Productized Legal Services is the next Big Thing

I started developing software applications that substitute for a lawyer's work many years before the introduction of AI tools and applications. AI platforms will power the creation of "productized legal services" that substitute for the work of a lawyer and are distributed directly to consumers and small businesses.

Here is my definition of "productized legal services": 

A software application that enables a user to solve a legal problem without the assistance or services of an attorney.  

A "law product" is a digital application. A "law product" doesn't have to be a digital application, but in almost all cases, it is. An exception, for example, is a self-help legal forms book. Unlike a traditional legal service, it is scalable and is sold to many users.

A variation of this "product" concept is automated legal services. One can think of the concept of "productized legal services" as existing on a continuum, with one end of the spectrum represented by a law product that does not involve an attorney's services. An example is a DIY interactive legal form that a consumer purchases directly. Software-powered legal services can also be scalable, packaged, and sold as if they were a "product." An example is a software-powered legal service where the client completes an online questionnaire, which generates a legal form for an attorney's review. The attorney provides assessment, advice, and custom drafting, as well as interaction with the client. It is less scalable than a "law product" but still scalable. I would call these hybrid services because there is a human service element.

Other examples of “automated legal service” are applications that analyze contracts and software applications that do predictive coding as part of the discovery process. In both instances, the software is replacing the work of lawyers. Companies that provide these applications to law firms are providing pure legal products, in my view. If these products are provided as part of a subscription service, the service is typically referred to as SaaS, or Software as a Service. Still, this pricing mechanism doesn’t change the underlying product character of the software application.

Differences between a “law product” and an “automated legal service.”:

Law Product Characteristics

• One-to-many scalable distribution models.

• Off-the-shelf buying experience.

• Not subject to state regulation in most instances.

• High margins.

• Larger addressable market.

• The attorney-client relationship is not created.

• Financing external. Can attract outside investors.

• Easier to sell as an asset – a better exit.

  
  

Automated Legal Services Characteristics

(often called "Technology-enabled legal services")

Similarities to Law Products:

• One-to-many scalable distribution models.

• Service is standardized so that all clients receive the same experience at the same price.

• Fixed pricing.

Differences from Law Products:

• Regulation of the attorney relationship applies.

• An attorney-client relationship is created.

• It can be offered only in the state where the attorney has bar membership.

• Subject to affiliate business rules.

• Often subject to “Unbundled legal services" rules.

• Attorney has strict liability and is covered by the attorney's malpractice insurance.

• Financing development from the law firm or personal funds. You can't have outside investors.

• If the law firm owns software applications, it must sell as part of a law practice sale. Harder to exit or sell effectively for capital gain.

• Development costs should be amortized when software applications are developed for internal use.

Here is a summary of the differences in these service offerings:

Offering	Distribution	Delivery	Pricing	Example
Traditional Legal Service	One to One	In-Person or Virtual	Hourly Billing	Legal Advice
Automated Legal Service	One to Many	Virtual	Fixed Fee	Automated Legal Form + Legal Advice
Law Product	One to Many	Virtual	Fixed Fee	Automated Legal Form
SaaS Service Subscription	One to Many	Virtual	Subscription Pricing	Newsletter

Make Money While You Sleep?

Lawyers often envision making money while they sleep.

Unfortunately, it is not as easy as it seems. The journey toward creating a successful legal product is complex, with numerous detours and failures.

I know this because I have been actively working in this market space for over 25 years. In 2003, I launched one of the first online law firms to offer highly automated legal services in family and divorce matters at www.mdfamilylawyer.com. However, it required a few years of further development before the volume scaled. I continue to operate this online law firm and enjoy residual payments from several other law product ventures, but these ventures were not overnight successes.

Often, failure can be attributed to a single factor, such as not understanding how to reach your target market.

You don't have to be a programmer to create a "productized legal service" business. I am not a programmer, but I know enough to recruit and manage programmers at the right price. You need to have entrepreneurial skills and the know-how to develop a business. If your law firm is failing because you do not know how to grow the business side of your law firm enterprise, I would be wary about jumping into the software application business, which can be equally challenging.  Lawyers, like programmers, are trained to be technicians, but the major factor that accounts for success is possessing entrepreneurial skills. If you don't have those skills, you need to learn them fast, or get a job and work for someone else.

Who is this blog for?

This blog is for attorneys and others who develop and sell legal products and automated legal services.

In this blog, I plan to report on the following topics:

• Law firms are developing automated legal services.

• Law firms are developing legal products.

• Non-law firms that are developing law products.

• Pro bono and Legal Service Program efforts to encourage the development of legal products and automated legal services.

• Regulatory and ethical issues are involved in offering legal products.

• Marketing approaches to providing legal products.

• Tech tools that enable the development of legal products.

• Financing the development of your law product.

I hope to help lawyers and entrepreneurs who have decided to go down this path avoid mistakes and increase their chances of success.