Google Backing Of DIY Legal Forms Will Force Lawyers To Lower Fees

Google captured the headlines this week with its purchase of Motorola Mobility. But this big deal has overshadowed a smaller one last week that will drastically transform the way we consume legal services. And in the long run it may have an even more profound impact.

As Forbes senior editor Daniel Fisher reported here, Google Ventures is part of the group that invested $18.5 million in Rocket Lawyer, one of a growing number of web-based services that can spew out documents like wills, leases and incorporation papers for a fraction of what many lawyers charge. In a separate deal, its competitor, LegalZoom, raised $66 million of venture capital last month from Kleiner Perkins and Institutional Venture Partners, among others.

While venture capitalists see gold in the do-it-yourself legal movement, the latest developments make me cringe. I’m all for educating consumers about legal issues – I’ve spent most of my career doing just that, most recently in my book, Estate Planning Smarts. But having also worked as a lawyer, I know how complicated writing documents can be. In fact, I make a hobby of collecting horror stories about consumers who get in trouble by acting as their own lawyers. You’ll find some doozies in my Forbes story, “The Case Against Do-It-Yourself Wills.”

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Gallery: The Google Search Evolution

In a pinch, both LegalZoom and Rocket Lawyer can help people connect with a live lawyer, but I have several objections to this arrangement. One involves the quality of the advice people are likely to get. At Rocket Lawyer, it costs $19.95 a month. That’s far less than I recently paid my plumber to install a new flushometer in the toilet.

In addition, the premise of both companies is that consumers will use the online documents to avoid lawyers altogether – that’s what attracts them to LegalZoom or Rocket Lawyer in the first place. So they can’t be counted on to ask for help, even when they need it. Spotting potential trouble spots is one of the things lawyers do. Chances are laymen will be dangerously ignorant of what they don’t know.

Consumers can profit from the latest developments, but not in ways that Rocket Lawyer, LegalZoom or the venture capitalists contemplate. Here’s how: they can use the widespread availability of DIY documents as a tool for negotiating reasonable legal fees. The same technology that has spurred the DIY movement has made it much easier for lawyers to do their jobs. Whether lawyers use their own forms or a commercial product, in many cases it is possible to prepare documents in minutes. They have no right charging for them as if they were being custom crafted and written with a quill pen.

Sourced from Forbes

50 ways to leave your lawyer

Sourced from The Economist:

CONVENTIONAL law firms charge vast hourly fees and then hand the work to underlings while the partners play golf at clubs their clients are too poor to join. At least, that is how it seems to many clients, whose irritation at being overcharged turned to fury during the recession.

Some clients are switching to unconventional law firms, which claim to offer equally good lawyering for much less money. Take Clearspire. The firm’s 20 or so lawyers work mostly from home, collaborating on a multi-million-dollar technology platform that mimics a virtual office. A lawyer checking in on a colleague automatically sees a picture of her on the phone when she is, in fact, on the phone. Clients use the platform too, commenting on and even changing their own documents as they are being drawn up. Conventional lawyers are far less open.

From the start, Clearspire offers cost estimates for each phase of a legal job. Employees who underestimate how long it will take cannot simply jack up the bill—they must take the hit themselves. But if a lawyer finishes his work faster than promised, he gets a third of the savings. The client also gets a third, as does Clearspire. This gives everyone a stake in making the process more efficient and predictable.

Bryce Arrowood, the founder, notes that law firms reward partners who bring in business, and not necessarily the most brilliant lawyers. Yet clients’ priorities are exactly the reverse. So Clearspire has an unusual dual structure. American law firms cannot have non-lawyers sharing fees with lawyers. (Britain used to be the same, but will ditch this pointless rule this year.) So Clearspire must be two entities: a law firm, with salaried employee-lawyers rather than partners, and a second company that focuses on bringing in business and supporting the lawyers.

The discount for clients is sweet. George Kappaz is a private-equity boss who recently gave a complex job to Clearspire (structuring an equity package for Astrata, one his fund’s firms). He estimates that it cost a quarter of what he would have paid the big firms he used before, and Clearspire’s work was just as good. (Many of its lawyers come from top-notch law firms.) Mr Kappaz predicts that the Clearspire model, or something like it, will revolutionise the legal business.

Perhaps so, but for Clearspire it is early days. Can it make money? A company like 11-year-old Axiom proves that clients have an appetite for alternative models. Axiom either seconds some of its hundreds of lawyers to a company, takes on a whole chunk of a client firm’s legal work (such as commercial contracts), or performs “discovery” (reviewing documents for litigation). Rather than charging by the hour for each lawyer, it asks for a single flat fee, or charges for a team by the week or the month. Expenses are kept low by having headquarters in SoHo, a chic bohemian bit of New York, and by stashing many lawyers in even cheaper places such as Houston and Hyderabad.

The recession was good to Axiom. After it sent its consultants, recruited from the likes of McKinsey and Accenture, to clients to help them trim their legal spending, the clients gave Axiom more work. Revenue grew from $55m in 2008 to $80m in 2010. This year the firm expects to rake in $120m. Companies were always under pressure to cut their legal bills, says Mark Harris, Axiom’s boss. But “fake pressure” before became “real pressure” during the downturn.

Axiom and Clearspire serve some of America’s biggest companies. Other entrepreneurs are aiming at small-business clients. These would normally take a chance on finding the right sole practitioner or small firm. But on LawPivot, a year-old social-networking website for lawyers and those who need them, potential clients post questions (up to three a month), and lawyers provide free, brief answers. The lawyers make nothing, but use the service to drum up custom. Clients can test a lawyer’s skill before opening their wallets.

LawPivot is a social-networking site, not a law firm—it will make its money initially by charging lawyers to upgrade their profiles (similar to the networking profiles on LinkedIn). Google Ventures is a backer, and Apple’s former top lawyer for mergers and acquisitions is a co-founder. This kind of heft will bring it up against LegalZoom, the biggest seller of online forms and easy, repeatable legal services for small businesses and individuals. LegalZoom now wants to put more of its contract lawyers to work directly for clients at a flat rate.

It is more than a decade since the internet made book-buying cheaper and more convenient. If technology now helps cut gargantuan legal bills in America and elsewhere, it will be better late than never.

Tougher land fraud deterrence

Sourced from the Malay Mail

The Land and Mines Department is tightening up loose ends to give better protection for genuine land owners from fraudsters.

In an exclusive interview with The Malay Mail recently, the department's senior officials said the changes were part of their proposal to amend the National Land Code (NLC) 1965.

Land and Mines director-general Datuk Azemi Kassim said the Natural Resources and Environment Ministry was eager to see a new set of rules to better protect property owners from unscrupulous syndicates.

"We are aware of land scams in the country. We are now trying to minimise such scams and this can be done with an amended NLC."

He said the department was in the midst of consulting relevant parties before drawing up the final paperwork by year-end.

Upon getting the Cabinet's green light, the department hopes the proposal will be tabled in Parliament by the middle of next year.

Azemi said about 75 per cent of the NLC needed to be amended. Among the proposed changes are the introduction of the Certificate of Correctness as an additional document when transferring land to another person and to implement the biometric system to ensure authenticity of a seller's identity.

The Malay Mail had reported on syndicates obtaining original land titles by forging documents, such as identity cards, letter of undertaking and signatures, and selling the land without property owners' knowledge.

Our probe on fake document-producing syndicates was made following our July 26 expose on a land grab case in Shah Alam involving Datin Murnina Sujak, whose four plots of land in Bukit Jelutong was sold by an impostor without her knowledge.

In the case, a woman named "Elizabeth George" managed to execute the deal using a fake MyKad and driving licence that bore her face but Murnina's personal details.

Land offices need to subscribe to NRD online service

Our investigation led to the admission by Selangor Land Office assistant director Nazrul Shukri Ali that they did not have an infallible method to ensure land titles were granted to rightful owners.

He also admitted thumbprint scanners in the State land offices were offline as their system was not linked with the National Registration Department (NRD). This was clarified by the NRD in our Aug 2 report.

On this, Azemi said thumbprint scanners distributed to the land offices were in working order, just that some of them had not subscribed to the NRD's online service.

"NRD handed us 180 units of scanners which we handed to the states. To have real-time details of the persons intending to transfer land ownership, land offices need to subscribe to the NRD's online service.

"With the introduction of the biometrics system, states will have no choice but to go online."

He said biometrics were already being used at the Federal Territory Land Office and the Temerloh District Office in which RM97,000 was spent to introduce the system in the latter office.

He said the Petaling district office, and two offices in Perak and Kelantan would have the system in place by early November.

"The Perak Land Office held a meeting a few weeks ago and they plan to introduce a similar system at the Kampar and Teluk Intan district offices."

Azemi also stressed land grab scams had been gradually reduced over the years.

"We have had cases where several land officers were involved with syndicates, including in Perak and Selangor. In 2009, a clerk from the FT office was arrested. We have not heard of any other case since."

Meanwhile, Land and Mines Office research and development director Mohd Shukri Ismail said the Certificate of Correctness would ensure lawyers' responsibility when dealing with land and property transfers.

"It will be part of the memorandum of transfer document. We will also conduct checks on the law firm and lawyers dealing with us.

"It is something practised in New Zealand and we feel it is high time to introduce it here. But we would like to know the Bar Council's stand before introducing it."

Also present in our discussion with Azemi and Mohd Shukri in Putrajaya were land management and legislation director Kamaruddin Mohd Taib, computerised land management director Mohamed Kamil Mohamed and computerised land management deputy director Ruhaimi Che Jusoh.

Certificate of Correctness

ACCORDING to the "Registrar-General of Land, Information Paper 2000/01: The certificate of correctness under the Land Transfer Act" by BE Hayes, the Certificate of Correctness was first seen in the New Zealand land system in 1870.

Here, a lawyer (when a lawyer is acting) has to sign a Certificate of Correctness. To give this certificate, the lawyer must be satisfied (among other conditions) with the identity of the person who has signed the instrument.

Hayes had illustrated the Basis of the Practitioner's Certificate of Correctness. (see graph above)

The article "Identity Fraud" published on lawlink.co.nz, stated: "It is important for lawyers to check on the identity of new clients.

Lawyers also have an obligation to check on a client's identity under the Financial Transactions Reporting Act 1996 (which is aimed at detecting money laundering).

In the future, lawyers are therefore more likely to request clients to produce original identification, and may ask for a second document to confirm identification."

Changes to deter land scams

● SUBSCRIPTION to National Registration Department (NRD): State and district land offices are advised to subscribe to the online NRD services to check the details of parties involved in transactions.

● Upgrade computer land registration system to version 2.8.4: Thirty of the 101 land offices in the country use the new system. Among the features include a "push email" feature where, once a land is registered, a copy of the transaction will be emailed to the law firm. There are also better firewalls to avoid hacking.

● Bar codes on original land titles.

● Checks at counter: Experienced land officers will be placed at the counters to vet documents before  proceeding with transfer application.

● Cooperation with police: Police to conduct audit trails if required to help investigations. This will enable cops and the Land and Mines Department to pin point officers involved in the transaction.

● Advertisements: The Land and Mines Department, in collaboration with the National Film Department, have produced and aired several advertisements advising property owners to pay their assessment to encourage them to check their land ownership status.

● Data cleaning: About RM5 million was spent to clean the records and data system for several States including Negri Sembilan, Selangor, Pahang, Kuala Lumpur, Terengganu and Putrajaya.

This was done to ensure records were updated while irrelevant files were deleted from the system.

History of the NLC

THE National Land Code (NLC) 1965 is the highest law related to land matters in Peninsular Malaysia. The NLC does not apply to Sabah, Sarawak and Labuan.

The Acts embedded in the NLC, however, does not and cannot override any prior law or decisions made before the NLC was fully implemented.

Nevertheless, the NLC has come under fi re for failing to protect property owners from losing their properties through land scams.

In the Adorna Properties Sdn Bhd vs Boonsom Boonyanit case in 2001, the Federal Court protected the buyer of such properties, leaving the real owner with little recourse. This decision was overturned by the same court last year, plugging a loophole in the law and now allowing owners who lost their land to fraudsters to redeem their right to their property.

In 2007, the MCA Public Services And Complaints Department recorded 16 cases of land scams with a total worth of RM20 million.

Drive-Thru Law Firm

As the trite expression goes, "...only in the U.S.A....." That said and, to be fair, the counter is designated for quick document signings and, pick-ups and drop-offs of documents. It is convenient and time-saving.

Sourced from here.

The Drive-Thru at the Kocian Law Firm

We all knew it would come to this eventually. The legal profession — once reserved for studious minds who diligently ponder the most complex moral, ethical, and legal issues of the day — has been reduced to a collection of short-order cooks, who whip up documents instead of eggs and toast.

Actually, that change probably happened many years ago. Generations ago, even. But there is something visual striking about the new Connecticut offices of the Kocian Law Firm. The firm is operating out of an old Kenny Rogers Roasters building. The Kocian lawyers are keeping the drive-thru window — and they’re using it as an easy and efficient way to exchange documents and quick advice with their clients.

Somewhere, Partner Emeritus is crying…

The story comes to us from NBC Connecticut. Here’s how Kocian intends to use the window:

“We have drive-thrus for ATMs and we have that customer convenience. Why not a law firm?” attorney Nick Kocian asked.

Kocian wanted to make things convenient for customers to easily drop off and pick up documents. He has been told this is the first drive-thru legal service in Connecticut and possibly the country.

But it’s not just a pick-up/drop-off service. You’ll also be able to ask questions:

A paralegal operates the window, hands out documents and answers questions.

“They really love it. It’s convenient for them,” said Rosa Castillo, one of the firm’s paralegals.

But, don’t mistake the quick and convenient drive-thru for a firm that’s short on giving customers attention.

I’d tell law students to try to summer at Kocian. Even if they don’t give you an offer, the drive-thru experience could prove invaluable during your next career.

Maybe the visual of receiving legal services at a drive-thru window isn’t so bad? I mean, the legal profession is a service industry. People who don’t want to be involved in a service industry probably shouldn’t go to law school, because they probably won’t make very good attorneys. Practitioners should always be trying to find way to better serve their clients.

But you have to ask yourself, how many years of school do you really need in order to be qualified to work at a place accepts customers at a drive-thru window? If it makes sense to turn law firms into fast food joints, then it would make sense to turn law school into a six week correspondence course.

The Malaysian Institute of Accountants is split – what’s next?

PETALING JAYA: The outcome of the Malaysian Institute of Accoun-tants’s (MIA) AGM on Saturday indicates that the gap in the membership may be widening between small accounting firms on one side, and the rest of the fraternity on the other. The former are dissatisfied with the profession’s regulatory framework and, judging from the voting at the AGM, their call for change is gaining momentum.

Those at the meeting rejected four resolutions, endorsed by the MIA council, to raise the annual membership subscriptions and the annual practising certificate fee. Similar resolutions failed to secure enough votes at last year’s AGM.

On the other hand, six motions that had been proposed and seconded by two members got the nod. These motions were essentially gestures of protest against certain rules that govern the supervision of accounting practitioners.

Christina Foo says it’s up to the council to recommend action.

Newly-elected MIA council member Subramaniam Sankar, a senior audit partner in the accounting firm of HALS & Associates, had proposed all six motions. The seconder was Chan Kah Kooi, also with HALS & Associates.

Subramaniam told StarBiz that the next step for the MIA membership and the Government was to determine whether the institute should be a regulator or a professional association.

“If it is decided that the MIA is to be a regulatory body, then we need another professional association to represent our interests and to provide technical expertise. We can’t leave it to the international accounting bodies. We should have a Malaysian organisation,” he added.

Set up under the Accountants Act 1967, the MIA’s chief tasks are to regulate and develop the accountancy profession in Malaysia. It is in fact a hybrid organisation, embracing the roles of both a regulator and a professional body.

MIA vice president Christina Foo acknowledged that by voting against the resolutions and for the motions, the members represented at the AGM had spoken.

“It’s now for the council to deliberate on these matters and to recommend the appropriate actions. If we need to follow up with the other authorities – and these issues do involve them – we will liaise with them,” she said.

According to Foo, the council meetings for the year had been pre-scheduled and it was up to MIA president Abdul Rahim Abdul Hamid to call for an emergency meeting if necessary.

At the start of the AGM in Kuala Lumpur, which lasted over four hours, a member questioned Abdul Rahim’s eligibility to chair the meeting, alleging that the president was not independent.

When members wanted to put this to a vote, Abdul Rahim instead stepped aside and Foo took over.

The dissenting mood continued when the resolutions and motions were tabled. The voting was via ballots, when it became clear that a show of hands would not go unquestioned.

One of the motions proposes that “necessary steps be taken so that all matters that affect only the rights of members in practice be voted upon only by members in practice.”

Another motion proposes that the MIA council takes steps to control the interview process for the issuing of audit licences, instead of a panel comprising various third parties and the MIA as the minority.

Subramaniam also proposed that there be a separate register for practitioners “so as to accord them with respective rights and obligations required to be in practice.”

The members at the AGM also agreed with the motion that the council should make efforts to abolish the need to renew audit licences every two years.

Subramaniam said if efforts to push for these changes through the MIA failed, it might be necessary for the practitioners to bypass the institute.

He is vice president of the Malaysian Association of Small and Medium Accounting Firms, which currently has about 50 members.

In contrast, the MIA has a total membership of almost 27,000. About two thirds of these are professional accountants in business, while a quarter of this population are in public practice.

According to the MIA’s latest annual report, as at June 30, it had 2,036 member firms, including 1,356 audit firms.

Industry insiders reckoned that at least 1,500 firms could be considered small.

Source: BizStar

Laid-off lawyers, cast-off consultants

Sourced from The Economist:

The downturn is sorting the best professional-services firms from the rest

Jan 21st 2010 | NEW YORK | From The Economist print edition

Illustration by David Simonds

WHAT do you say to a recent law-school graduate? “A skinny double-shot latte to go, please.” From New York to Los Angeles, Edinburgh to Sydney, the downturn of the past two years has hit the legal profession with unprecedented severity. As even some leading law firms struggle for survival, recruitment has dried up. The lucky few who get jobs are often being told to find something else to do for now, and report for duty on some far-off date. The same is true for MBA graduates seeking jobs in management consulting. Even the mighty McKinsey is said to be postponing start dates by several months.

Given that new graduates are the grunts of the professional-services industries, earning less than anyone else and working the longest hours, the lack of demand for their services is the clearest indicator of how bad things are. Although a deeper-than-usual cyclical downturn is largely to blame—and is hitting hardest those firms that specialised in financial-market activities such as mergers and acquisitions, and private equity—it is already clear that there will be long-term structural consequences, not least a growing gap between the best firms and the rest.

Cutting lawyers’ jobs used to be frowned upon in the profession and thus rarely happened, even in recessions. But last year was the “worst year ever for law-firm lay-offs”, reckons Law Shucks, a legal-industry blog. It counted 218 reports of lay-offs at 138 big firms, including no less than ten rounds of cuts at Clifford Chance, a British firm whose ambitious global expansion before the crisis now seems a big mistake. Thacher, Proffitt & Wood, a New York firm which by 2007 earned around half its revenues from structured finance, was devastated by the bursting of the subprime mortgage bubble and ended up being dissolved in December 2008. It was followed in March 2009 by the venerable but property-exposed Philadelphia firm of Wolf, Block, Schorr and Solis-Cohen.

As for management consulting, in the third quarter of last year Marsh & McLennan reported a 10% decline in its consulting revenues, in line with the overall shrinkage of the industry. Figures from other big firms are patchy, since they are private partnerships. Still, in 2009, to ensure they had enough cash to weather the financial storm, even leading firms such as McKinsey and BCG held back a chunk of their partners’ bonuses. Of the big three, McKinsey and Bain are said to have suffered slight falls in revenues last year, while BCG, after a strong second half, was slightly up. All three deny making lay-offs—although it is said that they made their “attrition rates” increase, by significantly raising the bar on their traditional “up or out” policy. McKinsey now has 10% fewer consultants.

The experience of some once-booming boutique consultancies has been even worse. Marakon Associates was bought for a song by CRA International after the bankruptcy last January of its parent, Trinsum; and Katzenbach Partners was saved by Booz & Company after shrinking alarmingly in the first six months of 2009.

Perhaps the hardest hit of the professional services has been human-resources consulting, where revenues fell by 20% in Britain last year. Pay-and-benefits consultants also suffered: sharply falling revenues were one reason why Towers Perrin and Watson Wyatt decided to merge last year. And although accounting firms are less exposed to the cycle than most professional-services firms—annual reports still have to be prepared and audited, whatever the state of the economy—in the year to last June the two biggest accountants, PricewaterhouseCoopers and Ernst & Young, each suffered 7% falls in revenues.

Of course, firms with countercyclical activities, such as bankruptcy work, have fared better. Consultants offering outsourced services, like IBM and Accenture, have also done well as cost pressures have driven other companies to use their services. In particular, legal-process outsourcing is booming, as law firms parcel out some of their more basic work to reduce costs. One of the leaders of this nascent market, Pangea3, whose offices in Delhi and Mumbai take on work from clients worldwide, expects to earn twice as much revenue this month as in January 2009.

Another booming business is helping the government sort out the economic mess. This is favouring the market leaders most, says Heidi Gardner of Harvard Business School, because the crisis has made governments risk-averse about whom they hire. Slaughter and May, a big London law firm, earned £33m ($54m) for its work on the financial crisis, including on the nationalised Northern Rock bank. Sullivan & Cromwell in New York has also done nicely from helping the American government with troubled banks. Big management consultancies have done well too, despite their poor record in the public sector (see Schumpeter). BCG, for instance, has advised the quango created to oversee America’s state-rescued car firms.

Under the knife

Though the best will gain at the expense of the rest throughout professional services, the legal profession seems likely to undergo the most profound structural changes. For the first time—long after IT and finance departments went through the same experience—the corporate legal departments that hire law firms are under great budgetary pressure, and are thus demanding much better value from them.

In a recent paper, “The Death of Big Law”, Larry Ribstein, a law professor at the University of Illinois, argued that after decades without changing, law firms are likely to have an outburst of experimentation with different business models: even the venerable and lucrative “billable hour” method of charging clients is in doubt. The experimentation may include more firms abandoning their traditional partnership model to go public, following in the footsteps of an Australian law firm, Slater & Gordon, which went public in 2007.

Not everyone is excited by this idea. “At firms like McKinsey it was the partnership ethos that helped them through the crisis, as partners believed they were in it for the long term. At some law firms too,” says Jay Lorsch of Harvard Business School. Contrast that with the investment banks that switched from being partnerships to public companies, such as Goldman Sachs. “If you talk to some older Goldman partners they are unhappy with the behaviour of those now running the firm, who have abandoned the partnership ethos in favour of aggressively pursuing profits and have ended up looking like greedy bastards.” As they adapt to survive a tougher climate, lawyers and consultants will need to ensure that any changes do not put their culture of professionalism at risk.