Internet wars: the bar against the websites.

• Author: Clark, Gerard J.

1. Introduction B. LegalZoom 1. Introduction 2. The Site 3. Disclaimers 4. Offers of Memberships 5. Website Blog 6. Every day Law Articles 7. Miscellaneous C. Other websites D. Legal and Ethical Questions 1. Introduction 2. The Publication of Forms and Information 3. Advertising a. Rule 7.1 b. Rule 7.2 4. Group legal services and Insurance 5. Bulletin Boards 6. Rule 5.5-Unauthorized Practice 7. Home Office Rules 8. Rule 5.4-Form of Ownership 9. Rule 1.2 (c)-Disaggregation E. Conclusion A. Introduction

   Consumers are increasingly consulting the internet to find providers of legal services. (1) Sites that respond to this demand are proliferating. (2) This new supply and demand system is changing the nature of the delivery of legal services and challenging a profession which is resistant to change. (3) The tension between the new providers and the traditional bar appears to be escalating. (4) This article will describe the tensions and will highlight the ethical and legal questions that these changes present.

   Three of the more popular sites will be used as examples of the huge number of legal delivery services that are available on the internet. (5) LegalZoom appears to be the most successful such website. (6) It has recently raised $100 million from Kleiner Perkins and Institutional Venture Partners (7) and is poised to go public. (8) Nolo was recently purchased by Internet Bands; Rocket Lawyer has recently raised $18.5 million in financing, in which Google Ventures participated. (9) Investors are attracted by the fact that these web-based providers of legal service to the public are disruptive models in huge, decentralized business of law, with revenues of $230 billion last year in billings from 160,000 law firms. (10)

   These sites provide legal services to the public in a variety of ways: first, by providing legal information in a format to be understood by a lay audience, (11) second, by offering to find the customer an appropriate lawyer, (12) third, by maintaining a bulletin board and inviting the public to post questions to be answered by lawyers who are registered with the site, (13) fourth, by selling memberships which entitle the member to free or discounted legal services on a continuing basis as the needs arise, (14) and fifth, by selling legal forms, either in blank, or, customized to the particular needs of the customer by interactive branching software which will use customer information to develop the appropriate document. (15)

2. LegalZoom

   1. Introduction

      LegalZoom was founded in 2001 by two former firm associates in Hollywood, California and currently claims serving over 1 million customers and employing roughly 400 workers. (16) Co-founder Robert Shapiro, a California attorney best known for his role on the O.J. Simpson defense team, is touted as one of the "top attorneys" behind the development of the site. (17) A nationwide advertising program in major national media markets seeks to brand LegalZoom as the leading legal services web site on the Internet. (18) However, the scheduled August 2, 2012, IPO was cancelled when institutional investors evaluated its stock at $7 to $8 per share, one third less than LegalZoom's evaluation. (19) The gloomy assessment by investors is probably influenced by the legal problems described herein, as well as the proliferation of competing sites.

   2. The Site

      LegalZoom maintains a multi-faceted website that provides information, maintains a blog, and sells personalized forms. (20) It also markets legal services plans for a monthly fee which entitles members to certain circumscribed services free of charge. (21) LegalZoom uses the tag line: "We Put the Law on Your Side." (22)

      When customers arrive at the LegalZoom web site they are presented with a menu of legal documents that are sold for a fixed price. (23) The documents are either those commonly needed by the individual client like powers of attorney, living wills, residential leases, purchase and sale agreements and no-fault divorce petitions; or those commonly needed by businesses such as certificates of incorporation, trademark applications, and contracts for the sale of goods. (24) These forms are available in blank or they may be customized by the site software. (25) The customer completes a series of questions and the document assembly software generates a legal document, which is sent to the customer in paper format by regular mail after the customer pays for the document by credit card. (26) Examples of costs are: 501(c)(3) application--$595, certificate of incorporation--$99, last will and trust--$69, living will--$39, joint venture agreement--$129 and copyright application--$114. (27)

      The company provides a "peace of mind review" to assure that all answers are completed, that the spelling and formatting is correct, and that the document has been proof-read. (28) Some documents come with a higher priced package that includes a one-half hour con sultation with a lawyer. (29)

   3. The Disclaimers

      The LegalZoom site includes the following disclaimer:

      The information provided in this site is not legal advice, 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. Communications between you and LegalZoom are protected by our Privacy Policy, but are not protected by the attorney-client privilege or work product doctrine. LegalZoom cannot provide legal advice and can only provide self-help services at your specific direction; 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 (30). The site has a detailed section entitled "Our Commitment to Privacy," which explains in detail the difference between contractual privacy and the attorney-client privilege, how personal data is handled, how third party vendors may have access to personal information, and customer options to withhold information. (31) The customer satisfaction guarantee provides company credit for the price of documents that do not satisfy the customer. (32)

   4. Offer of Membership

      After the completion of the creation of a document, the customer is offered a variety of membership options. (33) For the individual or family subscriber, there are two options: the Legal Advantage Standard subscription for $7.99 per month and the Legal Advantage Plus subscription at $14.99 per month. (34) For the business subscriber, the options include the Business Advantage Standard subscription at $7.99 per month and the Business Advantage Pro subscription at $29.99 per month. (35) The site proceeds to explain these plans in great detail. (36)

   5. Website Blog

      The site also maintains a busy interactive blog on which an attorney fields the questions of the public on every imaginable subject. (37) LegalZoom answers additional questions on Facebook and can be followed on Twitter. (38) In addition, one can find over one hundred LegalZoom videos on YouTube. (39) These run the gamut of type and subject matters: including testimonials, how-to-do-it legal advice, biographies of the founders and employees and even video of the firm Christmas party. (40)

   6. Everyday Law Articles

      The site maintains a library of articles that seek to explain legal issues in plain and simple language. (41) For instance, the site makes available the article titled, "5 Steps to Protect Family Heirlooms." (42) "You've probably heard at least one horror story about adult children fighting over how to divide up possessions or whether to keep or sell those precious family heirlooms after their parents have died." (43) The article then provides several steps to avoid family disputes over the items. (44)

   7. Miscellaneous

      The website also seeks affiliates to sell memberships in the group legal services plans at 15% commission. (45) The website states, "[t]he LegalZoom Affiliate Program is a way for you to earn a commission by promoting LegalZoom products using banner ads or text links within your website. Each time a visitor clicks on a LegalZoom link on your website and completes a purchase, you'll earn money." (46) The site goes on to describe who might be attractive applicants:

      [w]eb marketers committed to preserving the integrity of the LegalZoom brand, [f]ranchise companies searching for a cost effective solution for business formation requirements, Esq., CPAs, CFAs & CFPs exploring value added services to their clientele, [c]ompanies with online marketing specialists and content writing teams, [c]ompanies who look for niche products and build sites to promote products, [w]ebsite owners with a strong SEO presence for legal keywords, and [s]ites or directories that are targeted and useful to online shoppers. (47) The site also suggests that affiliations will not be from the following: "[c]oupon or incentives-only websites, [applications or adware known to overwrite cookies, [e]xcessive use of banners with no supporting content, [f]lash or graphics-only websites, [w]ebsites that have no value-add content, [u]se of black-hat SEO tactics, [a]ny version of spam[.]" (48)

      Finally the site is seeking over twenty job applicants at one of the three LegalZoom office in Glendale, San Francisco and Austin in one of the following job classifications: corporate legal, customer care, finance, human resources, marketing, operations, product management, research and development, and sales. (49)

3. Other Sites

   The Nolo site encourages the visitors to post legal questions publicly on the site and then posts answers from lawyers who have registered with the site. (50) Rocket Lawyer sells legal forms and also has a stable of lawyers ready to assist the purchasers of the forms who feel that they need further assistance. (51) The Total Attorneys site provides advertising for its member lawyers by eliciting rudimentary client information and then linking the client with their most appropriate lawyer...