The Law Monopoly is Killing Your Startup

Lawyers need to innovate and reach for the stars if they hope to survive. Also, flowers are pretty.

Lawyers need to innovate and reach for the stars if they hope to survive. Also, flowers are pretty.

Every week, almost everyday, a budding entrepreneur asks me for help with her startup. The law of business is a large and complex space, and there is no way I can explain to a new business person everything she needs to know. Worse, when it comes to helping the startup with its legal issues, there is no effective way to bridge the gap between what I need to charge to make a living and what they can afford for the issues they face. I cannot do the work for free, and my options to solve their issues for what they can pay are almost non-existent.  The problem lies at the heart of how our legal industry is structured and the effective monopoly lawyers have over the law.

The State Bar is a Monopoly

Think about it. The only people who can practice the law are lawyers. They have to go to undergraduate, then law school, then pass the bar before they can practice. Without these qualifications, a person will be charged with the unauthorized practice of law for trying to help other people with legal problems. In the beginning (and probably still today), this was a great thing because it protected people from charlatans pretending to be lawyers. But now, this licensing procedure has turned into a monopoly where lawyers face no competition (except from other lawyers), have little reason to innovate, and have every incentive to lock up the law behind closed doors. No competition means no innovation.

Structural Inefficiency Makes Lawyers Unaffordable

This lack of innovation is what makes law so unaffordable for regular people. The tools that automate my job are expensive and awful (they don’t work). I have to pass those costs onto my clients. Good templates cost money to obtain. Legal knowledge is generally available only through expensive continuing legal education classes. The courts are slow and waste everyone’s time. There are few free resources with quality advice, documents or guides. What does exist is not comprehensive, or not online, or both. These structural deficiencies increase my costs, and there really is no way for me to practice law in a traditional way while also making it affordable for my clients.

Lack of Options Creates Unnecessary Risk for Startups

The cost of legal advice is very expensive for startups. Either they spend money they don’t have for advice they really need, threatening the financials of the business, or they turn to services like NOLO or LegalZoom for help. While the latter options do provide good forms, they typically shy away from legal advice. They don’t tell you how to fill out the forms they give you. And if you don’t know how to fill out the form, you run the risk of serious legal mistakes. (I have seen this in my practice). Other startups just take a, “Oh well, we’ll deal with it later,” attitude, which is fine as long as nothing goes either really well (leading to disputes over money, control and taxes) or really terrible (leaving someone stuck with the bill).

Software as a Solution

The industry I think lawyers should attempt to copy is software. The software industry is highly competitive. There are tons of free/cheap resources and tools to help anyone learn to code. It basically gives most knowledge away for free. And yet, skilled software programmers get paid bookoo bucks for what they do. The only barrier to entry is time and practice, but people still pay developers good money to build software. Lawyers want to charge for everything: their time, the documents, gas, everything. They want to give nothing away, but if the internet, the sharing economy, and software have taught me anything, it is that when you give away your knowledge, people want to hire you because they can see your skills and because they recognize that you can solve their problem while saving and/or making them money in the process.

The practice of law needs to change. The price needs to come down so it is easier for people to start businesses/draft wills/get divorces/sell property/etc….  But we, as lawyers, need to use tech so that the quality goes up not down. This is the problem I see. This is the problem I want to solve. Stay tuned.