LegalZoom: Substance Over Forms?

LegalZoom has attracted investment from two leading venture capital companies, according to reports. Both Kleiner Perkins and IVP have taken equity from existing investors. It was reported earlier this year that LegalZoom was considering an IPO. I was intrigued to learn that LegalZoom has 500 employees. Press reports typically refer to LegalZoom as a "legal document company." But you don't need 500 people to collect forms and update and market a website. So I looked a bit more closely at the LegalZoom home page. If you do, you see a blue box on the lower left promoting something called "Legal Advantage." It is explained as "hands-on help from an experienced attorney." Ah-ha. Right now, you can't click on the blue box, they want you to call. The embedded code in this image contains this html tag: With Legal Advantage, you'll have unlimited access to attorney help for new legal matters. Legal Advantage is available in most states and is a separate offering than our legal document service. Please call (877) 657-8787 for details. (LegalZoom might want to be careful with this "unlimited access" stuff, even in code buried in images. Yes Virginia, there are terms of service that apply, which Legal Advantage attorneys may not help you interpret. Section 6(b), "Excessive Use," might be a good place to start.) So if use the Google to drill into the LegalZoom site, you find LegalAdvantage Plus for personal matters and Business Advantage Pro for business clients. Both available for monthly memberships. Here is what the business pricing is: So the VCs are buying into a legal version of the Netflix subscription model. This seems more like an attack on Pre-Paid Legal and other related plans. This is a tough market; like life insurance, these plans are typically sold, not bought. But wait, that's not all. The other half of the monetization story of Legal Advantage that brought marquee VCs to the table has to be lead generation. Here are some random lawyers, auto-magically generated by the LegalZoom website. The pitch to them likely goes something like this: be a Legal Advantage participating lawyer, do some legal work at a loss on the front end, but get leads for better work in the process. This can work, but it is a hard sell to take clients who think they are paying $13.99 per month and get them to buy business services at $267.98 per hour. This lead-gen would likely require Advantage Attorney to pay something for the privilege of participating. This is another revenue stream to attract investors in an IPO. They may even plan to provide lead-gen to attorneys outside the Advantage program. Probably charging more for those leads, no doubt. (Note to LegalZoom: your website says all "Advantage Attorneys" have at least "10 years experience," but two on the list as of this morning have only 8 years, and one has only 3 years. And they are all from the same firm). If LegalZoom goes forward with plans for an IPO, their S-1 will be an interesting read. They may need some time to let their Advantage programs gain some traction. I would be surprised that a legal forms business alone would support an IPO. This business is probably high-margin once you have the forms, but is more of a one-off purchase for most people. Legal Advantage is all about recurring revenues for LegalZoom. Longer term, a good percentage of those 500 employees will be marketing Legal Advantage to people who bought forms from LegalZoom. As I said before, a hard sale, and there is probably a fall off after a few months as people scrutinize their credit card statements. Netflix works really hard to stay under $10 per month. So what is at first blush a potential sign of increased venture capital interest in the legal field may really be more of an outlier investment. It is impressive nonetheless, and a real accomplishment for LegalZoom.

Read more detail on Recent Corporate Law Department Posts –

Legal notice about the LegalZoom: Substance Over Forms? rubric : Hukuki Net Legal News is not responsible for the privacy statements or other content from Web sites outside of the Hukuki.net site. Please refer the progenitor link to check the legal entity of this resource hereinabove.

Do you need High Quality Legal documents or forms related to LegalZoom: Substance Over Forms??

This entry was posted in Corporate Law and tagged , , , . Bookmark the permalink.

Leave a Reply