First, Get Rid Of the Lawyers

Baldwin Louie — Mon, 08 May 2000 15:00:00 -0700

It's one thing to rile Britain's stodgy bewigged barristers. But the Cohen brothers have done one better. The founders of the DesktopLawyer site recently drew the wrath of the pope, who called their online legal service ethically "repellent."

What vile sin do Richard and Grahame Cohen commit on a daily basis? They peddle low-cost divorces online, a very successful service that has helped make DesktopLawyer the leading Web legal company in the U.K. Now the dot-com is heading to the U.S., following its mid-April merger with a top American player, MyLawyer.com.

The merged company will face a few legal hurdles of its own. DesktopLawyer's online services, which eliminate the need for a lawyer in certain cases, could run afoul of U.S. laws that protect consumers from unauthorized practitioners. Online companies also face resistance from establishment lawyers, who complain that the upstarts compromise ethical standards and undermine the profession by positioning traditional lawyers as overpriced and expendable.

"I would be shocked that you could develop software that could encompass the nuances, subtleties and complexity of the law today," says Lawrence Fox, a partner at Philadelphia firm Drinker Biddle. His recent involvement in an American Bar Association (dossier) online training program for new lawyers reinforced his skepticism that technology can replace a lawyer, even for routine matters. "The concept of a 'simple' will, employment agreement or divorce harkens back to a simpler era when the law was less complex and when people didn't stand to lose as much as a consequence of bad advice," says Fox.

Bad advice or not, the Cohens are proving that people will gladly avoid hiring a lawyer if they can. After offering an uncontested divorce service for only 10 weeks, DesktopLawyer captured 6 percent of the $120 million divorce market in the U.K. A big part of the appeal is the $95 price. By taking the lawyer out of the equation, DesktopLawyer has been able to radically undercut the rates of independent practitioners and small firms by about 80 percent.

But the Cohens' bustling divorce business owes much of its success to the London tabloids. After DesktopLawyer partner Freeserve (FREE), a U.K. Internet service provider, ran a newspaper campaign offering a free DesktopLawyer divorce to new members, the Sun, Daily Mail and Express jumped on the story. The dot-com was hyped alongside the split of Mick Jagger and Jerry Hall. And DesktopLawyer's Feb. 14 $48 prenuptial contract offer was played up alongside a story about Michael Douglas popping the question to British actress Catherine Zeta-Jones. That's pretty good publicity for a dot-com with virtually no marketing budget.

Richard Cohen, a lawyer, and his younger brother Grahame, a programmer, say they didn't foresee the hype and controversy. They launched DesktopLawyer a year ago as a subsidiary of Epoch Software, of which Grahame is CEO. The initial plan was to market their Rapidocs software to law firms. The software lets people customize their divorce papers and other legal documents online without a lawyer's help. To promote the software, they launched their site, DesktopLawyer.co.uk, to show a skeptical U.K. legal community that demand existed for online counsel services.

"We've leveraged the intellectual property of a lawyer and turned it into a commodity," says Richard Cohen.

It's no surprise that the software hasn't been a hit among lawyers. The bulk of DesktopLawyer's business has come from the sale of more than 60,000 legal documents, with wills and uncontested divorce the bestsellers. The site's free law guide helps people select the legal document they need before they customize it - something a lawyer or paralegal would normally do - using the software. To finalize a divorce, people still need to file with the courts and pay a $240 court fee, but DesktopLawyer saves time and money: U.K. solicitors charge about $800 to draft a comparable document.

DesktopLawyer does provide offline legal support. Clients who spend more than an hour online and seem in need of help are referred to a network of 50 solicitors. However, less than 5 percent of users opt to purchase offline advice.

DesktopLawyer's global ambitions - sites are planned for Australia, Canada and South Africa - hinge at least in part on Epoch Software's expected initial public offering on the U.K. Techmark exchange later this year. Plans for an earlier IPO were scratched after the recent tech-stock slide.

The site is moving first into former British colonies, since the legal systems are based on English Common Law. The vast U.S. market with its litigious reputation is clearly the Cohens' big prize, though the complex state bar system and strict unauthorized-practice laws could hinder DesktopLawyer's ability to use its document assembly software.

Web-based legal services in the U.S. all entail contacting a lawyer, which makes them more costly. AmeriCounsel.com's flat-fee divorce services start at $389, four times the Cohens' price. Jonathan Slater, president of AmeriCounsel, says he admires DesktopLawyer's cost-saving innovations but says the software would violate U.S. law.

Slater adds that the Cohens will have trouble marketing their service: "They don't have brand recognition - something that's much harder and costlier to create in the U.S. than in the U.K." Central to AmeriCounsel's brand is Arthur Miller, eminent Harvard Law School professor and "the single most recognized, noncontroversial lawyer in America," says Slater.

Richard Granat, CEO and founder of MyLawyer, is the most pervasive U.S. player on the Net, with four legal sites. He also chairs the American Bar Association's Tech200 TaskForce, which is developing recommendations for "how lawyers can use IT to serve the ... broad middle class who have been priced out of the legal-services market."

After encountering DesktopLawyer six months ago, Granat says he quickly concluded the Cohens were the guys to beat - or join. The newly merged company will launch the U.S. version of DesktopLawyer around May 15, and plan to market its software package to U.S. firms.

After researching the legislative obstacles to launching the document-customization model in the U.S., Granat thinks there's a loophole in the law: "Our activity is fully protected by the First Amendment and constitutes a form of publication, even though the publication in this case is digital and interactive."

Peter Kennedy, an attorney in Austin, Texas, agrees. He successfully defended Nolo, a publisher of self-help legal books, against a suit filed by the state, and suspects Rapidocs could also be protected by the First Amendment. "When someone logs on to a fully automated site where there isn't an exchange between two people, there isn't the presumption of an attorney-client relationship. This doesn't constitute a practice of law in violation of unauthorized practice."

Legal ethics experts Russell Pearce and Mary Daly of Fordham University School of Law add that DesktopLawyer's service will appeal to state legislatures since it benefits consumers. But Pearce accuses the ABA, which opposes the use of software like Rapidocs, of functioning as a cartel intent on preserving the livelihoods of lawyers at the expense of consumers.

"The real travesty is the denial of equal access to legal services for low- and moderate-income people by the organized bar," Pearce says.

The Cohens certainly have a knack for creating controversy. With America's thirst for legal theatrics, the launch of their site in the U.S. will likely ignite a new round of headlines and free publicity.

Casey O'Brien Blondes writes about the Internet Economy in Europe.

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First, Get Rid Of the Lawyers