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Upstart Legal Services Gain Traction
by
Posted On September 1, 2011
What a lot of activity we’ve seen lately in online legal services—acquisitions, investments, new traction in the market, and even newly launched services. The traditional methods of practicing law have been challenged of late, with some of the work formerly done by lawyers now able to be performed by technology. And, the rise of free sources of legal information, such as Fastcase and Justia.com, continue to rock the market. Yes, we live in interesting and disruptive times.

David Curle, director/lead analyst with the information industry research and consulting firm, Outsell, Inc., says it has been expecting consumer and small-business legal information services to start to gain traction, “as technology and clients’ willingness to do business online catches up with old and less efficient ways of doing things.” In a recent Outsell Insight: “Google and Others Invest in Moving the Law Online,” he says that new funding rounds for LegalZoom and Rocket Lawyer show that investors are starting to believe in this sector, too. There seems to be more opportunities for growth here than in the large firm/corporate client end of the spectrum.

Firms such as LegalZoom and Rocket Lawyer offer legal forms and document creation services directly to consumers or small business—and can eliminate using a lawyer in the process. RocketLawyer is also affiliated with real lawyers who can step in with advice for a fee.

In May, LegalZoom raised $66 million in a new round of funding from Kleiner Perkins and Institutional Venture Partners.

In August 2011, Google Ventures announced that it is part of a group that invested $18.5 million into Rocket Lawyer. In June 2010, Rocket Lawyer raised $7 million from Investor Growth Capital and expanded its management team. Rocket Lawyer claims that more than 15 million small businesses and consumers have used its web-based do-it-yourself tools and legal plans.

Blogger and virtually based lawyer Stephanie Kimbro commented about the Google investment: “The news this week raises so many unanswerable questions, but one thing is certain, this development will hasten along the trend of unbundling legal services, offering fixed fees and using technology to deliver legal services to the public online. How it promises to do these things is in the complete control of those who hold the purse strings.”

Other Activity

Self-help publisher Nolo was acquired by Internet Brands in May 2011 and combined with its legal-focused division called ExpertHub. Nolo was established in 1971 as the first publisher of do-it-yourself legal books for consumers. It currently has a broader focus than some of the forms sites. Its website features extensive free content, online tools, and a consumer-friendly lawyer directory. Nolo also develops software, online legal forms, and print and ebooks.

LawPivot, founded in 2009, is a legal Q&A site where businesses receive crowdsourced legal answers from the right lawyers. Lawyers use LawPivot to market themselves by answering questions and building their reputations. LawPivot aims to ease the burden of matching businesses to lawyers. In January 2011, it announced a $600,000 round of seed funding from Google Ventures, and a handful of angel investors. In August 2011, the startup released a public-facing Q&A platform to allow businesses to also ask questions publicly and receive answers from the LawPivot community of users nationwide.

As Leena Rao commented on TechCrunch: “The online legal space is growing fast, and companies like Rocket Lawyer and LegalZoom are raising hefty funding rounds. While LawPivot focuses on more of a niche community, the site still has the potential to disrupt the legal space for the business world.”

Curle says that Google’s involvement in both Rocket Lawyer and LawPivot is interesting and logical. “In Rocket Lawyer, Google likely sees a number of synergies with its Google Docs offerings, and LawPivot provides fertile ground for a vertical approach to the matching of interests and vendors that its search algorithms have always provided. In addition, both investments will likely be complemented and integrated with the Google Scholars collection of full-text U.S. court decisions on some level.”

Here are some additional interesting partnerships:

  • In 2009, LexisNexis invested in Rocket Lawyer and added its legal forms to LN’s Lawyers.com service
  • FindLaw, owned by Thomson Reuters, has a partnership for legal forms with LegalZoom
  • The Gale LegalForms product comes from USLegalForms.com, which runs a fee-based site. Consumers should check with their local library to see if it subscribes.

Tabulaw

Tabulaw Inc. is a start-up currently in private beta that makes legal research and writing more productive for the practitioner and more accessible for everyone else. It creates software tools for legal work. Its mission is “to make the law work for everyone.”

Founder and CEO Ari Hershowitz says users of Tabulaw will be able to aggregate content gathered from a number of sources—LexisNexis, Westlaw, Google, etc. “The existing legal publishers create silos for their information—we give users a place to organize and share all that content.” He expects Tabulaw to be available by subscription in about 6 months.

Tabulaw also produces a website for tax professionals, Tax 26. Tax26 is meant for anyone who works with Federal tax law in the U.S. “We are building tools for tax lawyers and other professionals to create “living” secondary sources: news, posts and other insightful commentary and analysis relevant to today’s practitioner.”

Curle says that, “Outsell has been predicting for some time that the growing availability of free, standardized, and machine-readable legal information from government sources will lead to interesting new companies and offerings that leverage that information. Challenges remain, but companies like Tabulaw are already making a run at a new generation of legal research offerings built on top of open data.”

The Big Guys

And, what about the big guns in online legal information—the companies providing services to legal researchers, corporate legal departments, large law firms, and legal education? What was the Big 3 looks like it has now become the Big 4. There’s Thomson Reuters Westlaw, Reed Elsevier’s LexisNexis, Wolters Kluwer Law & Business (CCH, Loislaw), and now, moving in as the 4th is Bloomberg, which has announced it will acquire BNA, subject to shareholder approval (watch for our NewsBreak coverage next week). The interesting point is that BNA licenses content to the other three players—which presumably will end as contracts expire. Yes, things could get interesting.

As the Bloomberg press release noted, “This acquisition would immediately strengthen Bloomberg’s offerings in the legal information market by complementing Bloomberg Law…with BNA’s trusted legal, tax, and regulatory content. In addition, the combination would enhance Bloomberg’s coverage and analysis of tax and accounting, labor and employment, healthcare, intellectual property, and telecommunications issues. The acquisition would significantly grow Bloomberg’s presence in the Washington, DC area through its multiple operating units, Bloomberg News, Bloomberg Government, Bloomberg Law and BNA.”


Paula J. Hane is a freelance writer and editor covering the library and information industries. She was formerly Information Today, Inc.’s news bureau chief and editor of NewsBreaks.



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Comments Add A Comment
Posted By Sergey Ulitin9/2/2011 6:18:38 AM

Thank you! Very interesting article.
I found very interesting tool from Tabulaw Startup:
http://www.tax26.com/laws/tax-map/
Posted By Jerome Kowalski9/1/2011 12:28:43 PM

Interesting and optimistic analysis. I, frankly, am not sure that the optimism is warranted. The sanguine view is necessarily predicated on the presumption of an expanding and growing market for legal services – in the face of a market that has been shrinking for at least three years. The pie is simply shrinking and more mouths are seeking to grab a piece of that shrinking pie. See, for example http://kowalskiandassociatesblog.com/2011/08/11/are-law-firms-going-to-be-replaced-by-internet-based-providers-of-legal-services/

http://www.kowalskiassociates.com/

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