Sleeping With the Enemy? Rocket Lawyer and ABA Team Up

Editor’s Note: The author of this article is a professor at University of Tennessee College of Law and wrote the book, Glass Half Full: The Decline and Rebirth of the Legal Profession .

By Ben Barton, Professor of Law, University of Tennessee College of Law

In 2014 Rocket Lawyer and the A.B.A. announced a joint pilot project “designed to provide affordable legal services to small businesses and the self-employed.”

Last week that project was launched: ABA Law Connect allows small businesses or individuals in Illinois, Pennsylvania, and California to ask a legal question of a licensed lawyer (and ABA member) for a flat fee of $4.95. If further legal services are needed, the questioner can hire the lawyer at a pre-negotiated rate.

At first blush this seems like a puzzling combination. Online legal documents providers like Rocket Lawyer and LegalZoom have been seen as an existential threat to Main Street Lawyers, stealing business from will drafting to incorporation to divorces. LegalZoom in particular has had its share of scrapes with state regulators and lawsuits over the unauthorized practice of law (but so far those have mostly been settled or won outright ). Two suits are still pending in North Carolina .

Given the challenge that online legal services present, why is the ABA signing on with Rocket Lawyer? Rocket Lawyer is newer and theoretically less threatening than LegalZoom. From it inception Rocket Lawyer has offered both interactive legal documentsanda subscription service for legal advice. Rocket Lawyer draws users into the subscription model by offering the first legal form “free” when you sign up for a membership trial. The memberships run from $7 a month to $49.95, depending on the bells and whistles.

If more extensive work is needed, Rocket Lawyer has a network of lawyers to select from. Unlike LegalZoom, which added a subscription model in 2011, Rocket Lawyer has always considered the subscription model to be central to their business. This may explain why Rocket Lawyer has not yet faced the kind of regulatory scrutiny LegalZoom has: it theoretically serves both consumersandlawyers.

The project also could be a win-win for everyone involved. Rocket Lawyer gets the good will and name recognition of the ABA, and the ABA gets to tell its members that it is doing something to address the rising tide of online legal services. The ABA can also claim to be addressing access to justice issues by democratizing legal services. Rocket Lawyer gets a trump card in any future battles with state regulators: are they really going to try to shut down the ABA’s online partner?

It could even work for the lawyers involved. Obviously no one is going to make a living answering legal questions at $4.95 a pop. But if a decent percentage of those questions turn into actual legal work or even a subscription on Rocket Lawyer or LegalZoom, it could expand the market for lawyer’s services and make it simpler and less intimidating to hire a lawyer.

Questions still remain. How much can the lawyers that partner with Rocket Lawyer and LegalZoom actually make? What share of the relatively low monthly service fee do the lawyers collect? Assuming it is not that much, is there a lot of churn among the lawyers working for the sites? And if so, does that affect the customer experience? What cut do the websites take when an actual representation is generated? Rocket Lawyer and LegalZoom are privately held, so thus far all we know is what they tell us. Unsurprisingly they present these plans as great news for consumers and lawyers. Time will tell.

Looking longer term, the rise of a subscription model for legal services could signal a threat to Big Law. They are not a near term problem: existing Big Law clients are not likely to switch their work to Rocket Lawyer anytime soon. But they are clearly a long-term concern — especially aspotentialclients grow accustomed to working with online documents and pre-paid legal services. In the past, clients followed a natural progression to Big Law — they likely tried to make it without a lawyer for a while, then hired a small firm for a few things like incorporation or intellectual property work, and then eventually worked up the chain to Big Law as they became bigger and richer. Many new clients will not follow that trajectory.

Inexpensive services like LegalZoom and Rocket Lawyer are long-term threats to Big Law in the same way that free/pirated downloadable music and movies turned out to be a threat to the entertainment industry. An entire generation of consumers grew up with the idea that online music and movies should be free or basically free. When it came time for the millennials to pony up $14.99 to download an album or buy a CD, the record labels found few takers. They eventually backed themselves into a subscription model,after much bleeding in sales and profits. If Big Law wants to avoid the same fate they should start thinking about these companiesnow, because the next generation of clients is already using them.

Will we see the rise of a “Spotify mindset” in the market for lawyers? If so, Big Law can look forward to even more resistance over hourly billing from new clients and perhaps more bleeding out to competitors offering flat rate services. Lawyers that adopt the model can hope that the steady flow of income from a monthly fee outweighs the loss of valuable hourly work. But then ask the record labels how that has worked out for them.