How much is that lawyer in the window? The secret commoditization of the legal profession.
2019 Update: Avvo has been acquired by Internet Brands. See our review Martindale-Avvo legal marketing for more details.
The legal profession is being commoditized by businesses and the internet. Companies are finding new and innovative ways to play both ends of the equation, that is, to make money from both attorneys and consumers of legal services, as well as ways to insert themselves further into the attorney-client relationship. Some of these companies have made brilliant business moves that I believe are responsible for some of the recent decline in lawyer happiness and quality of life. Legal marketing and business development is a slippery slope that we, as lawyers, need to understand before it’s too late.
Will the fate and status of the legal profession be determined by attorney marketing businesses?
This is the introductory post in a series we will be doing called “The Slippery Slope” in which we will explore how both internal and external factors are changing the balance of power in the law.
Our goal in writing this post, and this series, is to peel back some of the business strategy that lawyers may otherwise ignore and cause lawyers to think about the long-term consequences of their marketing and business choices on their practices and on the legal profession.
In this post I’ll examine the business practices deployed by several companies that are forever changing the legal industry. Specifically I’ll look at the business practices of Internet Brands (which owns Nolo and Martindale Hubbell), LegalZoom, and Avvo (with an in-depth discussion about Avvo’s newest product Avvo Advisor).
As a lawyer I see the practices that I’ll describe as an erosion of the power and prestige of lawyers in general. For better or worse attorney marketing, and marketing over the internet is here to stay, and the still nascent attorney web marketing industry is moving so quickly, and is so powerful that marketing and business ideas today are changing an industry that is less than prepared to deal with those changes.
As a student of businesses and a believer in the power of technology to transform society for the better, I have mixed feelings about these business practices being developed by legal marketing companies and companies that offer alternatives to traditional legal services. Understanding that the practices described below are mere snapshots of a stage in the evolution of legal services, the attorney in me is nevertheless bothered that my attorney colleagues are often unwittingly complicit in their own professional relegation to something less noble.
After examining some examples, I’ll expand on how lawyers are complicit in their own subjugation and offer some ideas for lawyers who want to prevent further power loss or even reverse the process.
The new legal marketplace where attorneys and clients are both customer and product.
Lawyers and legal services are being sold as commodities, and leveraged as business tools by for-profit non-legal entities. The basic business model is brilliant in it’s simplicity. Here’s the formula:
STEP 1: Attract lawyers and their potential clients to a website. One will bring the other if done right. As we’ll see later in this post, the website can also extend to offline commerce as well.
STEP 2: Collect revenues. The lawyers pay. Or the consumers pay. Ideally for the business, both pay.
STEP 3: Leverage the free labor of both consumers and lawyers to provide the content necessary to enhance and sustain step 1.
While there are many variations on the above business model, the bottom line result is that lawyers as a whole spend their time and their money making non-lawyers and companies that are not law firms richer.
Law firm marketing and business generation is a zero-sum game.
The legal marketplace is a zero-sum game. Lawyers don’t create legal needs. They don’t compel people to commit crimes. They don’t cause accidents. It’s unethical to advise a client to spend money on services that are not in their best interests. The legal profession does not invent business, and most consumers are not excited about paying a lawyer (see endnote 1).
Later in this post I’ll talk about some implications of the internet commoditization and wholesaling of lawyers. First, let’s look at some case studies:
Examples of legal marketing companies that commoditize lawyers and legal services and profit from both sides of the equation
Internet Brands is, in my opinion, the best example of a very smart company that capitalizes on both ends very well. The company holds diverse web marketing properties includes Ben’s Bargains and Outblush. They understand the internet and how to monetize it a number of business categories, including the law.
In 2011 they acquired Nolo, which serves as a one-stop DIY shop, a clearinghouse for free advice, and a place where consumers can find lawyers. Consumers of legal services can, for example, both download a “Patent It Yourself” package for $44.99 or use a “Find a Lawyer” feature where it will show the consumer a list of lawyers who advertise with Nolo. Consumers can also submit a “Free Patents Case Evaluation” where they agree to be contacted by phone (“including auto-dialed or pre-recorded calls”).
Lawyers pay them a lot of money for ad placement, and presumably for access to the leads that request a case evaluation. From a business standpoint it’s brilliant. The company is playing both sides of the revenue stream. In chess parlance they have “forked” the legal industry. They get money when the consumer opts to do it themselves, and they get money when the person opts to get professional help.
Internet Brands also recently acquired Martindale Hubbell, from LexisNexis, and along with it the site Lawyers.com, which is another large directory where consumers can find a lawyer (who advertises with them), or chose a do-it-yourself option. The DIY option currently on the Lawyers.com site routes them to the purchase a range of DIY forms from Legalzoom, a self-help website for business law needs which was co-founded by Robert Shapiro.
Although I’m unsure of the financial arrangement between the two companies (LegalZoom and Internet Brands), it likely involves compensation based on customer referrals (clicks) or on customer acquisitions (purchases) if not a more formal structure.
Innovations in legal services, including discounted lawyers at Sam’s Club.
Legalzoom recently announced a deal with Sam’s Club for up to 25% off of LegalZoom’s products, which now includes attorney advice. That’s right, you can get discounted legal advice, along with travel services, check printing and a bundle of other business services when you join Sam’s. The implication is that legal services are just like everything else sold by Sam’s club.
As a lawyer, does the idea of a client purchasing your services at a 25% discount at Sam’s Club make you uneasy?
Betting on the transformation of the legal services industry
In 2013, according Joshua Kubicki of Tech Cocktail, roughly $458 million was invested in legal startups. And Legalzoom alone took on $200 million in January of 2014. Avvo added $37.5 million in April of 2014.
This is a lot of money, and it’s not all being spent to improve the legal profession for lawyers. To the contrary, much of it is spent to disrupt the status quo, to reinvent it.
Why not all of the innovations in legal marketing and technology actually benefit attorneys.
Clients who need the services of lawyers, and who can afford them, will find their way to a lawyer in their time of need. Take away the internet and it’s still going to happen. Take away all legal marketing for that matter, and it’s still going to happen. In a world without available legal marketing and information about attorneys, the distribution of the business among lawyers looks very different than it does in today’s attorney advertising saturated reality. But it’s still among lawyers. Without the internet some lawyers who are thriving today would be barely scraping by, and some lawyer who are struggling today would be thriving, but the gross amount spent on attorney services in general would be the same.
But add legal service options that bypass lawyers altogether to those same distribution channels, and some of the business that lawyers would otherwise receive now gets channeled through cheaper DIY options. Putting aside for a moment the question of whether this is in the consumers’ or the public’s best interest, this hurts lawyers for several reasons. The first is the obvious loss of revenue. The second, and more insidious, is the altering of the public’s perception. The DIY solutions cause potentially unqualified non-lawyers to feel empowered to perform legal tasks for themselves whether they are qualified to do so or not. The third, and most pernicious, is the slow and incremental relegation of lawyers to just one of many products on a shelf that a consumer might purchase to solve a problem.
Disruption of the legal space is being done with the help of lawyers. In fact, they are funding and contributing sweat equity to the cause. Here’s an example:
The 15 minute legal advice solution: Meet Avvo Advisor
The online legal website Avvo recently announced a new product that offers to connect consumers to a “top-rated lawyer anytime” for 15 minutes of phone legal advice for $39. The service, called Avvo Advisor, begs three questions:
- What kind of legal advice can be given in just 15 minutes from start to finish?
- What is the expectation of the average consumer when purchasing their 15 minutes of advice?
- What is the value proposition for the lawyer?
Let’s look at these three questions in turn:
Question 1: Does Avvo Advisor benefit the consumer seeking legal advice?
According to an October 23, 2014 press release:
“Avvo Advisor is the solution for legal issues that should be simple and affordable to solve, but are overcomplicated by today’s one-size-fits-all method of getting legal help. With Avvo Advisor, consumers no longer have to spend days and dollars finding an experienced lawyer to help with everyday legal situations.”
Avvo’s core business is their legal directory, which does a fantastic job of making it easy and free to find an experienced lawyer (and nearly every lawyer for that matter). So the first thing that occurred to me is to ask whether Avvo Advisor is innovating around it’s older and more established product. Would this new product cannibalize any of the older business? Would it “poach” potential clients that seek out a specific lawyer and notice the “Instant Phone Call” link above the lawyer’s profile (which doesn’t lead to a phone call with that specific lawyer)? I’ll explain this more in depth in a future post.
Putting aside the fact that the quoted summary of Avvo Advisor above comes in a press release that is designed to elicit attention as much from the tech and investment crowd as it is aimed at lawyers and consumers, let’s take what it says at face-value. What is the “over complicated” method of getting legal help? Is it the practice of consulting with a lawyer while supplying him or her adequate information and time to develop an understanding of the legal and factual issues surrounding the case and rendering an opinion and present the consumer with options.
Avvo rates lawyers using a comparative rating system that let’s consumers compare attorneys to one another. Leaving for another day the issue of how accurate or meaningful those ratings (on a 10 point scale) are, and whether they do a service for, or simply mislead consumers, the fact is that this rating system predates the recently added Avvo Advisor. If the ratings do help consumers find the best lawyers, shouldn’t it be noteworthy that the ratings were procured mostly during an era before the birth of Avvo Advisor, and when lawyers were still delivering services the old fashioned, if not “over complicated” way? In other words, if a lawyer is was rated 10.0 prior to the release of Avvo Advisor, and that rating was presumably based on giving legal services the old fashioned way, use of that 10.0 rating in selling Avvo Advisor services appropriate in regards to that lawyer? Does a 10.0 across the desk or in court translate to a 10.0 in a 15 minute phone session?
According to the press release, Avvo Advisor debuted by offering 15 minute advice in 15 states in the following areas of practice:
Small Business, Divorce, Family, Immigration, Real Estate, Landlord-Tenant, Criminal Defense, Employment, and Bankruptcy/Debt
So consumers with $39 to spare can purchase 15 minutes of a lawyer’s time. Here’s how it works.
First, the consumer enters his or her zip code on the Avvo Advisor site.
Next, Avvo asks what type of lawyer they want to speak with, and tells the consumer “Once you choose your practice area, one of our top-rated lawyers will call you within 15 minutes.” By submitting, the consumer is told, they are agreeing that Avvo will notify multiple lawyers that the consumer is expecting a call, and the first one to call will be the one they get. Alternatively, the consumer can choose from a list of lawyers who are willing to give 15 minutes of their time for $39, but then there is no time guarantee of when the chosen lawyer will call.
Next, the consumer is ready to check out at a page literally identified as “check out.” They supply a credit card number, a phone number and email address, and then they wait for the call.
Avvo Advisor’s “check out” form has some additional marketing encouragement next to an “Agree and Pay” button. Some of the highlights are that the consumer will save big on legal fees. In fact:
“Legal fees often cost $300-$500/hour. With Avvo Advisor, you’ll always save at least 30%.”
Great, what consumer faced with needing a lawyer or legal advice wouldn’t want to save money? And if 15 minutes is all that is needed, well, it sounds like a great deal. Right?
But what if 15 minutes is not enough? The consumer is given the answer during the buying process:
“Should you require additional legal services beyond the purchased advice session, you will need to make such arrangements directly with the attorney.”
There does not appear to be any language barring a second session through Avvo, so presumably the consumer could “work the system” and buy another 15 minutes of time for another $39. If the consumer does this, they might be able to select the same lawyer but with no ETA on when the call back would come, or if it would come. There is no guarantee that the lawyer will continue advising or representing the client in a matter that exceeds 15 minutes, nor that the price of the additional services will be discounted.
From the lawyer’s perspective it’s about marketing and business generation. Providing ongoing discounted services is probably not the idea. The cheap 15 minutes is what is called a “loss leader.” It’s the marketing strategy of selling something at a discount (and at a probable loss to the law firm) to attract clients. It’s exactly the reason why lawyers give free consultations. In fact, in every area of practice currently covered by Avvo Advisor (Small Business, Divorce, Family, Immigration, Real Estate, Landlord-Tenant, Criminal Defense, Employment, and Bankruptcy/Debt) attorneys can and do give free initial consultations. During those free consultations, good, solid, meaningful legal advice is routinely given. In most of those areas of practice in most jurisdictions a free consultation is common practice. In fact, I would wager that some of the lawyers who will accept $39 for 15 minutes of their time would give the same potential client an hour or more of their time for free if that client simply picked up the phone and called.
During a traditional free initial consultation, both the lawyer and the client have a very important power. It’s the power to decide to not work together, and it’s an essential part of the professional relationship.
As a lawyer, if you’re my potential client, I absolutely insist on talking with you (and often on meeting in person) before I will commit to representing you. If I can’t exercise client-control at the inception of the representation, I will probably be unable to exercise it once I’ve been paid for the representation. With Avvo Advisor, I do understand that the lawyer can still say no when the phone call starts (see below), but the expectation from the client is that they have purchased the lawyer through an uncomplicated process that, in reality, is anything but.
And money and value are relative. Ask any experienced private practice lawyer what happens when you bargain with a client and reduce your legal fees to get the business. There may be a proportional relationship between the size of the discount and the pain that the client causes the lawyer once retained. Discounting legal fees and pricing strategy will be the subject of a future “Slippery Slope” post.
Legal problems don’t exist in a bubble. Most people consult attorneys because there is either a real, or potentially real, adverse party. Because the American legal system is an adversarial system, one party’s position is often at odds with the others. There are winners and losers. There are real consequences. For that reason, the ethical rules governing lawyers’ conduct (the breaking of which can result in the lawyer being punished, including losing his/her license to practice law) all law firms must maintain a system to check for conflicts of interest before accepting a case. Avvo’s answer to the potential of engagement in a case in which a conflict exists is contained in a document they published called “Avvo Advisor and The Rules of Professional Conduct.” Avvo says:
An attorney’s first interaction with a potential client is no different than the first interaction that attorney would have with a potential client who calls or visits the office. At the beginning of the call, the attorney must ensure that there are no conflicts and that the attorney is capable of competently providing the legal services requested. The fee paid by the consumer is not paid to the attorney until legal services have been rendered. Thus, if any issue prevents the attorney from being able to provide the services, the call can be concluded and the consumer can choose another attorney or obtain a full refund from Avvo.
So there’s a conflicts check. In all of its complicated glory, and not really made any less complicated by Avvo’s marketing. The only lawyers who can do that rapid of a conflicts check off the top of their heads are solo-practitioners who have taken on very few cases so that they can remember all of the parties in interest in their complete history of cases.
According to Avvo’s ethics whitepaper, when signing up for the 15 minute session, consumers are told that the attorney may require them to complete a representation agreement in order to proceed. Isn’t signing a pesky representation agreement which outlines the rights and responsibilities of each party part of the “over complicated” process that Avvo Advisor is innovating around? Presumably this couldn’t get done in 15 minutes. Even the shortest engagement letters (an informal form of representation agreement) are routinely at least two pages in length, and they usually take at least several minutes to draft, even if it’s just a matter of filling in the client’s personal information into a form. Depending on how this part is handled, it could present a logistical problem for the attorney, and could put a damper on what the client expects will be 15 minutes of immediate and productive problem solving.
For a moment let’s suppose that the attorney is willing to do the small-talk, the conflicts check and representation agreement “off the clock” so that the client gets a full 15 minutes of legal attention. The reality is that, at least in my experience as a practicing attorney, 15 minutes is barely enough time to get even the most basic information to start to understand the problem. And most clients tend to unload a lengthy narrative on the lawyer, not knowing what the lawyer needs to hear, and often times trying to “argue their case” to the lawyer. This is reality.
There are very few legal questions that can be adequately conveyed, let alone solved, even in a full 15 minutes. Here is an example of a legal question that can be quickly solved:
Question: Should I rob a bank?
Unless the consumer’s legal question is as straightforward as the one above, the result of the 15 minutes is likely to be inconclusive or unsatisfying.
So assuming that you’re a consumer and you still think this is a great idea, and that 30 minutes from now, and $39 poorer, you’ll have your legal problem solved, what are your expectations, and what should they be?
Question 2: What is the expectation of the average consumer when purchasing their 15 minutes of advice at Avvo Advisor?
The “check out” page sets the expectation very clearly. The consumer should expect “legal advice from a top-rated lawyer over the phone.” Of course it is a lawyer top-rated by Avvo’s rating system, and there is nothing to indicate otherwise. So far, pretty straightforward.
The page also says “An attorney will call you within 15 minutes, or you get a full refund.” This is where it gets a bit sticky as far as surface client expectations. From the consumer’s perspective, does this mean that if the lawyer doesn’t call within 15 minutes the call will still happen but it will be free (like how Dominoes Pizza used to do it… if your pie isn’t there in 30 minutes you still get it, but it’s free or discounted)? Brilliant marketing move by a Pizza joint from a marketing perspective (although one wonders, in hindsight to what extent their marketing and legal departments coordinated regarding the liability of delivery drivers racing against the clock).
As of the time of publication of this post, the terms and conditions associated with the Avvo Advisor shopping cart do not define the expectations. Just like there used to be with Dominoes deliveries, it doesn’t take much to imagine clients pressing “Agree and Pay” and their stopwatch at the same time. What if the lawyer calls at the 16 minute mark?
Putting aside the term “top rated” lawyer (see endnote 2) for a moment, the fast guaranteed turn-around begs the question of whether the lawyer who calls back will be among the best. Is there a minimum level of experience? Of competence? Of anything really to be a lawyer who takes these triage calls? We were unable to locate anything on the Avvo Advisor website that speaks to any qualifications other than this:
All you need to participate in Avvo Advisor is a bank account and a mobile phone. You control your availability via text, whenever and wherever you want to receive Avvo Advisor sessions.
Does the consumer believe they are engaging the best lawyers (as opposed to the top rated or top reviewed)? The question matters, not just for the individual client, but for the overall perception of the bar. If the client perceives that they are getting objectively the best lawyer, then Avvo is recalibrating the public’s expectation about the availability, responsiveness and price of America’s top lawyers.
As an aside, I am sure that many, if not most of the lawyers listed in Avvo Advisor are excellent lawyers. They are all part of a business ecosystem that is increasingly hostile to them making a decent living in their chosen profession.
So why would excellent lawyers be willing and able to get on the phone within 15 minutes when somebody completes a check-out form on the web? The best lawyers (the successful ones who serve their clients well, win cases, earn the respect of their peers and the bench and have built a reputation over time) are presumably very busy during the days. They are working on cases. They are going to court. They are earning their fees of $300-$500 per hour or more. So why would they stop what they are doing for a discounted phone call? Perhaps because the legal marketplace has changed so much that the power is now in the hands of the marketers (more on this power shift below), causing good lawyers to participate out of necessity lest they lose the business to other lawyers who are willing to buy out the marketplace and leverage their competition out of business? A decade ago this would have been unthinkable, but today it is a reality.
The internet has created a culture of instant gratification in consumers. The best lawyers know that if they aren’t available when a potential client wants to talk, a lesser lawyer will be there to take the call, and that many potential clients will not wait. To many potential clients the internet makes it impossible to tell the difference between excellence and mediocrity. And the more legal fees that flow to the mediocre lawyers, the more money they have to reinvest in marketing, and the dumbing down of the bar continues in a twisted mutant evolution that serves neither lawyers nor clients.
So what should, and what does a client expect for $39 and 15 minutes? For the sake of argument, what if a legal problem is a lot more complex than could be handled competently in 15 minutes, but the client is expecting a 15 minute solution? In that scenario the lawyer’s expectations and the client’s expectations are misaligned. The lawyer only profits if the call turns into something more than $39 (which doesn’t take into consideration the marketing fee they agree to pay Avvo to have the call). The client may have been better off doing an hour-long free consultation. And if that’s the case, then the lawyer would also have been better off giving an hour-long free consultation. Here’s why:
The weight of the misaligned expectations will fall on the lawyer. Avvo includes a money-back guarantee, so if the client is not satisfied, the client can get his or her money back from Avvo. From the client’s perspective, it’s Avvo that made the client whole, not the attorney, who, in the client’s mind, made the client dissatisfied. Avvo comes out looking good. The lawyer takes the risk. The negative perception by the client could result in negative chatter about the attorney. Fair or unfair, the attorney may not have a chance to render meaningful services or to defend the advice they gave. Most lawyers will know this already, and for that reason, they may be more likely to just “play it safe” and run the clock during the 15 minute call. Some may give a lot of extra time, for free, to prevent a client from talking bad about them, or just because the lawyer wants to do a great job and can’t within the constraints of a 15 minute call.
I can imagine that many calls will be spent with the lawyer trying to explain to the client why 15 minutes is inadequate to help them. Avvo’s “check out” page advises:
A free consultation is often little more than a sales pitch. Skip it and go straight to discussing your legal issues.
This is a bit like saying “skip dating and go straight to marriage.” As a lawyer who has given well over 1,000 free consultations in my career (with dozens of them arriving in my office via Avvo’s legal directory), I can say that a free consultation, by it’s nature, does in fact go into the legal issues. But in order to competently analyze the case and render an the opinion necessary to get to the legal issues, the lawyer has to get the facts. This takes time. Sometimes a lot more than 15 minutes. And something it takes a bit of research as well. One thing it never was, however, was a sales pitch. I don’t respond well to salespeople. I didn’t in my law practice. I don’t employ them here at LawLytics. In all of my businesses I have always been fortunate enough to have enough organic interest in my services to never feel desperate enough to have to go into sales-pitch mode. What I did give during free consultations is good advice. Sometimes the advice was to hire me. Other times it was that a lawyer was not necessary, or that I was not the right lawyer. But potential clients who consulted with me always got answers and always left better informed than when they arrived.
On the Avvo Advisor website, I believe that the average client is led to perceive more value in a paid 15 minute phone call than in a longer free meeting, and yet this may not always be possible to deliver. A consumer of legal services has to be willing to invest more than just money in a solution. They have to be willing to invest the time it takes to assist the lawyer in guiding them to the right answer. Fifteen minutes is rarely, if ever, sufficient.
The really dangerous aspect of this setup, in my opinion, is the potential that it has to turn the lawyer into a yes-man, simply confirming that the client is on the right track, or understands the legal issue. Perhaps that’s all the client’s expect out of it and I’m reading too far into it?
Perhaps this service attracts the clients who simply want to be able to tell their landlord that they have already consulted with a lawyer, drop a name, and tell them that the lawyer says that they have a case? Perhaps it’s for those who want a little leverage when negotiating a severance package? Perhaps it’s attractive to those who want to use lawyers as threats and pawns without harboring any real intention of engaging the lawyer and pursuing a dispute?
Question 3: What is the value proposition of Avvo Advisor for the lawyer.
Why would a lawyer what to participate in this program?
The internet and the innovation going on in the legal space, coupled with the glut of lawyers minted by law schools over the past decade, has created an environment in which even the best lawyers must play the marketing game. Some lawyers give their business generation channels a lot of thought while others simply try whatever marketers put in front of them.
To understand why lawyers would want to participate in Avvo Advisor, it’s important to first understand Avvo in general, especially their most established product, their legal directory.
Avvo has been tremendously successful at generating business for lawyers. A well rated Avvo directory listing is essential not just to the generation of new business, but for the retention of referrals that before Avvo would have been a sure-thing. Setting aside the issues that many lawyers have about the accuracy of the Avvo rating system, it’s important to realize that the average potential client perceives Avvo’s ratings as authoritative. As a lawyer, it’s crucial to understand that your potential clients, even ones from direct referrals, are highly likely to see your Avvo profile and that of your competitors. Even if you don’t want to have an Avvo profile and have never logged in, you might already have one nonetheless.
Avvo has an amazing search engine optimization strategy that is difficult for law firms to match, partially because they leverage the labor of lawyers who contribute content to their site for free. In short, lawyers ignore Avvo at their own peril. The company has literally, and brilliantly, inserted itself into the very fabric of the legal marketplace so well that it would take an act of God or Google to dislodge it.
Because of it’s ubiquitousness, many lawyers concede their power and acquiesce. For some it just means completing their Avvo profile to increase their rating number. For others it means purchasing every marketing product that Avvo brings to market. As lawyers join the various programs, their competitors notice and join as well, even if their motivation is only to defend the market-share they already have. It’s a brilliant business model, executed and backed by brilliant people. In short, Avvo is a great business.
Now that we’ve gotten a little of the background of Avvo out of the way, let’s look at Avvo Advisor in particular.
Even though Avvo Advisor is, in my opinion a more radical step towards inserting non-lawyer companies into the attorney-client relationship, for many lawyers, especially those for whom business may not be as easy as it used to, Avvo Advisor is another advertising vehicle.
It’s a loss-leader to get in front of clients in the hopes that it will lead to additional business. Arguing otherwise would imply that the lawyers who participate are content to take random 15 minute phone calls at any hour for $39 a pop and that it’s sufficient income to offset the marketing fee that Avvo charges to deliver the $39 legal fee.
Do lawyers have any ethical hesitations about participating? There are some obvious potential ethical implications of the arrangement. The concern that first jumps to my mind is fee-splitting.
Avvo makes it clear that the entire fee is passed along to the lawyer to “avoid any fee-splitting concerns.” Does the fact that Avvo offers a money-back guarantee to the consumer negate this? As a business owner, I would assume that Avvo’s legal team probably has that issue buttoned down, but as a lawyer I’d probably want to double check it.
Here’s how it appears to work, given the information on the Avvo Answers website:
The client completes the order-form and authorizes the credit card charge. Avvo notifies the Lawyer via text message. The lawyer calls the client. The client’s card is charged by Avvo. Avvo then sends the money to the lawyer.
With me so far? So the basic cash-flow transaction looks like this:
Client → Avvo → Lawyer
If the client requests the money back, Avvo refunds the money even if it’s been paid to the lawyer. So:
Avvo → Client
According to their whitepaper, Avvo may then seek reimbursement of the refund from the attorney. So in that case:
Attorney → Avvo
So in a full circle scenario where the the client has the consultation, is not satisfied, demands the money back and then Avvo seeks reimbursement from the attorney, the money trail is:
Trail of Money Designated As The “Fee”:
Client → Avvo → Lawyer (then) Avvo → Client (and maybe then) Lawyer → Avvo
So this is innovation around the “overcomplicated” former procedure of contacting a lawyer directly and deciding whether to do business together or not? To me, it seems that Avvo has taken a relatively simple process and made it more complex in practice, although I understand the push to innovate ways to make it easier for consumers to access legal services.
The money shuffle does not stop there.
According to Avvo’s whitepaper, “Avvo will charge attorneys a separate marketing fee for each completed consultation.” Let’s add that into the mix.
Here’s the money trail in the scenario where the client does not ask for their money back.
Client → Avvo → Lawyer
Lawyer → Avvo
And finally, here’s the money trail in the scenario where the client does demand his or her money back:
Client → Avvo → Lawyer
Lawyer → Avvo
Avvo → Client (and maybe then) Lawyer → Avvo
It is important to note that in all of the scenarios above, the flow of the lawyer’s money, from the lawyer to Avvo is a one-way-street.
In these scenario, to “avoid any fee-splitting concerns” it’s important to note that the money is presumably not fungible. The way I understand it from their website, the money that passes from the Client, through Avvo and to the lawyer for the $39 legal fee is NOT the same money that passes from the lawyer to Avvo as a marketing fee. Presumably one does not offset the other so that only one transaction occurs, and they are separate transactions with the full amount being transferred each way. For tax purposes, one is presumably a marketing expense and the other is fee income.
There is no indication of pricing for the “marketing fee,” but given today’s lead market in which lawyers are paying a lot more than $39 for leads in some jurisdictions for certain types of cases, it is not difficult to imagine that the marketing fee is equal to or greater than the $39 consultation compensation.
The beauty of it, at least for Avvo, is that they probably make money either way, and they get the business intelligence benefit of being more deeply inserted into the attorney/client transaction. Furthermore, I believe that it benefits the non-lawyer business (in this situation Avvo) to have control over more of the attorney-client relationship.
For the lawyer, the value may be quite different. Ethics and transactional logistics aside, the net effect in this scenario is that the attorney is probably no better off than if he or she simply gave a free consultation. It’s a loss leader just like a free consultation, only with the weight of greater expectations from the client due to the payment, and a shorter time-frame to deliver on them.
If Avvo claws the consultation fee back then the lawyer is still out the marketing fee just the same as if the lawyer purchased the lead (which is in effect what has happened regardless).
Regardless of what Avvo does, the lawyer is still on the hook for the interaction with the client. If that 15 minutes of advice is misused or misconstrued, there is nothing to stop the client from asserting that he acted on the advice of counsel. There is nothing to stop him from writing a bad online review of the lawyer. There is nothing to stop him from filing a bar complaint. There is nothing to stop him from pulling the lawyer in as a witness in later proceedings regarding the advice given. In short, from a lawyer’s perspective in considering “what could possibly go wrong?” scenarios, the answer is “potentially a lot.”
What’s to prevent a review such as this fictional one, used to illustrate my opinion:
“I hired this lawyer for advice. He was highly rated and accepted my money for a 15 minute call. I was not happy with his advice, so Avvo gave me my money back.”
Ouch! From the client’s perspective a review like this is completely true. And it’s objectively true as well. But man does it make the lawyer look bad. Given the constraints of the arrangement it’s completely unfair to the lawyer. But once it’s out there, the damage is done, and one review like this can be very damaging to an attorney, especially when there are similarly rated competitors to choose from who don’t have have this kind of review.
Is Avvo Advisor good for lawyers?
Given what I am able to see so far, I can’t conclude that this program is of benefit to the lawyers who participate in it, despite the fact that many of our attorney-customers report very good returns from their investment in premium advertising on the Avvo directory. It seems like a lawyer who would otherwise give a free consultation would be sacrificing a lot of control, and potentially client respect, for the opportunity to jump and give 15 minutes of discounted advice.
If I were practicing and needed business badly enough to consider participating, I would probably want to seek an advisory opinion from the State Bar and or consult with ethics counsel before jumping in.
I would love to hear from any lawyer who has used this program successfully and had a good and profitable experience. It’s certainly innovative, and it will be interesting to see how this new program evolves.
One of the problems endemic in lawyer marketing is that lawyers don’t talk about what is working well for them a lot because they don’t want their competitors to know. I think the real measure of this platform will be to see whether, over time, the lawyers who are listed as available to participate in Avvo Advisor continue to participate. We will track that and do a follow-up piece in a year.
Tying it all together. Commoditizing lawyers.
What do all of the companies and products mentioned above, and many others that weren’t mentioned, have in common? They are all innovating methods and technologies that are shifting the balance of power in the legal services industry away from attorneys in the name of greater public access.
Who could argue that greater access to the legal system by non-lawyers is a bad thing?
As a practicing lawyer, I would always recommend what was in the client’s or potential client’s best interest, even when that recommendation was not consistent with my own financial best interest. I would tell people when they could handle their own matter as compentely and efficiently as I could at a lower cost. Doing otherwise is, in my opinion, unethical.
So at first blush it may seem that offering do-it-yourself legal tools in the same place as offering legal services is a good idea. It gives the consumer the most possible options. It allows the free market to operate, and as such presumably assures that the consumer will choose the best option. I think this free-market presumption is incorrect in this case.
Anybody who has been a practicing lawyer knows the reality that clients often don’t act in their own best interest, despite the best advice (and sometimes an elbow or kick under the table in court). They take the witness stand against our advice. They fail to give us all of the facts about their cases, omitting essential facts that come back to bite. They hide assets despite our clear warnings. They litigate for values that the efforts and expenses could never justify.
I am for the free market. I believe that clients should understand their options, even when those options include not hiring an attorney. But many clients lack the foundation and filter to decide whether they need a lawyer or not until they have filtered their matter through a professional. When they see DIY solutions marketed alongside lawyers in the same place, it’s natural for them to question the value of the more expensive legal services. And when they see legal services offered at deep discounts, with expedited consultations and satisfaction guarantees, it’s natural for consumers to devalue attorneys and the work that we do.
Putting lawyer advertising next to advertising for DIY legal kits is a bad idea for the public and for lawyers because of the subconscious association. To the layman, it appears that lawyers and DIY solutions are competing. It appears that they are different paths to the same solution. Because they are competing, the logical conclusion is that a lawyer, if called, would always try to sell their services. If I’m correct, the result is more people trying the DIY solutions first, which can be a big problem that goes undiscovered for years.
Unlike some DIY solutions, for example leg waxing or drain cleaning, many of the DIY legal solutions don’t give instant feedback about the efficacy of the product.
If a consumer buys a DIY will drafting kit because he thinks that he needs a will to protect his family when he actually needs a trust, the error won’t become known, nor the consequences felt until it’s too late. Same with business formation packets. A mistake in choosing the form of entity or state of incorporation or bylaws will only become known when there is a real problem.
There are problems that only a lawyer can solve, and as lawyers, if we don’t stand up for that fact, then we are abdicating our power to the marketers and corporations that are literally innovating us out of business while potentially harming the clients that we are trained to protect.
How can lawyers keep from losing more power?
As lawyers we need to stop playing into the hands of marketers and business that we don’t understand. The fact is that most lawyers who engage in mass marketing are unwitting co-conspirators in their own demise. That’s going to be an ongoing theme as we explore the complex ecosystem of legal marketing in future “Slippery Slope” posts, but I’ll leave all of the ways that lawyers are helping the marketers and non-legal-entities to another day and another post.
For now, let me leave you with a few thoughts.
Understand who you are supporting and make the marketers choose. The websites that sell leads to attorneys, sell attorneys to the public, and/or also sell DIY solutions have a primary source of revenue. I suspect that in almost every case that primary source of revenue is attorneys. In other words, they collect more money from attorneys paying them for advertising than they do from customers paying them for legal kits. For some it’s probably the other way around.
Which source of revenue is primary for each company would become apparent if attorneys simply refused to participate in any platform or with any company that commoditized them.
The reality is that this will never happen because there will always be lawyers who will perceive a great opportunity to market themselves somewhere where there is a large audience and not a lot of competition despite the cost to the profession as a whole. But if enough lawyers understand the implications of participation and stop fueling the fire that is consuming them, it may be sufficient to slow the momentum.
Understand who you are working for. When you contribute your thoughts and advice to forums that commoditize lawyers, you are helping them build their infrastructure. You may think that you are marketing your own practice and using their forum as your soap-box, but what you are really doing is making it harder for you to compete with them. They are harnessing your labor. Your labor is pushing you out of the market, which they increasingly own. Then you are paying them for access to the very market you helped exclude yourself from. And the more you work and the better you make them, the more they will raise the prices on you. Mark my word.
Be your own lord, not a serf. If you don’t own the fruits of your efforts, somebody else does. Everything on the internet is owned by, and either monetized or otherwise leveraged by somebody. If you take the same efforts that you would otherwise spend working on somebody else’s property and instead spend them working on your own property, you not only profit more now and more in the future, you also stop feeding something that has the power to price you out and bury your practice. Just as the internet empowers others to usurp the power and dignity from the legal profession, it provides an equal opportunity for lawyers to amplify their own power and dignity and elevate the legal profession.
We are at a crossroads as a profession and we need to stop giving our power away to non-lawyers while we still have any power left to give. The internet is the greatest communication platform ever built. I’m afraid that if lawyers don’t wake up soon and start using it to better themselves and their practices (rather than use it simply to shop for more business), it will one day be too late.
Most consumers are not excited about hiring a lawyer and incurring legal fees, even if the fee is contingent and requires no up-front outlay of funds. There are consumers who would prefer to skip the lawyer all together if possible, though they may not fully understand whether their legal need lends itself to a do-it-yourself approach.
I acknowledge that some lawyers handle cases in a manner that creates additional disputes or even litigation. Some lawyers “upsell” services to consumers without them asking. For example, a lawyer drafting a premarital agreement might suggest that the couple also purchase estate planning services, and then deliver those services for a fee. But the things that generally bring new cases into law firms are not lawyer-caused, and there are a finite number of cases to be litigated, wills to be drafted and bankruptcies to be filed.
A quick look at what top-ranked appears to mean in the context of Avvo Advisor.
Avvo has a ranking scale that goes up to 10.0. A lawyer with a 10.0 rating can’t get any better. Lots of lawyers have this rating. Do a search of their legal directory for any major city and you’ll typically see a large number of perfectly rated lawyers. For example, a search for DWI lawyers in New York returns 109 attorneys. Of those 109 lawyers, 19, or more than 19% of them, are rated a perfect 10.0. There are scores as low as 1.4 for a lawyer who graduated with honors from NYU and has been a lawyer for more than 40 years, and who also has an exceptionally high peer rating from Martindale Hubbell, so there are clearly discrepancies between Avvo’s rating system and Internet Brand’s rating system. The average ratings for New York DWI lawyers appears to be in the 6-7 range, which Avvo classifies as “good.” The 19 lawyers with a perfect 10.0 are classified by Avvo as “Superb.” Here’s how Avvo explains their ratings.
Let’s look at Seattle, which is where Avvo is headquartered. The equivalent search in Seattle returns 97 lawyers. Of those 97 lawyers, 32 of them, or nearly 33% of them, are rated a perfect 10.0. That’s a lot of Superb lawyers!
We looked at a specific area of practice for our sampling because the numbers were prohibitively large to analyze all lawyers in each city.
Now, let’s look at the lawyers that are available to select from for the consumer using Avvo Advisor:
There was no category for choosing a DUI/DWI attorney on Avvo Advisor, so the closest thing offered was the selection of available lawyers by those willing to give 15 minute Criminal Defense consultations for $39.
We picked a random zip code in Manhattan, 10011 to see which attorneys we could choose from. Avvo Advisor gave us a selection of 17 lawyers who were available. Of those 17 available lawyers, 7 of them were rated a perfect 10.0. The lowest rated lawyer available was 7.2. The years of experience ranged from a high of 26 years to a low of 3 years. However, neither the rating nor the number of years of experience are currently presented to the consumer as they go through the Avvo Advisor selection process. We had to plug their names into the Avvo Directory individually to get this information. Is a 7.2 rated lawyer with 3 years of experience a “top rated” lawyer as the site currently claims? It really depends on the definition. But when you look at the distribution of ratings across all lawyers, an objective statistician would probably define a 7.2 rating as perhaps slightly above average.
We looked at the zipcode 98015 in Seattle. Avvo Advisor returned 12 lawyers to choose from for Criminal Defense. Of those, only two were rated a perfect 10.0. The lowest rating was 7.1. And years of experience ranged from a high of 37 years to a low of 1 year. Nine of the 12 lawyers had fewer than 10 years of experience.
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