Will Legal Services Bidding Sites Gain (Real)Traction?

I’ll be honest with you. I’m not a fan of the concept but I haven’t dismissed it out of hand, either. As I piece various issues together I am seeing this may very well be a serious trend for the future for a number of reasons  - least of which is the economy and our country’s love affair with technology and online bidding sites in general.

The question remains – who will do it right and win the race?

As you know, a while ago there was a whole lot of fuss made about a new reverse bidding site called Shpoonkle. It’s a crazy name and there was a whole lot of criticism leveled at the concept of this company, its founder being a law student who wanted to help new lawyers struggling under debt, give them a fighting chance to get clients while helping those with monetary challenges get lawyers to assist them with their legal matters.  Established lawyers saw it as a nail in the coffin of professionalism and a new low in legal marketing.

However, legal (and other professional) services bidding sites are nothing new. (This Law Review Note is from 2001 which makes it even more intriguing to me.)

“An Internet market researcher recently predicted that consumers will spend $222 million for online legal services this year and that the market will grow to $2.8 billion by 2004.”7 Lawyers are readily taking advantage of this new market by advertising, providing legal services,8 and even participating in auctions for legal services online.9

At the end of 2001, there were “close to 100 Web sites that aim[ed] to match lawyers with clients online.”10 These included sites that were simply online directories of lawyers as well as online auctions.11 Many Americans see the appeal of online auctions.

According to one commentator, “At least thirty-one percent of Americans who access the Internet regularly, or about thirty-five million people, participate in online auctions.”12

Texas Law Review – Notes
Bidding by the Bar: Online Auction Sites for Legal
December, 2003 82 Tex. L. Rev. 445

Four online legal services bidding sites were analyzed in this law review article to address the various ethical issues: Legal Match, LawyersQuotesFast, eLawForum, and FirmSeek. (These sites existed at the time the law review article was written and in the format described by the Note. They may no longer exist in this exact format or under the name or url posted.)

The point is legal services bidding sites are nothing new and have been reviewed, analyzed and challenged for over a decade and  yet the concept persists whether with the companies named above or new companies. This ‘Note’ drew the following conclusion:

This Note concludes that most of the online auction sites for legal services are referral services; therefore, they must be regulated and approved by the appropriate state authority. These auction sites also must be designed to limit the risk of harm to consumers by avoiding the unauthorized practice of law, loss of confidentiality, conflicts of interest, and harm due to consumers’ lack of understanding of their rights and responsibilities in such transactions. These sites are beneficial in that they create competition and may result in a lower cost of legal services; but, given the risk to consumers, the sites that target individuals are generally not well suited for complex legal services. However, using these sites to match consumers with lawyers for routine legal services—name changes, simple adoptions, simple wills, and simple bankruptcies—poses fewer risks to consumers and should be permissible.

While this note concluded the ones mentioned above were referral sites and as such had to abide by rules governing referrals, companies such as Total Attorneys , won a highly publicized challenge to their business model, (which, by the way, is not a lawyer bidding site but does have a lead generating component to its services) getting ethics panels to concur their model fell outside the scope of ‘referral’ as defined under the rules of professional conduct.

The reason I’ve started to investigate further is because in my capacity as founder of Solo Practice University® I am approached frequently by startups (and very established companies) to look at their offerings and whether or not they have value to the solo community.

Recently, I was approached by a large publicly traded company with a lot of money behind them who is about to launch a new lawyer bidding site in their ‘legal vertical’.  It’s fair to say they have done their homework about the market place, have more current statistics, and are seeking to capitalize upon it. They’ve also seen the weaknesses in previous models and are planning to rectify them. How successful they’ll be at it, I don’t know.

Many companies like this tend to forget there are two parties which must come together voluntarily – the consumer and the lawyer.  Many forget that lawyers can’t be forced but must participate willingly without feeling it compromises the profession or themselves. They must feel they are actually participating in a public good because it is a radical change in their traditional thinking when it comes to reaching new clients.

Over the years, I’ve also talked to or had e-mail with other lawyer bidding sites which have changed their business models to shore up weaknesses or respond to poor perceptions. They have also seen rapid growth in the ‘bidding’ aspects of their businesses.

It was also why I didn’t out-of-hand condemn the concept/introduction of Shpoonkle when a press release came into my e-mail box.

At some point, there is going to be a breakout company/business model that is going to captivate both lawyers and the consumers at just the right time with just the right message and it’s going to capitalize effectively upon this country’s increased involvement (and love affair) with online auctions and need for access to affordable legal services.

I’m now pretty convinced it is inevitable…I just don’t know who this breakout company will be or when they will arrive.

What do you think?

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15 comments on “Will Legal Services Bidding Sites Gain (Real)Traction?

  • I hope you are wrong about this. I’ve so far seen no good from this. Instead, it degrades the profession. “Buying” a lawyer like you would a t-shirt? Under that model, the t-shirt is by far the better expenditure of money.

    On the other hand, I should have seen this coming. The day after I bought stock in Cisco, it nosedived. Why should the career move intended to stabilize my retirement plan be different?

    Kidding aside, these sites make me think of a bunch of field workers hanging around just outside of town all vying for a day’s work. Nothing against field workers, but that seems a lousy way to find a lawyer.

    • Rick, I just have that queasy feeling it’s inevitable. It’s question of level of penetration into the marketplace. Are they competing for the Legal Zoom DIY crowd?

      However, that being said, when I went to the Future of Legal Ed conference and those representing law schools were panicked at the ‘affordability’ of Concord Law School – which is online – fearful that if they don’t change their education models they’d go out of business, the Dean of Harvard Law said something which holds true in everything: There will always be buyers of Mercedes and BMWs no matter how many manufacturers of Hyundais come to market. This is true of all professions and why it’s even more important that lawyers today build solid reputations and strong referrals sources as no matter what comes down the pike, word of mouth remains the best. Nothing beats a solid recommendation from someone who knows you, likes you, and trusts you.

      Our bigger issues is the loss of the middle class which has fueled many solo practices.

  • As a young lawyer who wholeheartedly embraces technology, I still think this is a bad idea. You know why? Providing legal services is not easy. Its hard. Even simple legal matters can quickly spiral in to something very hard. And doing it for pennies is not going to appeal to most lawyers because of 1) what they had to go through to become lawyers (3 yrs. of law school + lots and lots of debt + the bar exam), 2) the amount of regulations lawyers have to navigate and comply with in this profession, and 3) the amount of time and attention it takes to serve each individual client. Plus, this kind of obliterates the lawyer-client bond, which is a huge part of what makes practicing law enjoyable for me. I’d be shocked if someone were able to create a palatable legal auction model.

    As I have said on my blog, I truly think clients are better off handling their own simple legal matters by themselves than using these kinds of services. Honestly, if this was the only way I could practice law, I think I’d move to France and become a travel writer instead.

    • Rachel, you are hitting the nail on the head from the LAWYERS perspective. However, from the consumer/clients’ perspective will they view this as a good thing and through demand kind of force a segment of lawyer to participate…that lawyer who has not yet had a chance to develop to a point where they can comfortably turn away. This is going to be the next big challenge. Unless all lawyers completely turn away from this model (which won’t happen) they can (and have historically) grabbed a segment of the market already! It’s how much a segment of the market and to what degree will solos’ livelihood be affected? It’s troubling, to say the least.

      • I don’t think it serves client’s well either. Cheap legal services usually means bad legal services for the same reasons stated above but some consumers want cheap which is why Legal Zoom is successful. However, then those consumers have to deal with the consequences of not getting the legal advice and often getting an incomplete service. I recently wrote about how two of my clients got screwed after creating LLC’s on Legal Zoom because there was a requirement that Legal Zoom did not bother to complete.

  • “Established lawyers see it as a nail in the coffin of professionalism and a new low in legal marketing.” Come to Texas and check out some our commercials. Legal services are offered between explosions, fist are shaken, teeth are gnarled.

  • Auction services are not likely to work for reasons that really, have nothing to do with the uniqueness of legal services and instead, relate to the psychology of auctions and consumer spending habits. Consider, for example, the most successful auction tool of all: Ebay. Ebay took off initially because it gave consumers a chance not only to find bargains, but also to purchase hard to find items- depression glass or comic book collections – not available in stores. Today, there are merchants who sell more fungible commodities on ebay, though I would be surprised if they make much money. In my own case, it is far easier to get a deal on a suit either by shopping at a discount store or maybe somewhere online. The extra time and effort of an auction just isn’t worth it unless I can get the item for next to nothing.

    The same applies to legal services. As you point out, bidding is nothing new, and indeed, sophisticated clients conduct “bids” for services in the form of RFPs. The reason that RFPs work for large firm matters is that the buyer is seeking something “customized” – just as the ebay buyer looking for a Victrola. RFPs won’t work for wills or trusts or trusts or LLC services unless consumers can procure those services via auction for next to nothing – because otherwise, the added cost of writing the bid and waiting for a response isn’t worth it. And as Rachel points out, lawyers are not going to work for next to nothing (nor should they). Because auction sites depend on lots of buyers and sellers, if you can’t bring match the supply of potential clients and lawyers, the system will fail.
    Finally, I personally see too many potential problems with these services – like disclosure of confidential information and inadvertent waiver of privilege – that pose yet another barrier to entry. If the business model made sense, changing confidentiality rules might make sense, but here, I don’t think it’s a model that is viable.
    None of this is intended to suggest that I oppose competition. We lawyers are the beneficiaries of competition in the computerized legal research market and in the tech industry – and we cannot expect to remain immune from competition, nor should be try to since it impedes access to law. But we are fast reaching a point where consumers have enough information about rates and prices and services online that they can find an affordable provider without resorting to auction.

    • Carolyn, I fully appreciate what you are saying. But in these types of auctions, the lawyer is essentially the bidder, not the consumer so the attractiveness to the consumer for them to ‘post’ and have lawyers come to them rather than have them go through the hassle of looking (providing they have no recommendations or referrals or feel frustrated) can have appeal. This is why the model only works if the lawyers have a true benefit without compromising of their personal/professional values.

      IF (and it is a big IF) the other issues you mention – confidentiality and inadvertent waiver – or maybe acknowledgment of waiver just for the limited information provided – are addressed properly, someone is eventually going to come up with the right formula and position it in a way that there will finally be a breakthrough on this model.

      I just don’t know who. I just don’t know when. But the time is approaching because of the reasons stated above. And it still leaves me queasy…

  • Change is inevitable and the growth and success of the Shpoonkle web site substantiates this acceptance of the process and change. The concept of online bidding services isn’t new but they have all previously failed. The time and delivery is now right at Shpoonkle. Shpoonkle is not a referral service. All attorney members are validated prior to access on the site. There is no unauthorized practice of law on the site. The site and process is completely confidential and we respect and make every reasonable effort to protect the consumers privacy.

    The site is free and the consumer is more protected by the safeguards in place than arbitrary selection of an attorney from an advertisement. The risk to the client is negligible as compared to a consumer walking into a random attorney’s office they saw posted on the side of a bus. When a consumer goes into an attorney’s office, they have no safety net other than being savvy enough to ask or check that attorneys standing with the bar.

    Shpoonkle provides that service for the consumer. Additionally, we advise our members to check again when meeting the attorney to make sure that licensure is still in good standing. We are using the site for advocacy and education to enable clients to find more affordable legal solutions and also helping lawyers to expand their practice.

    We have almost 2000 attorneys as members on our site in less than ninety days. Many of the attorneys are from very reputable and established firms and/or successful solo practioners. One lawyer member stated: ” that many people feel frightened of the entire legal process, and worry that sometimes they just cannot afford to hire an attorney or get help. They often are paralyzed and do nothing and the situation worsens. If nothing else Shpoonkle educates consumers that there is help out there for them.” Another attorney member stated ” that many people try to do the legal work themselves, and although the forms they get online may be correct, without an attorney to tell them the legal ramifications of that form – the results can often be disastrous.” Shpoonkle is not competing for the DIY crowd, we are actually trying to enable more people to get the legal help they need, just at a price they can afford. In regard to the quote: ” There will always be buyers of Mercedes and BMWs no matter how many manufacturers of Hyundais come to market” is very true, but how many buyers of those Mercedes and BMW’s don’t negotiate a better price with the dealer so they don’t pay sticker? if you bargain that BMW price down are you getting less value or quality or just being a smart consumer?

    The bond between the attorney remains intact, in fact it seems heightened by this process as the consumer feels that the attorney is more flexible and willing to work with them not only on the legal issue but with them as a person (economics or lack thereof).

    Before folks jump to conclusions, it is best to get all the facts. Shpoonkle may not be a good fit for everyone, but we are keeping privacy intact on the site, our members are professional reputable and LICENSED attorneys and firms, and we are not a referral or lead service. Shpoonkle is helping a lot of people and after all isn’t that what the law profession is supposed to do?

  • I would like to see the lawyers themselves taking control of this trend. I think there are ways to pool our resources as solos to pull in prospective clients without having to be part of a branded network concept created by a large company.

    I agree that it’s a consumer-driven trend and therefore, there’s not much that we as a profession can do to stop it. We can ignore it and doing so will let the online legal service companies take control of that huge untapped market for legal services. Right now my opinion is that attorneys can find a way to meet the needs of the consumers who what the cheap online legal services while also working on larger, more complex matters with clients who understand the value of the attorney’s work and whose matters require more full-service representation. I would advocate for a balance of the cheap and the regular attorney fees services. Unbundling legal services for cheap is not going to sustain a practice without a large number of clients and it’s not appropriate for every practice area or every client’s needs. So I don’t see this as the future of all legal services. But I do think that there are ways that we can do a better job of pulling in this work for ourselves rather than outsourcing it to these bidding sites or networks who take a cut, whether in a listing fee or by the fact that the attorney’s profile is providing their site with content and upping that company’s SEO. The attorney should put that content on their own site and raising their own SEO to pull in clients themselves for both the affordable unbundled rates and the full-service fees.

  • Herein lies the problem. I posted about this earlier in a different context. Advice is easy. Execution is hard. When we talk about legal services, we are not talking about documents, or our advice on the law. Or as we say in East Texas, “All tha’ book learnin’”. All of that is important, but, from my experience, that is not why people hire lawyers. Or, at least why they no longer pay them any serious money for these services. People hire lawyers to execute what they need to have happen.

    It happens all of the time. People come up to you at events, parties, church or get togethers and ask for advice. Years ago the response was, “call my secretary and make an appointment next week and we’ll sit down and talk about it.” Lawyers, paralegals and other call me often and ask for guides, pleading forms or documents. Give it to them. If they hire you it is because they need execution.

    You win or lose in the legal business environment depending on your reputation in regard to execution. You are the lawyer that can make things happen. (I do not mean win or lose, but maneuver through the process).

    That is the biggest problem for recent law grads. All they are at this early point in their career are a bunch of worthless advice givers. (Sorry, I do not mean that to sound so harsh as I learned this over the years the hard way myself). What I mean to say is they have little or no training in execution so they fall back on the one thing they know from law school and it happens to be what nobody today wants to pay much money to hear.

    What law schools did not train them to do is execute a plan or a strategy based on their practice area. I am not sure it is even possible law schools to do this. It is some of the reason lawyers need places like SPU.

    So, you go to law school to learn all of the skills nobody wants to pay you for in a modern (information is free) society.

    Information, advice, forms, etc. are good for one thing – marketing. You can think of law school as your marketing or advertising costs.

    That is the reason I speak on my subject, write on my subject, share whatever anybody wants. Because they will hire me not because I know more, but because they need someone that can execute for them.

    My overboard advice to all of the wannabe online lawyers (and even those that are the more bricks and mortar variety as well) is turn the modeling software around and let the public model it and print it off themselves for free, at their whim, without paying you a bit of lip service. Do not take a dime for it and do not do any work except to provide the system. Add videos, audio, PDFs, explaining everything. It is the Google model (read the book “FREE”, for example). It is this information rich marketing you need.

    Most will still pay you to execute what they want or need to have happen. Those that do not, at least you have helped them in a non-exploitative way by showing your expertise. The cost to do so was merely marginal (if you do not calculate in your law school tuition).

    In fact, the more information the better. It is the overload that lets them know they need a lawyer to help them execute what they want or need. You can say don’t do it alone, but giving the information lets them understand it might not be the best idea. It is ignorance that lets people believe there is no value in hiring a lawyer to execute. Like new lawyers they confuse a little knowledge with competency in executing a plan or strategy. A lot of information changes that without even challenging them.

    People do not want to walk into divorce court alone, for example. They do not want to execute a will alone for another example.. There are somethings they cannot do in Texas, for example, like probate. Anybody can think to ask if the cop’s speed gun was properly calibrated at Court. It is how you get it to court, get it before the judge and make it happen that they need help with doing.

    Although stated rather crudely, wasn’t the point Steve Miller was trying to express years ago concerning the need for hand-holding in divorce matters in Florida. He got roundly criticized for it. See the video here and judge for yourself.


    So, quit trying to hoard information or pretend there is a scarcity of it. In terms of broad information these days, there is nothing that a law graduate knows, in most practice areas, that the average person cannot find out on Google, given enough time and effort.

    The problem is, and law is slow to catch up, is that in the old days we created a fake scarcity of information and advice so we could charge for it. That is not true anymore.

    We use to say that talk is cheap. Well, in this technology age, information, case law, legal principals and advice are are all cheap. They are all easy to give and easy to find. What is expensive is somebody who can effectively bring all of the diverse pieces together and execute the plan or the legal strategy. Someone that can walk someone though the troubled waters.

    • I like this observation that we hire lawyers to execute on our plans and to negotiate for us, argue for us, and generally make things happen. This is surely the case as the complexity of a matter escalates. But the observation doesn’t take into account, that are many legal tasks, that were once considered complex, but because of access to legal information over the Internet — information which was not previously available –either for free or for a low fee, consumers are being empowered to execute their own plans for transactions which previously were beyond their capacity. I am thinking of such things as self-representation in uncontested divorce organizations, the creation of a simple corporation or LLC, or pursuing a child support action, to name a few examples.

      This work is being lost to the legal profession, as non-lawyer providers rush in to fill a gap as lawyers seek more complex and value-added work where their skillscanmake a contribution.

  • And this is one of the prime reasons that your focus on niches for the solo lawyer, and especially for the newbie solo lawyer like myself, is such an important piece of career advice. I have learned this in my first year and a half as I lacked that focus for the first year. Now I may have a dual track plan at the moment with the two practice areas that I am practicing (healthcare licensure defense and advising small healthcare business organizations), but this focus is critical in being able to provide the services that you are suggesting here are the future of the law. Many times I have been asked “What can you do for me – can’t I do that myself?” And the answer is yes, you can. But I make it my business to pay attention to what is going on and who is doing what and for what reason.
    It may be information that the individual can find, but you are mostly correct in saying that what they can’t do is use that information to solve their problem, if their problem can be solved. Many of the nurses I represent are going to get disciplinary action against their license. But it is very easy to make the situation worse, to not respond to one of the letters from the Nursing Board and to get your license revoked. And that is obviously a bad thing. What I have had to learn is to explain how the value of my knowledge lies less in what I know than in what I know to do with their situation.
    Of course, the other advantage is that I already know the information that the PC can find on the internet, if they search deeply enough, and then they don’t have to go look for it if they call me (or look at my website). But you are right that the information is not the value of a lawyer-client relationship. And neither are the forms. But using those forms and that knowledge to solve their problem efficiently when they can’t or won’t is where our value lies.

  • An auction marketplace cold be a useful venue for lawyers that have learned to deliver commoditized legal services very efficiently, as for example at a fixed price over the Internet. Even though prices are already low for certain types of these transactions, the profit margin per transaction is high, so going after volume makes sense. Volume can come from many sources: directly to the law firm;s web site; through online Directories, and now through auction sites which are simply another channel that can drive traffic to law firms who need to do this kind of work.

    This is another consequence of the fact that that there is an oversupply of lawyers — too many lawyers chasing after a limited amount of legal work.

    I can see how a lawyer with a very focused specialty could use an auction site to reach out to clients, without giving much price concession, because they don’t have to as their skills are sufficiently unique that the number of providers are limited in the specialty area.

    So for example, in a jurisdiction where there are only 2 or 3 lawyers who specialize in preparing QDRO orders, it would make sense for all of the providers in the specialty area to agree on minimum pricing and aim to divide up the work rather than compete on price with each other. The nature of the legal work is so local and and relatively small scale, that is is probably beyond the reach of any federal prohibitions on price fixing. If consumers don’t like the minimum pricing that is offered they could try and do it themselves, which would be next to impossible when the legal work to be done is complex, nuanced, and intricate.

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