How Law Firms Can Be More Like LegalZoom (And Why They Should Try)

Any lawyer would probably tell you that LegalZoom’s services are inadequate in most cases, and because LegalZoom is not a law firm and cannot become one, it doesn’t really pose a threat to their business. But the fact remains that LegalZoom is a $400 million plus company, and it has captured a fairly large share of the market for “low hanging fruit” type legal services (e.g. LLC formations, trademark filings, etc.). It’s entire model is built on efficient, low cost services, which just so happens to be exactly what today’s consumers are looking for. With all the success LegalZoom has had, it begs the question why more law firms have not attempted to replicate this model of delivering services? In this post, we provide our thoughts on the subject.

The LegalZoom Model: Low Cost, Maximum Efficiency

LegalZoom built a large, successful business with one very simple premise: affordable legal services, delivered efficiently.

Modern consumers are savvy, price conscious, and impatient. Regardless of what they are purchasing, they demand easy accessibility, fast delivery, and top-notch customer service, all for a reasonable price. Businesses in any industry that are able to execute on all these criteria tend to grow rapidly (see Uber for a perfect example).

Unfortunately, hiring a lawyer has a way of being the exact opposite of this ideal customer experience. Lawyers are incredibly busy and tend not to be very accessible. Even the most routine legal services can take weeks to fulfill, with limited communication throughout the process. And let’s not forget about the cost, which usually ranges from high to downright unaffordable.

It’s no wonder that LegalZoom is succeeding with their online, automated legal services that only cost a few hundred bucks. Nothing groundbreaking about the concept at all. They just listened to the customer.

But, LegalZoom Is Broken

The problem is, LegalZoom is broken. It’s not a law firm, and it is prohibited from providing real legal advice (although some would argue it does otherwise). LegalZoom services are “one-size-fits-all,” and anything but tailored carefully to each person’s legal needs.

This creates a massive gap in the market. People clearly want the ease and affordability of LegalZoom. But they aren’t getting the proper legal advice and services they really need most of the time.

LegalZoom can really only handle the absolute bottom level of services on the complexity scale. But there is a huge, unmet need for streamlined, affordable legal services at the next level up. Middle class families and small businesses everywhere are in desperate need of better legal services that LegalZoom cannot accommodate.

So my question is, where are all the automated law firms looking to capitalize on LegalZoom’s biggest weakness? The demand is obviously there. Why aren’t law firms (i.e. the businesses actually authorized to provide legal advice) trying to serve this massive, lower end of the market?

Today’s Law Firms Are Not Equipped to Compete

Despite what seems like an incredible opportunity to capture a massive, growing share of the legal services market, law firms are content to let LegalZoom and Rocket Lawyer keep gradually stealing market share. Both companies are continually moving up on the complexity scale, partnering with law firms and adding “attorney services” to their offerings where there are gaps caused by the inability to practice law.

The problem is, once again, that law firms are behind the times. They are not innovative enough. They are too bad at business.

The two specific reasons why law firms are not equipped to compete with LegalZoom are:

  • Lack of Tools
    • LegalZoom is a technology company. It’s legal services are powered by software, not humans. Most law firms have not implemented or developed the kind of software tools which would enable them to operate with such efficiency.
  • Lack of Distribution
    • LegalZoom operates online, making it accessible anytime, from anywhere. It invests heavily in online marketing which enables it to reach massive amounts of people. Most law firms operate only locally and are unsophisticated when it comes to online marketing.

How Law Firms Can Be More Like LegalZoom

Law firms would be wise to take notice of the trend that LegalZoom started. They’ve tapped into a clear, yet largely unaddressed customer demand, and the legal market is hungry for better solutions and lower costs.

Here are suggestions for what law firms need to do in order to capitalize on this trend, and adapt to the changing needs of the legal market:

  • Invest in Online Marketing: Law firms can broaden their reach by investing in good websites and online marketing tools to attract and retain more clients. The internet is key to greater distribution and growth.
  • Implement Better Processes: Law firms must start to implement more systematic processes for workflow and project management. While the details of each case are unique, the process through which cases are resolved is largely the same.
  • Leverage Software: Using good legal software to manage cases, leads, billing, client intake, and document assembly is imperative. Software is revolutionizing every industry around the globe – don’t ignore it.
  • Innovate the Business Model: Firms using alternative billing methods are already experiencing faster growth than their competitors. The law firm business model has and will continue to change, shifting away from hourly billing toward other, more predictable and client-friendly approaches.
  • Always Put the Customer First: Last, and most importantly, law firms need to adjust their attitude. Gone are the days where law firms have all the power. Today’s clients have a wealth of alternatives to choose from, accessible at the click of a mouse or tap of a smartphone. Put the customer’s needs first, and always strive to provide exceptional customer service at any cost.

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