One of the chief rationales for de-regulating the legal services market is the high cost of traditional legal services. If we are to expand access to justice, the argument goes, we must let in low-cost providers of legal services. Companies like Legal Zoom may not provide a perfect work product, but certainly it is better for a consumer to use Legal Zoom than to go without legal help entirely.
The problem with this argument is that it does not appear to fit with Legal Zoom's business model or customer base. Here are the most common services provided by Legal Zoom to both small businesses and ordinary consumers as set out in its May 2012 SEC filing:
|Small Business Services||Consumer Services|
|LLC Formation||Last Will and Testament|
|Incorporation||Power of Attorney|
|DBA/Fictitious Business Name||Living Trust|
|Non-Profit Corporation||Name Change|
|Provisional Application for Patent|
When I think of unmet legal needs, I tend to think of individuals representing themselves in housing court or deportation proceedings, not services used by small businesses or relatively rudimentary acts such as name changes. There are in any event many lawyers who will handle these matters for a few hundred dollars. Indeed, Legal Zoom recognizes that its success thus far has been based less on the cost of attorneys but that "small businesses and consumers often do not understand their legal needs or know where to start looking for an attorney."
There is obviously value to the public in Legal Zoom increasing awareness of the law and putting downward pressure on the price of basic legal services. But the success of Legal Zoom is not particularly helpful in determing whether legal services are too expensive unless there are a large number of individuals who are sufficiently savvy to use Legal Zoom properly but cannot afford a lawyer to provide the same service. When it comes to basic documents such as wills and petitions to change names, Legal Zoom is likely undercutting lawyers on what are already quite affordable prices. There is nothing at all wrong with this, but too much of the debate about Legal Zoom and companies like it seems to precede from the assumption that consumers simply cannot afford the price that lawyers are charging. The real question is whether Legal Zoom can provide roughly as good a product at a lower price, and this is an area where we are in dire need of data.