of the plan.
In LegalZoom’s Business Advisory Plan, the customer receives advice on contracts and business agreements, copyrights, trademarks and other intellectual property protections, personal legal matters including property, family law and estate planning. The subscription plan is available for 6 months or one year at a price of 31.25 USD per month. The Legal Advantage Plus plan offers customers advice on financial issues such as bankruptcy, contracts, legal agreements and lawsuits, employment issues including termination, compensation disputes and employment agreements, family matters and estate planning for a monthly sum of 11.99 USD (LegalZoom n.d.-d).
This sets LegalZoom apart from existing legal service providers. The company emerged as an alternative to traditional legal service providers and introduced efficient, affordable legal services for the benefit of small business owners and individuals in the USA.
Problems and impacts
How and to what extent has LegalZoom measured and mapped the following as a first step towards people-centred justice?
- most prevalent justice problems within the target population
- The justice problems with greatest impact on the target population
- The justice problems that are most difficult to resolve and therefore tend to remain ongoing
- The groups most vulnerable to (systemic and daily) injustices within the target population
- External/hidden factors that make solving justice problems very difficult
When facing a legal problem, most Americans either seek the help of a lawyer, look for advice from friends and family members or turn to legal aid services who offer legal assistance to low income groups. Those who do not have the financial resources to tackle their legal problem and are not eligible to receive help from legal aid professionals fall through the cracks. LegalZoom addresses the legal needs of this section of the population who lie in the middle of the socio-economic spectrum (C. Rampenthal and J. Peters, personal communication, October 1, 2020).
Today, several internet based legal service providers exist to provide businesses and individuals essential legal documents at a reasonable price. These include Rocket Lawyer, Avodox, Patentbot, Incfile and UpCounsel. However, back in early 1999, when LegalZoom was founded, few online legal service providers of its kind existed.
The founders of LegalZoom, Liu and Lee, identified a gap in the transactional needs of people when the two would be frequently approached by friends and family for advice on preparing legal documentation. This led him to the realisation that the lack of sophisticated but affordable legal documentation is one of the most commonplace problems that ordinary people face. They founded LegalZoom to bridge this gap.
As this idea was germinating in the mind of the entrepreneurs, online businesses were gaining currency; stocks were being traded online and travel services were increasingly offered online. Inspired by the number of services being offered online, Liu and Lee with the help of technologist Hartman, launched LegalZoom, an online service that would address legal needs of small businesses and individuals who could not afford the legal fees of lawyers (Harris n.d.).
In addition to legal documentation, LegalZoom provides advice from independent lawyers. This has resulted in another section of the population receiving essential legal services at an affordable price. People who could not afford to engage the services of a lawyer completely and were not eligible to receive assistance from legal aid services, can now decide how, when and for which service they engage a lawyer. In other words, the company has unbundled the wide range of legal services offered by lawyers using technology to suit the preferences of the customers. For a competitive price, customers can choose to have short online chats with lawyers (limited access) or engage a lawyer’s expertise completely.
Defining and monitoring outcomes
How and to what extent has LegalZoom researched and identified the outcomes that people expect from justice processes in the target population?
LegalZoom sought to cater to the legal needs of small businesses and middle-income individuals. At the time of its inception, there existed little data on the justice needs of Americans. So the company was not founded on hard, evidence-based data and facts per se. The founders had to rely on observational data to identify what people want from existing justice services (C. Rampenthal and J. Peters, personal communication, October 1, 2020).
For instance, prior to the setting up LegalZoom, the founders realised through interactions with friends and family members that going to a lawyer for transactional legal needs, such as creating a will, was very expensive for ordinary people. Thereafter when LegalZoom was in its nascent stage, circa 2000-2003, the use of the internet was taking off. People searched ‘how to get a divorce in the cheapest possible way’, ‘how to set up a business’, ‘how to make a will’ etc, which indicated to LegalZoom the kind of legal services people most needed (Ibid).
Another approach that the company has adopted to identify the outcomes that people want from justice processes is to understand the underlying needs of the customer. To illustrate this point, the interviewees quoted the example of Henry Ford. If Henry Ford were to ask people what they wanted, people would ask for faster horses. But what they actually wanted was a faster mode of transportation (Ibid). Similarly, LegalZoom tries to unravel the fundamental needs of the people using the information it obtains in its interactions with clients.
LegalZoom’s commercial success indicates that this approach of the company to understand the outcomes that people want has proven to be effective. However, there is scope for the company to systematically and empirically research and identify the outcomes that people want from justice processes. This can help LegalZoom in better defining the outcomes that people want and thereby improve the services and products it offers.
How and to what extent has LegalZoom determined whether existing justice processes deliver these outcomes and allow people in the target population to move on?
LegalZoom was founded with the very objective of addressing the gap left by existing justice processes in delivering the outcomes that people want. The founders of the company were aware that far too many lawyers in the USA charge exorbitant fees for providing even the most basic services, making it difficult for ordinary people to access them.
Moreover, the everyday experiences of the friends and family members of the founders of the company revealed to them that services that provide advanced, user-friendly and affordable legal documents are absent in the market. To verify this finding, the company undertook preliminary market research (Ibid). Together, these data points indicated that existing justice services fell short of delivering outcomes that people desire.
How and to what extent has LegalZoom created a system for monitoring whether new, people-centered justice processes deliver these outcomes and allow people in the target population to move on?
LegalZoom designs its products specifically to meet the outcomes that people look for.
The representatives of LegalZoom explain that they are constantly trying to resolve problems that people face while accessing justice (C. Rampenthal and J. Peters, personal communication, October 21, 2020). Thus, LegalZoom’s problem-solving outlook ensures to some extent that its products and services are best positioned to deliver the outcomes that people want.
In the following years to come, LegalZoom can consider setting up a full-fledged monitoring outfit that tracks whether its products and services are delivering the outcomes that people want.
Evidence-based solutions
How and to what extent has LegalZoom introduced interventions that are evidence-based and consistently deliver the justice outcomes that people in the target population look for?
Consider:
- Causes/underlying problems
- Combinations of interventions
LegalZoom introduces interventions that are user-centred. Before introducing a new product or service, the company undertakes surveys and focus group discussions with customers and larger public alike. Through these methods, they try to understand how people would like to access a particular legal service. For example, they asked people: “Have you gone to a lawyer?”, “Why did you go to a lawyer?”, “Did you go in person?”, “Did you talk on the phone?, “What do you think about accessing this service online?” (Ibid).
The company also interacts with their existing customers and tries to unpack legal problems from the customer’s point of view. It works to understand their needs, their experience using a product, and their preference for different solutions that can address their needs. In one such conversation, a customer revealed to representatives of LegalZoom that she prefers the company’s online services because other lawyers discriminated against her because of the colour of her skin. The online services offered by LegalZoom protect her from racial or gender biases that individual lawyers may carry (Ibid).
That being said, what is still missing is an evidence-based approach to introducing interventions that consistently deliver the justice outcomes that people want. The products and services that LegalZoom has introduced are user-centred and effective in resolving people’s problems. However, they are not based on rigorous evidence which demonstrates the effectiveness of these interventions at delivering the outcomes that people want.
How and to what extent has LegalZoom used outcome-based monitoring to continuously improve these interventions and replace interventions that have proven ineffective?
On the basis of data collected for this case study, it appears that LegalZoom undertakes user-testing to improve or replace a product or service. LegalZoom interacts with 5-15 customers on a weekly basis. When introducing a new product or service, the company designs and tests three variations each and tests them on customers to identify which one they prefer. It then iterates the design of the service or product based on the customers’ feedback. Thereafter, it introduces the revised product or service among customers, requests their feedback, and again reworks its design based on the feedback they receive. This is done 4-5 times, by which time the product or service is free from most inefficiencies (Ibid).
Although user-testing is an effective way of designing products, systematically monitoring outcomes that people receive can inform the company about the user’s end to end journey of using its products and services while trying to resolve a legal problem. This information can add value to LegalZoom’s understanding of the outcomes people want and enable the company to tailor its products and services to better fit the needs of people.
Innovations and delivery models
How and to what extent has LegalZoom scaled their people-centered service delivery model to deliver justice outcomes for a larger target population?
Marketing and branding played a critical role in scaling the services that LegalZoom provides.
Founded in 1999, LegalZoom expanded quickly between 2000 and 2003, thanks to the penetration of the internet in all corners of the US. Although initially the company was not widely known, LegalZoom leveraged the platform provided by the newly emerging internet to advertise itself. This gave LegalZoom a competitive advantage because at that time, most other legal firms did not indulge in online marketing thus allowing the company to market itself at a competitive price across all 50 states (Ibid). It helped the company increase its visibility and create a national customer base.
Other key factors that helped LegalZoom in scaling its services were its customer focus, problem-solving orientation, and innovation mindset. As one interviewee said,
Many times, innovators are carried away by the strengths of their innovation, that they forget to further innovate. Afterall, the innovator is trying to resolve problems. By limiting the innovation to a certain set of problems, the innovation limits its own growth. Instead, if the innovator adopts an attitude where he or she is looking to resolve new and more problems, it automatically broadens the scope of the innovation. By continuing to address problems, the innovation boosts its own effectiveness and ability to reach out to more people than before (Ibid).
This zeal to solve problems is evident in the company’s evolution. It went from offering DIY legal forms to providing services of lawyers in combination with legal documentation at a competitive price. Consequently, LegalZoom could reach out to people who had previously shied away from using standalone DIY forms and diversify its clientele.
Coming to the question of to what extent LegalZoom has scaled its services, as mentioned before, so far LegalZoom has provided services to over 4 million customers and filed 250,000 trademarks (Chowdhury 2017). The company operates in all 50 states of the USA. LegalZoom estimates that every 3 minutes, a customer sets up a LLC and every 4 minutes, a last will is created using the company’s documentation service. One in five LCCs in California and nearly one in six non-profits are launched with LegalZoom. Customers have completed over 550,000 consultations with LegalZoom plan attorneys (C. Rampenthal and J. Peters, personal communication, October 21, 2020).
How and to what extent has LegalZoom funded their service delivery model in a sustainable way?
One of LegalZoom’s main lessons in having a sustainable financial strategy is to have a for profit business model, even if the innovation is working on a social cause. The reason for this being for profit organisations often lack the organisational structure and funding that is required to scale operations. The funding constraint further limits their ability to hire and recruit talented persons.
Secondly, LegalZoom evolved from being a company that offers legal documents for purchasing on an item-by-item basis into one that offers legal services for a subscription plan. While selling documents related to will, trademarks, LCCs to customers, the company was already making profits. It is only when the company started providing legal plans that it switched to a subscription based model.
The company chose a subscription based model because typically, prepaid legal plans are offered for a subscription. In legal services, where acquisition cost is high, the subscription model helps companies that provide transactional legal services and have a higher volume of customers at a lower cost. It gives them more room to work with the acquisition costs.
Apart from subscriptions from users, LegalZoom draws financial resources from venture capitalists and private equity funding. Although the subscription model is a profitable financial strategy, the company relies on venture capital and private equity for strategic and growth purposes. Like any other private company, it is likely that the company will have to look for more sustainable sources of funding in the future.
To what extent has LegalZoom leveraged the following sustainable financing strategies?
- Public-private partnerships
- Smart (user) contributions
LegalZoom relied on private equity funding, venture capital and user contributions in the form of subscription fees to sustainably finance its operations. It did not undertake a public-private partnership model or incorporate smart user contributions in its business model.
In the initial years of Legal Zoom, venture capitalists were not willing to invest in the company due to the dotcom bubble burst. Instead, the founders raised funds from friends and family. They raised $333,500 in the first go (Harris n.d.; Cremades 2019). Over a period of time, the friends and family members of the founders invested around $1 million. Bringing Mr. Shapiro on board early on also helped with the company’s fundraising efforts, and his influence brought several investors in. Most of these were very small amounts in comparison to equity raises from professional investors.
Thereafter, the company has relied on private equity funding and venture capitalists. In 2018, the company’s valuation boosted upto $2 billion after it received secondary investment from Francisco Partners, GPI Capital, Franklin Templeton Investment Funds, Neuberger Berman Investment Advisors and Institutional Venture Partners (Amore 2018). This chunk of investment is among the largest investments in the history of the legal technology industry (LegalTechNews 2018).
Prior to that, private equity firms such as Permira invested $200 million dollars in the company in 2012. This was around the time when LegalZoom wanted to go public, but instead opted for a private equity investor. Other investors who have a stake in the company are venture capitalist firm Bryant Stibel.
Enabling environment
How and to what extent have regulatory and financial systems created/enabled by the government supported LegalZoom and made it possible for this service/activity to scale?
The legal regulatory system in the US- namely lawyers and several state bar associations – created significant barriers for LegalZoom over the years. They accused the company of being engaged in unauthorised practice of law (UPL), on the basis that the state legal ethics rules prohibits anyone but a lawyer to practice law (American Bar Association n.d.).
In a 2010 class action lawsuit, the District Court in Missouri concluded that LegalZoom is engaged in UPL. LegalZoom settled the case by paying compensation of $15,000 to the plaintiffs who were a part of the class action, as well its customers in Missouri. It also made certain undisclosed changes in its business policy (Moxley 2015). In addition to Missouri, LegalZoom faced lawsuits in Ohio, Alabama and Connecticut. The State Bar Associations of Connecticut, Pennsylvania and North Carolina also accused the company of unauthorised practice of law in the past. It was only in South Carolina that the Supreme Court ruled in favour of LegalZoom and unequivocally stated that the company does not engage in unauthorised practice of law (McClure 2016).
In 2012, when LegalZoom was considering going public, the company identified on-going cases and threat of lawsuits based on unauthorised practice of law as a risk associated with its business (LegalZoom 2012). Although this did not actively prevent LegalZoom from going public, it is clear that the UPL accusations were a matter of concern for the company.
Despite these challenges, LegalZoom’s popularity allowed it to continue to operate and expand its services. The company’s trajectory of lawsuits and accusations of unauthorised practice of law saw a turning point when the State Bar Association of North Carolina had issued cease and desist letters to LegalZoom on the charge of unauthorised practice of law. Here, LegalZoom fought back by filing a case of promoting monopolistic practices in the field of law against the State Bar Association.
Eventually, LegalZoom and the State Bar Association of North Carolina reached a settlement in 2015 in which the State Bar agreed to support online providers of legal services provided the latter enact regulations to protect the interests of consumers. That’s when LegalZoom found the support of other national public institutions. The Antitrust Division of the Department of Justice (DOJ) and Federal Trade Commission (FTC) supported this move and acknowledged the way in which LegalZoom filled a lacuna in the provision of affordable legal services (Moxley 2015). They stated that:
Overbroad scope-of-practice and unauthorized-practice-of-law policies can restrict competition between licensed attorneys and non-attorney providers of legal services, increasing the prices consumers must pay for legal services, and reducing consumers’ choices.
... Interactive software for generating legal forms may be more cost-effective for some consumers, may exert downward price pressure on licensed lawyer services, and may promote the more efficient and convenient provision of legal services. Such products may also help increase access to legal services by providing consumers additional options for addressing their legal situations (Department of Justice and Federal Trade Commission 2016).
This was the first time that a state bar association had taken formal action against LegalZoom with regards to UPL. By clearing its name off the UPL allegations, the company was finally able to put the UPL accusations to rest.
After the company reached a settlement with the State Bar Association of North Carolina, the company’s then General Counsel released a statement heralding the start of a new pathway to increase access to justice. He says:
The tide is turning. From rear guard actions that try to stop LegalZoom to how we can work with technology and companies like LegalZoom to start expanding access to people who need affordable legal services (Rogers 2015).
While the company encountered obstacles in its home country, it was able to expand its services in others. The United Kingdom adopted a new Legal Services Act in 2007 that created a regulatory structure allowing alternative business structure (ABS) firms. ABS firms have some form of non-lawyer involvement in the ownership and/or management of the firm (McMorrow 2016).
Taking advantage of this opportunity, LegalZoom acquired the ABS licence and has bought a legal firm in the UK with the intention of building a new-age law firm that brings together technology, lawyers and experts from other fields. Since then, LegalZoom has offered online services to business owners, persons interested in selling or buying a home, and individuals interested in making a will. In April 2020 LegalZoom sold its law firm, which is an ABS, to Metamorph Group in the United Kingdom. Although LegalZoom did not operate in the UK for a long time, this example demonstrates that modern legal practices set by regulatory bodies were beneficial to the company in scaling its activities (Rose 2020).
How and to what extent have the outcomes-based, people-centered services delivered by LegalZoom been allowed to become the default procedure?
With respect to LegalZoom, the train has left the station.They’ve got a couple million satisfied customers and it’s going to be really hard for anyone to shut them down ,” says Deborah Rhode, a legal scholar in the US (Ambrogi 2014).
LegalZoom fought a long battle in order to be accepted by legal practitioners and institutions. It received recognition by regulatory bodies and federal authorities for providing an essential legal service only in 2016. Prior to that recognition, the company adopted varying strategies on a case by case basis to respond to and overcome legal challenges of unauthorised practice of law.
One, it negotiated settlement deals with relevant state authorities in which it made certain modifications to the way it operates. In another case, it sued the State Bar Association of North Carolina for protecting lawyers’ monopolies that hurt the interests of consumers. Three, it countered the arguments made by the state authorities and continued to operate with no legal repercussions. LegalZoom was able to do this because by then, its client-base had expanded and its services were being used by millions of Americans. This prevented many state legislatures from taking formal action against the company (Barton 2015).
When LegalZoom was challenged in South Carolina, the Supreme Court of the state found the company not guilty of UPL (McClure 2016). In Ohio, the Supreme Court refrained from arriving at a conclusion and deferred its decision. In Alabama, the plaintiff himself dismissed the lawsuit (GlobalNewswire 2011). The Connecticut Unauthorised Practice of Law Committee and the Pennsylvania Bar Association Unauthorised Practice of Law Committee considered LegalZoom’s legal services in violation of UPL, but did not take further action to penalise the company (McClure 2016).
In the state of Missouri, the court concluded that LegalZoom is engaged in UPL but allowed the company to function if it made certain modifications. Similarly, in the state of Washington, LegalZoom was required to arrive at a settlement with Attorney General Rob McKenna in 2010 (Beahm 2010). The settlement included disclaimers that LegalZoom should provide to protect the interests of consumers.
Likewise, the Supreme Court of North Carolina permitted LegalZoom to operate subject to certain conditions needed to protect the interests of consumers. The two parties reached an agreement after clashing for a long period of time. An important factor that prompted the State Bar Association of North Carolina to reassess its order that LegalZoom cease operations was LegalZoom’s lawsuit accusing the North Carolina State Bar of violating antitrust laws, protecting monopoly of lawyers and stifling competition (Brown 2016).
This agreement set a precedent not observed before by LegalZoom or any other online legal service provider. The State Bar also agreed to review the definition of UPL to accommodate online legal service providers like LegalZoom, discouraging other UPL lawsuits against LegalZoom in the future (Rogers 2015). Thus, this agreement signalled the end of LegalZoom’s UPL woes and paved the way for other similar online legal service providers to function without the threat of allegations of UPL.
Along with LegalZoom, there exist several other online service providers such as Rocket Lawyer, Avodox, Patentbot, Incfile and UpCounsel. These service providers coexist with traditional legal service providers such as law firms. Therefore, even as the use of online legal services has become widespread, it cannot be said that these services have become the default procedure.
How and to what extent has LegalZoom stimulated (or benefitted from) investment into justice research and development?
Evidence suggests that LegalZoom has not directly benefited from investment into justice research and development in the USA.
Leadership and pathways
How and to what extent have justice sector leaders’ skills and collaborations enabled/hindered LegalZoom to increase access to justice by delivering the outcomes people need at scale?
LegalZoom has reaped the benefits of working with justice workers in both direct and indirect ways. The company learnt to look at justice problems with a new perspective and was inspired to do new projects. Justice leaders who were advisors to the company helped it in navigating the regulatory landscape in the USA and UK (C. Rampenthal and J. Peters, personal communication, January 20, 2021). Given that LegalZoom has faced multiple challenges with respect to accusations of unauthorised practice of law, advice from justice leaders on how to manoeuvre the regulatory landscape is likely to have helped the company in avoiding further complications with respect to the legal identity and functioning of the company in the USA.
As for the UK, it is likely that the advice from justice leaders helped the company in expanding its operations internationally (from being a company that works solely in the USA, to moving to the UK) for the first time. Both ways, it enables the company to work smoothly and in providing its services to people in different geographies and thereby deliver the outcomes that people need at scale.
Literature indicates that justice leaders within public institutions in the USA have also helped LegalZoom. During the legal battle between the State Bar Association of North Carolina and LegalZoom on the issue of unauthorised practice of law, the then President of the State Bar Association of North Carolina Ronald Gibson, and his predecessor Ronald G. Baker Sr., were instrumental in chalking out a settlement between the two parties (Rogers 2015).
This settlement not only allowed LegalZoom to operate without any obstacles in the state of North Carolina, but it was also the first time that a regulatory institution had deemed the services provided by the company as not falling under the umbrella of unauthorised practice of law. The company has faced allegations of UPL several times, this virtually cleared the company’s name in the eyes of regulatory institutions thus enabling it to function with fewer obstacles than before in the USA. Being able to operate seamlessly in a given geography again allows the company to continue in scaling and thereby delivering outcomes that people need at scale.
How and to what extent has LegalZoom contributed to/benefited from new high-level strategies or pathways towards people-centred justice in the US?
LegalZoom is cautious when participating in the formulation of high-level strategies towards people-centred justice. A significant portion of people-centered justice entails delivering services for free to those in our systems that need it the most. Many entities, including non-profit companies and NGOs have been working to increase access to justice for years – and have made strides in doing so. Being a profit-making company, LegalZoom is aware that its motives may be questioned, which in turn could hurt or pull focus from the movement of innovating the justice system. So when participating in high-level strategies, LegalZoom makes sure to focus on the end goal of innovating to improve access. That being said, LegalZoom, along with many other stakeholders in the legal system, has interacted with the Supreme Court of Arizona, Washington, Illinois and Florida about reforms required to increase access to justice for the people (C. Rampenthal and J. Peters, personal communication, October 21, 2020).
One interviewee highlighted a paradox in the legal profession:
We want to be enablers and facilitators. We don’t want to be drivers. The drivers need to come from the states. They need to come from the regulators, they need to come from educators and academia because their motives are not looked at suspiciously (since they are not for profit). But we all know that the only way these work, as true solutions, is to show that there is profit in them. Not for profits usually lack the organisational structure and funding required to scale operations. Besides, a lot of justice issues simply are not attractive to private equity and venture capital. Therefore the private sector plays an important role in bridging the justice gap (Ibid).
LegalZoom may have been wary of actively contributing to high level strategies to enable people-centred justice, but it unwittingly brought about changes in the way online legal service providers are perceived by regulatory bodies such as state bar associations.
In 2015, while settling the dispute with the North Carolina State Bar Association, LegalZoom and the State Bar Association agreed to support legislation that gave interactive legal service providers the green light to function legally, subject to the condition that they follow the terms of the settlement agreement that LegalZoom and the State Bar Association crafted. The State Bar Association also gave its word that it would lend support to legislation that would bring clarity to the definition of ‘unauthorised practice of law’, which as of now is vague and was used to challenge LegalZoom’s legality. This agreement is a step in the direction of expanding the capacity of non-traditional actors to provide legal services and thereby loosen the monopoly of lawyers over the practice of law (Carter 2015).
This agreement took the form of the ‘An Act to Further Define the Term ‘Practice Law’, passed by the General Assembly of North Carolina in 2015. This Act exempts interactive legal service providers from the definition of practice of law and includes other terms of agreement that LegalZoom and State Bar had decided upon (Justia US Law n.d.).
To what extent has LegalZoom contributed to/played a role in a broader paradigm shift towards people-centered justice?
LegalZoom is often characterised as a ‘disruptive innovation’ – or an innovation that brought about a paradigmatic shift (Cohen 2014). Time and again, the company has introduced cutting edge business models that have had success in the commercial market and simultaneously made legal services affordable than before. It began its business at the low-cost, high-volume end of the market and eventually moved up the ladder to provide high-end services that require the specialised and technical skills of lawyers (Barton 2015). Both times, it refashioned the way legal services are provided.
Not the first provider of online legal forms, it certainly offered the most sophisticated and efficient legal documentation (Schindler 2012).
With its prepaid legal plan that offers unlimited 30 minute consultations from lawyers on new personal and business matters for a fee starting from 10 dollars a month, LegalZoom entered into the business of offering personalised services of lawyers. People who previously could not afford the hourly rates of lawyers, can now obtain legal services from LegalZoom’s pre-vetted network of lawyers at an affordable price. This new product of the company dramatically alters people’s access to justice.
People can decide the degree of lawyer involvement, starting from brief online interactions with lawyers to long-term engagements. This upends the way the legal services have previously been delivered by shifting the focus away from a lawyer-oriented business model to consumer-oriented business model. Zooming out to a larger landscape of legal system, the company has created a ‘template for how, when, and for what service level lawyers are required for different tasks and functions’ (Cohen 2014). It commodifies services of lawyers in a way never seen before – markets will now determine ‘who and what is the appropriate resource to deploy for a specific task, matter, or portfolio based upon its value to the client?’ (C.Rampenthal and J.Peters, personal communication, October 1, 2020).
Moreover, in the discourse and practice of the legal profession in the USA, LegalZoom demonstrated the potential of online legal service providers to provide efficient and reliable legal services thus paving the way for other online service providers. Taking inspiration from LegalZoom, traditional legal firms are also trying to take advantage of the company’s model of employing non-lawyers to help customers in preparing legal documents. Although such a change in regulations can make people susceptible to incompetent advice from unqualified or under qualified professionals, if these non-lawyer service providers are also regulated, it will help law firms to cut costs, increase efficiency and provide cheaper services to customers (Habte 2017). Thus not only is LegalZoom influencing the role of online legal service providers, it is also stimulating changes in the practice of law by traditional legal service providers, for the benefit of the people.
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Interview with Chas Rampenthal and James Peters, October 1, 2020
Interview with Chas Rampenthal and James Peters, October 21, 2021.
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