Solo Practitioners, Technology

Will Client-Matching Services Turn Participating Lawyers Into Uber Drivers?

We should be against any tool or app that has the potential to dictate how lawyers are paid and run their practice.

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I was out of town over Thanksgiving weekend to visit family and friends. One night, a few friends and I decided to go out to visit a few hotspots. To avoid the hassle of looking for parking and paying parking fees, we decided to leave the cars at home and use Uber as our mode of transportation. One of the drivers we talked to was a charming, articulate fellow who knew a lot about the local laws and breweries. When we asked him if he had a day job, he said he was a contract lawyer doing doc review. He didn’t tell me how much he made from his Uber gigs, but based on the fares we paid, I assume it couldn’t have been much.

Uber is an app that connects drivers with passengers who need a ride from Point A to Point B. The passengers pays Uber directly, the company takes its cut, and the driver gets the remainder. Uber attracts customers by advertising itself as a lower priced alternative to traditional taxis. It also attracts potential drivers by offering easy supplemental income for part-time drivers and potentially unlimited pay for people seeking to drive full-time.

On its blog, Uber claims that the median yearly income for their drivers is $90,766 in New York and $74,191 in San Francisco. But various fact-checking reports suggest that these high yearly incomes are outliers rather than medians. Uber’s drivers have been complaining that they are slowly but surely seeing their earnings get smaller and smaller. Uber raised its commission cut from 5% to 25% in addition to imposing subtle fees to drivers. It has also been known to slash fare prices on occasion. And more drivers are opting to work part-time and only during “surge pricing” hours, where rates are higher than normal. Most of their drivers are making nowhere near what they were led to believe, and some are barely breaking even after costs are taken into account. Also, if the drivers do not get high ratings from their customers, they risk getting fired.

Thus it appears that Uber’s cunning long-term business plan is threefold: (1) to expand its market base by implementing fare cuts as needed; (2) gradually boost revenue by increasing its commission take; and (3) see how much of a pay decrease its drivers are willing to take before enough of them decide to leave. Given Uber’s nascent but strong growth rate, the likelihood of changing laws to accommodate and regulate ridesharing technology and growing competition among drivers, it is safe to assume that the race to the bottom of driver compensation will continue and level off at some point.

Now imagine an app or an internet website that proposes to bring together potential clients with the right lawyer like the way Uber does for transportation services. Let’s call it FutureLaw — an alternative legal provider I talked about in a prior column. The clients will pay a modest fee to FutureLaw to get connected with a lawyer for a consultation. Now if it wasn’t for those pesky, party-pooper ethics rules, FutureLaw would take a cut of the client’s payment and send the rest to the attorney. If the client decides to hire the attorney and pay her a substantial retainer, FutureLaw would want a cut of that too. But because of the fee-splitting prohibition, FutureLaw cannot demand payment of a percentage of the fees.

But FutureLaw has to make money somehow. It shouldn’t have to do pro bono work for the sake of “access to justice.” That should be left to the small folks, right? So to remain profitable, it will either raise client fees or decrease lawyers’ compensation. Since FutureLaw is a startup with no brand recognition, it cannot raise its prices. In fact, it will have to use free promotions and incentives to allow people to test out the service and eventually gain market share.

With that being said, I think it is very likely that FutureLaw’s ultimate business plan will be similar to that of Uber — eventually minimizing client fees by minimizing lawyer compensation. Of course, at first, FutureLaw will give high salaries to its early adopter lawyer followers who will then brag about it on social media. But as more lawyers get on the FutureLaw bandwagon and compete for consultation spots with clients, FutureLaw will have every incentive to cut compensation to its lawyers and increase its own bottom line.

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While there will be robust debate as to whether alternative legal providers such as FutureLaw will fill a societal void, it can result in a situation where a small group of people will make a fortune off the labor of struggling attorneys. Look, don’t get me wrong. I (and presumably many other solos and small-firm lawyers) am not anti-technology. The internet, email, and Google Scholar are godsends to us. Also, we would embrace any innovative tool that would help us weed out bad or incompatible clients, collect fees faster, save us trips to court on a snowy day, or reduce overhead costs, to name a few.

But what we should be against is any tool or app that has the potential to dictate how lawyers are paid and run their practice. Otherwise, lawyers will no different than Uber drivers.

Shannon Achimalbe was a former solo practitioner for five years before deciding to sell out and get back on the corporate ladder. Shannon can be reached at sachimalbe@excite.com.

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