How will legal services be delivered in future? In the last issue, we started to look at the delivery methods used by some of the key online providers of legal services who are not solicitors. We heard from Jamie Ross of Lawpack, which not only sells DIY materials themselves, but also supply these materials to the Tesco Legal Store and other commercial outlets. We also heard from Mark Keenan of Divorce-Online, a very successful supplier of online divorce materials and Martin Davies of LAW on the WEB, a central site for legal information, documents and links to solicitors.
This time we have an article from Humphrey Clarke of Epoq, originator of the document-generating package Rapidocs. This “intelligent” software embeds a series of questions and logical constructs into the document so as to produce the “right” version for the particular client. Epoq is currently setting up a network of regional firms (the MyLawyer network) who will use the Rapidocs software to provide online document drafting facilities on their own sites. The MyLawyer site will also sell documents directly to the public. We also hear from Giles Dixon of ContractStore which sells low cost online contract templates to small – and medium-sized businesses; he believes that the alternative to his low cost documents is often not a solicitor but simply no advice at all. Apart from the UK business market, ContractStore has a particular eye on the emerging Chinese market.
Overall, we have found a thriving “alternative” market, ie a market in legal services not provided by solicitors as such but provided by companies in various ways. These types of service are likely to increase in the new legal regime coming soon.
Having said that, it is not all gloom and doom for solicitors since, in all these companies, there are solicitors either running the company overall or providing the legal material for “commoditisation” of one sort or another. In other words, there is still work for solicitors here but probably not as much (in terms of the number of clients or customers involved) as would previously have been the case when legal services could only be provided by firms of solicitors.
In addition, the solicitors already providing legal services and documents online are not sitting back and waiting to be put out of business – they are fighting back with renewed and innovative services. In the next issue we will cover some of these solicitor-led developments and if anyone is willing to share their experience with us, please contact me as soon as possible on.
The MyLawyer network
By Humphrey Clarke
The introduction of the Government’s Legal Services Act (LSA) is spearheading significant changes in the way legal services are delivered. The upheaval could be nothing short of seismic ”” with some commentators predicting that as many as 3,000 high street law firms (or 35 per cent of the total) may disappear in the subsequent upheaval as new providers enter the market. The emerging legal landscape poses serious threats for traditional providers, but in our opinion it also presents a wealth of opportunities for those firms who are willing to make the most of the changes.
Epoq and Rapidocs
Epoq was established in 1994 to develop the technologies, content and processes that would enable mass-market commoditisation of legal services and has grown to become the largest provider of on-line legal services in both the UK and USA. Since 2002 we have successfully launched services for HBOS, RBS, Natwest, MORE TH>N, Allianz, DAS and Abbey; perhaps most notably the Halifax Legal Solutions Service in 2006, the UK’s first stand-alone legal subscription product for consumers.
All these services are based on our online legal services platform of which Rapidocs, our award-winning legal document automation technology forms a core component. Rather than presenting simplistic flat forms or Word files to end users which have little or no utility, Rapidocs documents are “documents that think”, empowering users to create complex legal documents with the minimum of expertise. The “intelligent” element of Rapidocs is the embedded logic within the document, allowing it to effectively draft itself according to the user’s requirements. This pre-programmed logic can be used to ask the user the same questions a lawyer would ask in a client interview. The answers given to these questions then determine the language and clauses to be inserted into the document, ensuring that each document is individually tailored for the user. By automating the drafting process in this way and engaging with clients online, complex services such as employment contracts, wills, shareholder agreements and partnership agreements can be produced to a consistently high standard at a fraction of the internal cost, thus increasing a law firm’s recoverable hourly rates and utilisation. Once drafted, users accessing our online legal services platform can send their legal document through our workflow systems for review by a legal professional.
Unique in the marketplace, this technology platform can deliver mass market legal solutions online through a browser via web download and through a telephone contact centre suitable for consumer and SME users for support by professional lawyers. This has exciting implications for institutions seeking to enter the legal space and law firms seeking to maintain or increase their market share.
Market opportunities will inevitably be initially concentrated around higher-volume, lower-value legal services for consumers and small businesses, where huge potential exists to reduce pricing through the vast improvement in efficiency which can be achieved through our platform. This presents a significant challenge to traditional providers in the legal services market.
Effects of the LSA
By allowing non-lawyers to own legal entities, the LSA exposes regional and high street firms to competition from all-comers, especially those with well-established brand presence, superior media exposure, IT capabilities and existing retail distribution capability. External commercial organisations have already entered the legal space and have started to offer legal services directly to the public. These new providers of legal services should find a receptive audience; the unambiguous conclusion of the most recent market research is that consumers would be highly receptive to alternate providers of legal services. Research conducted by Finnacord in 2006 found that almost 50 per cent of consumers would be open to considering new providers of legal services, and in a subsequent survey by Which? 75 per cent of consumers were found to be very receptive to the prospect of new entrants such as banks and supermarkets entering the legal services space. Other surveys have confirmed this view. It is likely therefore that the “alternative” market for legal services will expand exponentially over the next 3 to 5 years as banks, insurers and other affinity groups become aware of the scale of the opportunity.
Commoditisation and IT will shape and characterise 21st century legal services, and the use of disruptive technologies is at the heart of efforts by new entrants to exploit the LSA. The key is investment in systems that will allow providers to drive down the internal cost to serve clients. New entrants and some of the larger regional law firms will provide legal services in a very different way to traditional high street firms. Instead of utilising the traditional model, based on bespoke drafting and hourly billing, they will invest in cutting-edge document automation, workflow and knowledge management systems which will introduce economies of scale to many areas of law.
The MyLawyer network
Previously Epoq’s focus was on supplying our technology to large institutions looking to enter the market, but it is now our intention to open up this technology to solicitors through our MyLawyer network. The rationale for this came from law firms who were seeking to respond to the challenges of this new legal environment. They wanted to use our technology to develop new ways of reaching out to their consumer and SME clients and to service institutions looking to integrate legal products into their service range.
The MyLawyer network will enable law firms to exploit the opportunities offered by the LSA, add new services, provide legal service offerings to Institutions, create new income opportunities and protect the margins of their traditional business. Epoq will be acting as the “brand behind the brand” for our network firms, developing bespoke services and content for their businesses and working with them to generate opportunities from their institutional contacts. In return we will use their knowledge and expertise to expand the range and scope of our existing services, catering for customers of our Institutional partners who have more complex legal issues, or who require the reassurance of a fully lawyer managed service.
The first wave of network members includes Pannone, Hugh James and Nelsons. They will be operational by the end of 2008 and will be providing their own client base with similar online legal services to those we provide to the customers of our Institutional partners. They will also be able to provide these services to third party affiliate partners such as banks, insurers and others that they may work with. They will also benefit from potential referrals via the My Lawyer network as many of our large Institutional partners are very keen to link their own legal service offerings to the network for higher value, more bespoke work. The network will also be directly marketed to the public through www.mylawyer.co.uk. Over the course of 2008/9 Epoq will be targeting additional regional firms to join. This will ensure full geographical and specialist coverage in England and Wales.
The LSA will usher in a “brave new world” in which outdated and outmoded business practices will be swept aside by the entry of new providers. But the impact of the reforms and the implementation of legal technology will allow forward-thinking firms to carve out an increasing share of the market as less progressive providers succumb to increased market pressures. It will offer scope for some real innovation, affording law firms the opportunity to build greater relationships with institutions, generate new revenue streams and tap into a latent market.
Humphrey Clarke is Business Development Officer of epoq.
Email humphrey@epoq.co.uk.
ContractStore
By Giles Dixon
ContractStore sells contract templates online, mainly to small – and medium-sized businesses, both in the UK and overseas. If, say, someone wants to appoint a contractor to carry out work on his factory or to appoint an agent for the sale of his products, he can buy one of our contracts which sets out the basic terms and comes with explanatory notes. The customer can then download the document (in Word format) to his PC and either fill in the details himself or take it to his solicitor if he needs more legal support.
We have some 200 different contracts, so we cover most of the basic needs of a lot of businesses. Someone described ContractStore as the IKEA of the law: instead of getting something hand crafted, you buy a flatpack and assemble it yourself.
Early stages
I had the idea for selling standard contracts written in plain English years ago. Firstly, I believe that legal documents should be written in language that laymen can understand. Sadly, contracts are getting longer and longer. ContractStore is not going to reverse that trend but we do try to avoid it.
Secondly, as a solicitor it seemed to me that many businesses do not have the legal documents they need because they cannot afford to spend a lot of money on legal fees. If you wanted a suit 100 years ago you went to a tailor, but now ready made ”” and well designed ”” clothes are available to everyone. But the legal profession, when it comes to drafting fairly standard contracts from a precedent, is still providing a Savile Row service which is too expensive for smaller businesses. In a recent ContractStore survey, we found that less than a third of companies actually use a lawyer to draft their contracts and many write their own contracts without any legal input.
It was only when the internet arrived on the scene that it made real sense to go ahead. At the time I was a partner in a City firm looking to early retirement and I thought an internet company would keep me active as well as providing an income!
I had already contributed some standard contracts to a CD Rom published by Context in a joint venture with Bliss, and setting up a website seemed a logical step. I registered the domain name and then, with a couple of former colleagues and my former secretary, The ContractStore Limited was incorporated in 2001 and we started with some 40 contracts, mostly drafted by myself.
Having lived overseas for 12 years, my interests and collected precedents included a number of contracts involving cross-border activities and this is reflected in the catalogue. In addition we have a number of construction contracts, this being my particular specialism. These aspects differentiate us from other sites selling legal documents.
The website was developed by Enstar who had set up websites for a number of barristers as well as the Bar Council. In May 2002 I left the City to spend more time on ContractStore as well as establish my own one man practice, specialising in projects and construction. Over the years, we have expanded the catalogue and we now have half a dozen lawyers in England who contribute contracts, mostly on a royalty basis and our catalogue includes contracts for use in China, the USA and South Africa. Our US contributor approached ContractStore out of the blue and has been a brilliant member of the team; while we have actively sought others ”” most recently property and employment specialists. If any IP/IT lawyers are reading this article, do get in touch!
Our marketing and technical team has also grown and accounts for a large part of expenditure. The site was redesigned and relaunched in 2007 and this resulted in a substantial increase in visitor numbers and sales, although the gap between the two remains wide. In addition to our website team at Enstar, we have regular SEO and PR support while my daughter, Sarah Dixon, who has her own consultancy Spider Design, looks after design. Most of our promotion is online: we use Google ads and our SEO team have assisted in other ways on the web. Adele Buckell, my co-director, looks after the catalogue and is involved in general administration.
Who are the customers?
The majority of customers are SMEs or individuals, often those setting up a new business. However, we have quite a few larger companies and a number of our documents have been bought by local authorities and by law firms. About a third of our sales are overseas, mainly in the US and Commonwealth countries. We have had sales in around 60 countries.
We have a particular interest in China, with two Chinese lawyers from PRC on the team. Although we are in pole position on Google (or close to it) if you search for Chinese contracts, sales have been limited. Moreover, although we set up a Chinese language website, there have been technical problems and it seems that China is not yet ready to buy legal documents online, not least because credit card transactions in mainland China are not readily available. We are working on a number of initiatives in relation to our Chinese operations and given the potential market we are hopeful things will improve with a more active approach than we have had to date.
The legal profession and the future
ContractStore is not a law firm but a publisher of legal documents and that point is made in our terms of business. However, that does not stop visitors to the website asking for legal advice. As a result, we do offer limited legal services to the extent that we will commission a contract template for a customer. The document is supplied as a template, not a fully “tailored” contract. A fixed price and delivery date is agreed in advance with the customer.
This aspect of the business is on the increase but, since customers are attracted by the low cost (none of our English language contracts is more than £50), most of them are not going to want to make the jump to paying hourly rates of even £100 for tailored services, so we do not envisage a big take up.
Many people now buy books or holidays online, but buying legal documents is still something of a novelty. I believe that sites like ours will continue to thrive and we are now looking to partner with larger organisations for the benefit of their customers; for example, banks, accounting firms or telecoms companies could all have customers or clients who need well drafted contracts for their business. With the freeing up of the legal profession, a company such as ContractStore should be of interest to non-lawyer organisations.
As for the legal profession itself, large firms are unlikely to be interested in selling low cost documents and smaller firms would be unlikely to generate a great deal of income, given our experience to date. However, quite a few firms have bought our contracts in recent years and some might be interested in using us to find new business. It could also be useful to our customers to have a list of law firms willing to offer a cost effective service in different places and areas of the law. But we would expect them to offer a parallel service ”” in particular clear language, a reasonable (preferably fixed) price and a firm delivery date!
Giles Dixon is a solicitor. He is Managing Director of ContractStore. He also runs the Giles Dixon Legal Consultancy.
Email contracts@contractstore.com.
