Unbundled Legal Services: Opportunity or Threat?

Lawyers are part of a Changing World.

If you’ve been reading this blog recently, you know that we’ve been focusing on the hard realities of a rapidly evolving legal profession, along with lawyers’ general reluctance to confront them.  This week we will take a look at unbundled legal services: a runaway freight train of a trend that in many ways embodies the complexities of our changing business.

Also known as “limited scope representation,” “legal knowledge management” or even “discrete task representation,” this rapidly emerging business model could just as easily be called “a la carte law shopping.” The principle is simple and compelling: In order to reduce overall costs, client and attorney agree to limit the scope of the attorney’s involvement for a specific legal representation scenario. The lawyer provides representation or support for clearly defined legal tasks but hands over overall responsibility to the client.  The client saves money by paying a flat fee rather than a retainer and/or hourly fees and in the process assumes greater control over their legal destiny.

From the consumer’s point of view, this arrangement is a no brainer.  Why pay for the silver coffee service in a law firm’s conference room when you can source many of the key documents and components for your case online?  You do the footwork and buy your own cappuccino at Starbucks.

In an unbundled world, a client willing to shop for a “legal product” can save a lot of money and direct their own legal destiny.  In return, they must only be willing to forego the psychological safety net of full service representation.  The appeal is immediately obvious, the downsides less so. What could go wrong?

Catching up with everyone else
This new legal business strategy reflects developments in areas of commerce.  Take, for example, another industry that had things their own way for a long time: home entertainment delivery. For years there has been an ongoing dissatisfaction with cable/satellite companies’ practice of offering over-priced programming packages that require customers to pay for channels they don’t want.  Yet even in this semi-regulated, quasi-monopolistic market, a combination of consumer pushback and free-market technology have forced content delivery outfits to begin unbundling their channels.  Ironically, the cable industry may be up-ended even before it has had sufficient time to extinguish the network television model that dominated home entertainment for over half a century. The ability to download video via Netflix, Roku and Amazon has changed everything again.

These events (and dozens more) have not gone unnoticed by the more forward-looking, entrepreneurial members of the legal community who see the upside of delivering targeted legal tools in more efficient ways. And there are also plenty of non-legal organizations looking to grab the low hanging fruit, particularly public accountants and other financial services firms.  In fact, virtually every other market segment has moved to add value and remove expenses by deploying the internet and other disruptive technologies, while the historically closed law profession has been slow to get it.  The reason behind this movement is simple economic principle called supply and demand.   There is a strong need for legal services amongst the lower income people who have not been able to afford traditional legal services, and there are entrepreneurs and venture capitalists out there who recognize this untapped market and are using technology to service this market.

And, as usual, lawyers now need to play catch up.

The Genie is Not Going Back Into The Bottle

In 2002, the ABA Model Rule of Professional Conduct 1.2(c) formally opened up the possibility of unbundling: “A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.”  In the years since, the deployment of limited representation strategies began trickling and then spilling over into mainstream law practice.  By the time the California State Bar issued new ethical guidelines officially legitimizing the practice in 2009, the unbundling train had long left the station. Lawyer regulators have followed and adapted their rules.

Hand in hand with official support for on demand lawyering has been a corresponding wave of online advertising targeted to more focused markets – markets that have been underserved by legal services.  While certain areas of practice have always been more compatible with targeted messaging (family law, personal injury), the advent of unbundled services transforms the art of connecting with clients fruit into a science.  Not only do limited representation scenarios cost less, they are easier to market.

Within the past couple of years, we have witnessed the rise of online search engine-based sites that offer a veritable smorgasbord of legal services for set fees.  Some of these are backed by traditional law firms, but others guide the law shopper to legal support services companies, often based in low-wage countries overseas. And as more U.S. lawyers catch on, some of these unbundled products turn out to be new “brands” set up by traditional law firms.

Challenges and Opportunities

The truth is that many lawyers are offended by what is perceived as the commoditization of the legal profession.  It runs counter to our long held understanding of a lawyer’s special place in society and potentially cedes more control of the relationship with our clients than we are comfortable with.  But none of these means the end of the legal profession, merely that we need to change our approach to the legal service market.

There is no question that this new paradigm opens the door to downsides on both sides of the coin. There is enormous potential for substandard representation and even fraud in the marketing of unbundled legal services. There is certainly no reason to think that an assembly line approach to legal representation is going to improve the quality of advocacy, but it is also true that the standards of traditional lawyering have always run the gambit as well.

There are other landmines as well, including the possibility that traditional lawyers may be liable for malpractice lawsuits.  And there is no way around the fact that fees charged by attorneys for a wide range of services is under downward pressure.  Even law firms are outsourcing some types of expertise to the equivalent of online junior partners and forcing the largest firms to change their business model.

Nevertheless, there is at least one possible upside to this paradigm shift and it is connected to a principle of social justice.  Some of the most powerful arguments for unbundling legal services concern better access to legal services for poor and middle class citizens.  The ABA has long recognized that lower and moderate income households have historically avoided bringing cases to the legal system because of the high costs.  Unbundling is likely to make legal representation affordable for a segment of the population previously excluded from the game. At the same time, the slashing of legal aid budgets almost everywhere is removing a resource that has served less advantaged population segments.

In other words, there is every possibility that unbundling legal services will increase the value of the legal services pie as a whole. The law services market will grow even as traditional fee structures are sliced up.

For my money, the positive approach to the unbundling monster is to make friends with it and put it to work for you.  The very definition of “unbundling” means a law business can incrementally add components of the model into an existing business while still preserving a conventional practice at the core.  In a world where dentists are making more money giving collagen injections than cleaning teeth, we need to be prepared for anything.

For small to mid-sized firms languishing in the doldrums of uncertainty, incorporating limited representation options into an existing law business could well provide a jump start.  It is impossible to predict exactly where all this will lead, but forward-looking legal businesses are beginning to integrate unbundled services into their practices.  Emerging a la carte services include research, document review, discovery material organization and exhibit preparation. Tech savvy organizations are proffering teleconferencing services and cloud computing-based online dispute resolution.  Lawyers in many jurisdictions have begun offering legal ghostwriting, coaching and even role playing services in lieu of full representation. Yet others are opting to provide courtroom representation only in the trial phase.

Taking a cue from CPA firms, a new generation of attorneys may in due course find themselves pursuing professional roles as legal advisors and consultants in a role similar to that of a financial advisor.

Through most of this post I have avoided taking a strong position on whether the trend toward unbundled legal services is “a good thing or a bad thing”. That’s because how we lawyers feel about it ultimately doesn’t matter, in the same way there is no point in judging a tsunami.  It’s better to spend your energy getting to high ground while you are able to control the situation. You never know what opportunities you might find up there.

In Illinois scope representation is governed by the Illinois Rules of Professional Conduct and the Supreme Court Rules. Supreme Court Rules 11, 13 and 137 were amended effective July 1, 2013 to permit lawyers to provide limited scope representation in civil proceedings.

The Illinois Bar Association has provided numerous resources and guidelines for lawyers exploring unbundling services.

The American Bar Association offers additional resources to help lawyers, bar leaders, the judiciary, court administrators, scholars and the media better understand and critically analyze the issues involved in self-representation and unbundled legal services.