On-Demand Legal Providers Want to Put State Battles Behind Them

After years of fighting state bar associations, on-demand legal services companies like Avvo, LegalZoom and Rocket Lawyer have shifted to evolving their businesses.

For years on-demand legal service providers have sought to revolutionize the legal market by offering fixed-fee legal products and advice through online marketplaces. But for years, state bar associations pushed back.

After many successes and setbacks, however, companies like Avvo, LegalZoom, and Rocket Lawyer have moved on. Though their services are not welcome all over, they are intent on continuing to operate as usual, and even expanding their offerings and clientele.

“It is a battle that we feel, for LegalZoom, we have sort of moved past,” said Laura Goldberg, chief marketing officer of LegalZoom.

While a part of a growing trend towards an “on-demand economy,” the services offered by Avvo, LegalZoom and Rocket Lawyer were panned by several state bar associations, including those in PennsylvaniaNew York and New Jersey, who argued that the services violate ethics rules around fee-splitting and referrals.

In New Jersey, three of the state’s Supreme Court committees even issued a joint June 2017 opinion restricting local attorneys from participating in any of the three companies’ legal services plans. The opinion found that Avvo, which charged a marketing fee for lawyers participating in its plan, was in violation of the state bar’s Rule of Professional Conduct 5.4(a), 7.2(c) and 7.3(d), which regulated fee-splitting and referral services.

While Legalzoom and Rocket Lawyer did not charge fees to attorneys on their plans, the committees still found their plans violated ethics rules because they were not registered with the state’s Administrative Office of the Courts.

LegalZoom and Rocket Lawyer ultimately registered with the state, but Avvo sought to have the opinion reviewed. In June 2018, however, the New Jersey Supreme Court declined to weigh in.

But Avvo wasn’t waiting around for the State’s Supreme Court decision. Whether allowed in New Jersey or not, the on-demand legal service provider was aiming to reach more customers and position its company for further growth.

In January 2018,  Avvo agreed to be acquired by media and software services organization Internet Brands, a move that Avvo CEO Mark Britton said will help the company potentially evolve its on-demand service into new verticals. But make no mistake, Avvo is still firmly committed to serving the legal sector.

“Nothing ever really swayed us from our standalone path until Internet Brands,” Britton told Legaltech News. “They are different because they’ve got a real commitment to legal. They get legal. It’s hard to find people, investors, operating companies that get legal, that enjoy legal and are really focused on a mission of helping legal consumers and also helping lawyers.”

As Avvo sought to tie its future growth to another legal company, LegalZoom turned to broader types of legal consumers in a bid to secure theirs.

In 2016, the company launched LifePlan, an employee benefit product that works through employers to connect people with legal, financial, tax and insurance advice. In June 2018, the company also partnered with patient advocacy organization Patients Rising to offer Lifeplan services to its members for free, a move to further build LegalZoom’s brand recognition.

To be sure, LegalZoom already enjoys a coveted spot in the legal marketplace, being one of the most commonly used legal apps on mobile devices. But it’s also making sure to make inroads with traditional players in the legal industry instead of butting heads. “We have very good relationships with almost all the state attorneys generals and are very actively making sure they know what we’re doing and how we are doing it,” Goldberg said.

For LegalZoom, such relationships and business growth has underscored that on-demand legal services have found their place in the market. “We have spent a lot of time, and a lot of energy, and a lot of money educating and, when necessary, fighting the resistance,” Goldberg said. “But we have felt in the past two years that we’ve really won those fights and that there’s been maybe not an overt acknowledgement, but an acknowledgement that we are here to stay.”

Still, in a fragmented 50-state market as challenging as the U.S., it’s no surprise that some companies looked to expand outside the country. In September 2016, for instance, Rocket Lawyer announced it was teaming up with European legal publishing company Editions Lefebvre Sarrut (ELS) to launch its services in France, Spain and the Netherlands. The company is also eyeing further expansion into Europe outside of those three countries.

While these companies prepare themselves for the next phase of their growth, it is anyone’s guess how much of an impact they will continue to have on the legal market. But it’s undeniable that these companies have left their market on the legal industry, and the industry has left their mark on them.