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February 22, 2001

Dot-Com, Esquire: Legal Guidance, Lawyer Optional

By JENNIFER 8. LEE

Jeffrey L. Brown/ Aurora, for The New York Times
DO-IT-YOURSELFER Oskar Thorvaldsson of SourceHealth.com uses a Web site to get legal contracts that he sometimes has a lawyer modify.


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Michael Dinneen for The New York Times
ONLINE DEFENSE Monica Carroll of Anchorage successfully defended herself in a lawsuit using legal cases she found on Nolo.com.


AS a small talent agency in the swaggering Hollywood entertainment world, CMB was struggling for a foothold.

"Being confident how you approach negotiations and deal-making is just everything in this business," said Amandilo Cousin, vice president for business development at the six-member agency. But because the company lacked the resources for high- priced legal advice in contract negotiations, Mr. Cousin said, "we felt at a great disadvantage."

So two years ago, the firm turned to the Internet. Its agents started getting generic contracts from LawVantage.com, a site offering a library of documents, to use as frameworks.

Instead of asking lawyers to draft contracts at a cost of several thousand dollars, the agency takes the generic documents to lawyers, who customize them at a cost of several hundred dollars apiece.

"We have a good framework to work from instead of depending all the time on an attorney," Mr. Cousin said. "We can do a lot of the legwork ourselves."

LawVantage.com is one of several Web sites that have sprung up to offer legal services. On the Internet, consumers can bury themselves in research, search for lawyers, chat with lawyers and get the papers to initiate a simple legal proceeding like a divorce, often at little or no cost.

"If you think about law, a large component is just information," said Richard S. Granat, who served last year as chairman of an American Bar Association task force on technology. "Information by itself can go a long way to help solve legal problems," said Mr. Granat, a Baltimore lawyer who is president of MyLawyer.com, a legal information site.

As a result, analysts say, the industry may be on the verge of fundamental changes, including the growth of la carte legal services and a trend toward charging by the service instead of by the hour. As online resources grow, analysts say, they could reduce the demand for traditional services and force lawyers to lower fees.

"The source of value and market power is the difference between what lawyers know and what consumers know," said Gillian Hadfield, a University of Toronto professor who studies the marketplace for lawyers.

"Anything that makes consumers feel that they know more will reduce the demand for legal services."

At the same time, analysts say, online offerings are helping some lawyers draw new clients and creating a market for legal services among individuals and small businesses priced out of the current system.

Fewer than half of the moderate-income families with legal needs sought legal advice, according to a 1998 study by the American Bar Association. Much of the demand was for information and documents that are the bread and butter of small practices: wills, divorces, real estate closings.

"The system we have works very well for corporations and businesses and for people that have relatively good incomes," said William G. Paul of Oklahoma City, a former president of the American Bar Association who set up the technology task force.

Mr. Paul said the major areas for expansion were those where "we can deliver legal services in a new way."

"It lends itself to about anything that does not involve litigation matters," he said, "or somewhere where you have to go to court."

But he cautioned that online advice was not a substitute for lawyers. "The system, however it evolves, cannot replace lawyers," he said.

Online legal services will total $222 million this year and will grow to $2.8 billion by 2004, according to Keenan Vision, a market research firm in San Francisco. But that is a minuscule part of the overall legal industry, which totaled $125.1 billion in 1999, according to the Department of Commerce.

Enthusiasts say that in legal matters, as in stock trading and medicine, the Internet will empower consumers by making available information that until now has been accessible only to providers.

"If your client comes to you knowing a bunch of options, instead of you being the Wizard of Oz knowing what to do, the role then is to ask the right questions," said Monica Bay, editor in chief of The Law Technology News.

That has been the experience of Oskar Thorvaldsson, president of SourceofHealth.com, a small business in Carlsbad, Calif., that sells health-related products.

"I don't want to go to a lawyer," Mr. Thorvaldsson said, "who will charge me a lot of money for taking something out of the library and plugging in my name."

A second opinion is always less expensive, he said, adding that he gets contracts from LawVantage.com at $100 for five documents, then sometimes takes them to a lawyer.

Some are using the Internet not just as a supplement to traditional legal services, but as a substitute. When Monica Carroll, a supervisor at Yute Air Alaska, was sued in 1997 by a former co-worker, her employer said the company did not have the resources to defend her against accusations of sexual harassment and assault and battery.

When Ms. Carroll started researching lawyers, she found the fees beyond her means. One lawyer wanted a $20,000 retainer. Instead, she used Nolo.com, a Web site by a self-help legal publisher, to find accounts of cases comparable to her own.

"If it hadn't been for the Internet," Ms. Carroll said, "I wouldn't have even known that you could go in and speak up for yourself in court." She represented herself, and the judge ruled in her favor in November.

Teresa Moe of Phoenix handled her divorce last year through a local Web site that provided documents and instructions. When she had a question about real estate in the divorce, she went to USLaw.com, a consumer law site, to chat with a lawyer. The site now charges a fee.

"He was very customer service-oriented," she said of the lawyer. It was more pleasant than her last experience with a lawyer, she recalled. "I felt like I was infringing on his time even though you pay by the minute," she said. "This time I got what I wanted so quickly."

Until recent years, lawyers were generally not allowed to advertise. But the Internet is creating an amalgamated marketplace that can offer smaller law firms greater reach.

"The Internet has expanded my horizon," said Richard D. Marks, a corporate lawyer in Calabasas, Calif., near Los Angeles, who recently registered with MyCounsel.com, a law referral site. "Now I have access up and down California, as opposed to my area."

At the same time, the online offerings have accelerated a movement toward "unbundled" legal services, with charges based on the service rather than the lawyer's time. The average hourly rate for a lawyer is about $180.

But Web sites now offer generic contracts for $39.95, other kinds of legal documents for $14.95 and chat sessions with lawyers, up to 30 minutes long, for $9.95. Some sites advertise flat-fee services. AmeriCounsel.com offers a service menu: bankruptcies start at $525 and adoptions at $165.

Greg Siskind, an immigration lawyer in Nashville who manages a Web site called VisaLaw.com, said his clients had not only come to expect to pay flat fees but had also become fussier about what they were willing to pay.

"Ten years ago I used to hear regularly from people who were charged unscrupulously high fees for immigration services simply because they had no idea what was normal," Mr. Siskind said. "Now we see a lot less of that. And much of that has to do with the amount of information available on the Internet."

His firm has dropped its hourly rates in favor of flat fees. "Lawyers don't like to look at their services as commodities, but that is basically what we sell," he said. "And going with a fixed-price model instead of a time- based pricing model is consistent with the reality that there is enough similarity in the cases that we handle to be able to put a price tag on them."

Though the economic potential may seem compelling, the Internet raises ethical issues, like the tenuous line between legal information and legal advice and the definition of a lawyer-client relationship where the two may never meet. It also complicates states' jurisdictions in a medium that is effectively borderless.

And it is far from clear that the legal profession as a whole will embrace online law as an opportunity rather than a threat.

In the 1930's, during an economically depressed era, radio programs giving legal advice were shut down by a flurry of regulation by bar associations that felt threatened by the new medium, said Catherine J. Lanctot, a Villanova law professor who has studied technology and the law.

"It is a good illustration of how the bar has responded to an innovative new technology," Professor Lanctot said.

Thus far the American Bar Association has been enthusiastic about the Internet's possibilities, setting up an "e-lawyering" portion of the association's Web site.

But the function of the association as a national body is mostly advisory. Most policy is made at the state bar level.

For example, in 1999 the Unauthorized Practice of Law Committee of the State Bar of Texas said Quicken Family Lawyer, a self-help legal software program, should be banned as an illegal "cyberlawyer."

After a Federal District judge in Dallas ruled that a ban could be imposed, the Texas Legislature redefined the unauthorized practice of law to exclude items like software and books that conspicuously state that they are not substitutes for lawyers.

So far, there have not been any widespread efforts to regulate online legal activity, except for a few state bar associations that have issued varying opinions about the nature of lawyer-client relationships on the Internet.

But Professor Lanctot, an expert on legal ethics, said it was only a matter of time before ethical and economic issues showed up on the radar. "If someone manages to find the Amazon.com of legal services quick answers with a credit card you might see some pressure from the segment of the bar that currently serves that market," she said.

Many sites, she said, are skirting a tenuous line between legal information and legal advice, which is the application of law to specific circumstances.

"My concern is with sites that purport to answer people's legal questions either for free or for a fee, but at the same time they disclaim any responsibility for the advice," she said. "To me, that is the worst of both worlds."


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