Can You Really Get Good Legal Help For $89/Month?

An interview with legal pioneer [LegalZoom founder] Brian Liu about the next big thing in legal innovation and his new company, BizCounsel.com.

Brian Liu, Co-founder of LegalZoom and BizCounsel

Brian Liu, Co-founder of LegalZoom and BizCounsel

Beck Bamberger:  You’re one of the original pioneers in the legal innovation space.  Many people don’t know that you were the one who came up with the idea for LegalZoom, which has now become the most recognized brand name in law.  What gave you the inspiration for the company?

Brian Liu:  Hi Beck. Thank you for that.  I remember flying back to LA from San Jose after a meeting at Wilson Sonsini.  I was at Sullivan & Cromwell back then, and we were working on a big tech IPO.  Even though some would think of that as the pinnacle of corporate law, I was deeply unfulfilled.  I remember driving back home in my BMW and thinking — is that the reason I went to law school, just so that I can drive this car?

Instead of helping multi-billion-dollar corporations, what gave me the most fulfillment was when I was able to work directly with our smaller clients.  And of course, when my own friends and family would always ask me for help on various legal matters.  From those experiences, I came to two realizations — first, a lot of people needed help, but they weren’t able to afford the rate Sullivan & Cromwell charged.  Second, much of the help they needed consisted of routine legal documents or administrative filings with the Secretary of State.  At that time, the internet was making huge changes to the way traditional services were being offered.  We looked at online stock trading, online travel, online tax preparation — so we thought, why can’t we do that for law?

Beck:  You and your co-founders really pioneered this idea of making the law more efficient and customer friendly.  As you look back on those 18 years where you were the CEO and then later Chairman of the Board, what has been your most important lesson?

Brian:  I recently looked back at my original business plan and it’s amazing just how accurately we predicted exactly how things would turn out.  In some ways, it was crazy to think LegalZoom would be this big.  Now 75% of all Americans have heard of the company.  We were just a couple of young lawyers and a tech guy — myself, Brian Lee, Eddie Hartman.  But without Robert Shapiro as a co-founder, we might not have had the guts to quit our jobs to pursue the venture full-time.  Over the years, I’ve learned that it takes a big vision and an audacious attitude to make things happen, but it takes organization and practicality to make things succeed.

We knew that the system for delivering legal services was broken.  Every year, Bar Associations talk about “Access to Justice.”  Every year, there are more lawyers, but the need for access is even greater.  Big corporations are of course well-served.  And with pro-bono services, legal aid and even self-help clinics in the courts, there are services to help those with little or no resources.  But what about those in the middle class?  They don’t qualify for legal aid, yet there’s no way they can afford to pay $350 per hour.

And the law itself doesn’t make life any easier for the average American.  Sometimes it’s like a minefield, full of traps for the unwary.  For example, what’s the difference between a Will and a Living Trust?  They both basically do the same thing.  However, with the former, you have to go through the time and expense of probate.  With the latter, you avoid all that headache, but it’s because you’ve paid a lawyer thousands of dollars up front to save you tens of thousands down the road.

If you’re a small business owner, what’s the difference between doing business as a sole proprietorship vs an LLC?  In both cases, you’re running the exact same business.  But with the former, you have unlimited personal liability, and with the latter, you’re protected.  The only difference is a 1-page document that you file with the state.

In both cases, the legislature could have simply changed the law so that probate isn’t necessary (in most cases), or that all business owners are protected against personal liability regardless of business structure.  But no, they didn’t.  Instead, those benefits are only available to those with the requisite knowledge and financial resources that could afford it.  Fundamentally, I don’t think that was fair.  The same legal protections should be available to everyone — not just the rich.  Therefore, we started LegalZoom with one big mission — to democratize the law.

Beck:  So you found a big problem, and you tried to solve it.  That makes sense.  You officially left LegalZoom last year.  What have you been doing since then?

Brian:  I just love the legal innovation space, and I love the idea of democratizing law.  It’s what I know and what I’m good at.  So the apple isn’t falling too far from the tree.  I’ve been working on a new start-up called BizCounsel.com, and we just launched.  BizCounsel is the natural progression from LegalZoom.  We do a really good job helping people start their business at LegalZoom.  In fact, we’ve probably helped start more businesses than anyone in the world.  But once you’ve been in business for a few years, you’re generating revenue and you have a few employees, things get more complicated.  In many cases, you really need a lawyer to guide you through legal matters you constantly face as a business owner, but you run into the same problem I talked about before — you can’t afford to pay $350 per hour, and you don’t want to deposit $5,000 as a retainer.  In fact, 80% of small businesses that have been around for 2-5 years don’t have a regular lawyer.

Beck:  Wow, I didn’t know that.

Brian:  Exactly.  There are too many small business owners who either don’t do anything about their legal needs — the equivalent of burying their heads in the sand and hoping for the best — or, they try to do legal work on their own.  By that I mean — they might Google “service agreement” or “employment agreement” and then copy and paste a document together.  Or they may review a contract without any legal training and sign something that they probably shouldn’t.  While they can hope and pray that they’ll get lucky and that none of those actions will come back to bite them, I know better.  Each year, roughly 50% of small business owners face some type of negative legal issue.  In many cases, these issues could have been avoided with the right legal help from the start.

Beck:  How exactly does BizCounsel work?

Brian:  At BizCounsel, we’re fundamentally changing the way small business owners interact with attorneys.  Instead of following a transactional business model, we’re more akin to a SaaS service.  For a fixed monthly fee, BizCounsel members can get legal advice from our network of dedicated business attorneys, without paying by the hour.  They can also get contracts reviewed and get real legal work done for a discounted price.  The goal is for each member to form a long-term relationship with their attorney.  That way, their attorney can get to know you and your business, and your attorney can be proactive with his or her counsel instead of always reacting by extinguishing fires.

Beck:  So with BizCounsel, you don’t have to pay lawyers by the hour?

Brian:  For the most part, that is correct.  Our goal is to make the practice of law more efficient.  But even if we adopted all of the efficiency-boosting measures in the world, it wouldn’t make much of a difference if the economic incentives aren’t aligned.  If we charged by the hour like most lawyers, we would have zero incentive to work faster and smarter.

Let me pose a simple question.  Do doctors or dentists charge by the hour?  If your medical procedure takes a little longer than anticipated, do they charge more?  No, they don’t.  Medical practitioners are compensated for the procedure, for the result.  Not purely for time.

Ultimately, our goal is to create clarity and transparency in pricing, because that’s what consumers demand.  Of course, there are some matters where it’s impossible to anticipate the amount of time and effort it will take to get the matter resolved.  But wherever possible, we charge reasonable flat fees.

Beck:  Sounds good for business owners, but what about the lawyers?

Brian:  Great question.  We want to help our network lawyers build long-term relationships with new clients.  Most lawyers today are so busy doing non-legal work such as marketing, business development, office management, administrative work and accounting that they only spend a tiny fraction of their day actually practicing law.  According to a 2018 study by Clio, a typical attorney in private practice only spends 1.5 hours per day doing paid legal work.  With BizCounsel, we handle all of the administrative and other tasks so that attorneys can spend 100% of their time doing what they were trained to do — practice law.

When your utilization rate is close to 100% (vs 20%), we can afford to charge a fraction of the cost compared to a typical lawyer.  And I tell our lawyer friends all the time: this has to work for both of us — so it’s incumbent upon us to make sure that our network attorneys are compensated and happy.

Beck:  So it’s like LegalZoom on steroids.

Brian:  (laughter)  Well, LegalZoom is doing great and I continue to be their biggest cheerleader.  What we are doing with BizCounsel is reaching out to new audiences — businesses who are past their formation stage and really need that dedicated attorney for consultation and real work.

Beck:  Best of luck, Brian.  If any attorneys wanted to talk to you about being part of BizCounsel, what should they do?

Brian:  Just head to www.BizCounsel.com and call our general number.  Or send us an email at attorney@bizcounsel.com.

Beck Bamberger is an Entrepreneur, Investor, and former TV Producer