The Opportunity of Unbundling Legal Services to Your Practice
This article is the first of a three part series on the concept of “unbundled” or “limited legal services.” This month’s article discusses how offering limited legal services can open up new markets for solos and small law firm practitioners. The second article appearing in September will discuss ethical concerns that the practitioner must know of when developing an “unbundled” legal service. The final article scheduled for October will cover best practices and techniques for offering “unbundled” legal services profitably and effectively.
The Latent Market for Legal Services
It is a well-documented fact that over 80% of U.S. consumers can’t afford lawyer fees.
- 78% of Americans do not have a will or updated will.
- 50% of all marriages end in divorce.
- Bankruptcy filings have almost doubled since 1990.
- Over 10 million American are victims of Identity Theft each year.
- Nearly 9 our 10 employees experienced at least one legal concern during the past year.
- 50% of middle income households in the US have at least one legal problem per year.
- Only 20% seek legal assistance from attorneys
According to varying estimates by the U.S. Bureau of Economic Analysis and the U.S. Bureau of Labor Statistics, American consumers spend approximately $43 billion to $56 billion annually on personal legal services. Our estimate for the latent legal services market adds another $45 billion to this potential market.
Many now turn to self-help alternatives. Online legal companies such as LegalZoom have demonstrated there is a huge potential latent market. In 2011, LegalZoom reported that it generated more than $156,000,000 in sales and it claims they have produced over 1,000,000 wills for U.S. consumers. These services are without the assistance of an attorney. Consumers fill out an online questionnaire which generates a form and the consumer is then responsible for executing the form properly or filing the form at the courthouse. It cases such as divorce, the consumer represent themselves at the hearing and takes responsibility for filing all documents, service of process, and all of the other procedural steps normally assumed by the attorney. However, even though the consumer saves in legal fees, they don’t get the benefit of a lawyer’s advice.
An alternative solution to the do-it-yourself approach is the provision of limited legal services, or “unbundled” legal services by the lawyer. Some law firms have been providing unbundled legal services for many years, but most solo and small firm practitioner still do not offer limited legal services. As a result solos and small firm practitioners continue to lose market share to LegalZoom and other non-lawyer companies, such as legal document preparers.
Offering limited legal services besides full service representation is one strategy that lawyers are successfully using the reach this latent market and expand their revenue base.
What are “limited” legal services?
Limited legal services or ”unbundled” legal services are a form of legal service delivery where the lawyer breaks down the tasks associated with legal matter and only provides representation for a limited range of services, usually for a fixed fee. This enables the client to pay for only the legal services they want from the law firm, taking responsibility for doing other legal tasks within their competence themselves. This form of delivery is “co-production” with the client doing part of the work themselves, usually the administrative and procedural tasks. This results in lower legal fees which expands the market for legal services. Most often, the law firm charges a fixed fee for the discrete tasks undertaken by the law firm.
Examples of “Limited Legal Services”
Here are examples of work that law firms undertake on behalf of clients that are considered limited legal services:
- Legal forms bundled with legal advice for a fixed fee.
- Drafting pleadings, briefs, declarations or orders
- Document review
- Conducting legal research
- Making limited appearances
- Court coaching
- Drafting contracts and agreements
- Providing legal guidance or opinions
Is the Provision of Legal Services Ethical?
In 2002, The American Bar Association revised the ABA Model Rule 1.2(c) entitled “Scope of Representation” to state:
(c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.
This role has either been adopted or modified by forty-two states and more states are considering modifying their rules to confirm to the ABA modification. We predict that within a relatively short while, all of the states will recognize limited legal services as an appropriate and ethical form of legal service delivery.
This rule has been adopted or modified by forty-one states since its addition to the model rules.
Why Consumers Choose Limited Legal Services
Consumers like limited legal services for a variety of reasons:
- The legal service is more affordable because of the DIY component;
- The consumer feels that they are more in control of the process because they are an active participant in producing the legal service.
- The consumer is confident that a large legal bill will not surprise them that they cannot control.
- The consumer has more flexibility and when the legal service is offered online it is more convenient.
- When the limited service is offered online, consumers in remote rural areas can access legal services conveniently and more affordably.
For the practitioner, limited legal services offers a way to tap into a latent market for legal services and create a new revenue source. Sometimes the limited legal service client will require full service representation, so the limited legal services strategy is a way of marketing the law firm’s full suite of legal services. By offering limited legal services, the firm can built a trust relationship with a new client that can be converted into a long term relationship that results in repeat business.
Courts benefit because by providing limited legal advice to pro se litigants the burden on the court system is lessened.
On-Line Limited Legal Services
As LegalZoom has demonstrated, providing limited legal services online can be very profitable. Limited legal services can be offered in the office, but the real leverage comes from offering these services over a wide area over the Internet. DirectLaw, (shameless plug), our virtual law firm platform is specifically designed to support the delivery of limited legal services over the Internet, and to enable solos and small law firms to compete effectively against LegalZoom and other nonlawyer companies.
To learn more about this concept we recommend the following resources:
The American Bar Association’s Unbundling Resource Center
The American Bar Association’s Standing Committee on the Delivery of Legal Services white paper, “An Analysis of Rules That Enable Lawyers to Serve Pro Se Litigants”
Stephanie Kimbro, Limited Scope Limited Legal Services: “Unbundling and the Self-Help” Client. (2012).
About the Author
Richard S. Granat is Co-Chair or the eLawyering Task Force, Founder and CEO of DirectLaw and Co-Director, Center for Law Practice Technology, Florida Coastal School of Law. He was also named one of 50 Legal Rebels by the American Bar Association Journal in 2009; awarded the ABA Louis M Brown Lifetime Achievement Award for Legal Access in 2010, the ABA Keane Award for Excellence in eLawyering in 2013, and also named a FastCase50 Winner in 2013.