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MCLE Self-Assessment Test

Bar association flattens fees to lure consumers

By Psyche Pascual
Staff Writer

In a move to remain competitive with online companies that use the web to offer consumers low-cost legal services, California’s largest voluntary bar association has launched its own flat fee service.

Flat fee graphicThe Los Angeles County Bar Association began offering flat fees in April through its existing lawyer referral service With nearly 24,000 members in Los Angeles, Riverside, San Bernardino and Ventura counties, LACBA is also among the largest voluntary bars in the United States.

The association’s move was sparked in part by competitive pressures from the online legal services companies already charging flat fees for simple document filing, such as wills and business forms. Some brick-and-mortar law firms and sole practitioners that normally charge hourly, also advertise flat fees for simple legal cases, including criminal law.

“Consumers have become accustomed to these types of services. … Consumers are purchasing all types of goods online,” said Seth Chavez, director for LACBA’s lawyer referral service. “That’s where our program has gone. It’s the larger picture of what consumers are used to experiencing in the market place. That’s what the legal services market has capitalized on.”

Consumers will be charged flat fees for only three types of legal services: $800 for an uncontested divorce, $800 to file forms for a limited liability company and $500 to register a trademark. Those amounts cover only attorneys’ fees and do not include extras, such as filing fees and postage. In return, attorneys pay an annual fee to get referrals from the service.

Chavez said consumer response so far has been so positive that LACBA may add other kinds of legal cases to the flat fee program within the year. He hopes to attract experienced consumers, those who know the cost of legal services, as well as people who know nothing. “Flat fees offerings help consumers to better understand the costs,” he said. “They put some of the myths about the costs of legal services to rest.”

LACBA’s foray into flat fee legal services has already sparked interest among other voluntary bar associations competing with online legal service firms, including Rocket Lawyer, Avvo and LegalZoom.

Online legal services firms attract consumers with do-it-yourself forms for consumers who need basic services, such as starting and running a small business, drafting simple wills or completing a simple divorce with low fees, often under $100.

According to a 2015 report by market research firm IBIS World, the online legal services market generates more than $4 billion a year and is expected to grow about 10 percent annually in the next decade. About 52 percent of consumers who use online legal services are individuals and about 41 percent are business owners, according to the report.

Other bar associations around California were quick to praise the LACBA’s flat fee business model and are watching to see what kind of response it gets from consumers. Carole Conn, director of the 7,500-member Bar Association of San Francisco’s Lawyer Referral and Information Service, said legal referral services across the state are due for a shakeup.

“We are absolutely watching [LACBA’s program] very closely,” Conn said. “We’re all rowing in the same direction. One would be a fool to stick your head in the sand and pretend these changes aren’t meaningful.”

Barbara Arsedo, lawyer referral service and moderate means program coordinator for the roughly 1,500-member Contra Costa Bar Association, said offering flat fees make sense for clients on the lower end of the economic scale.

“We have clients that don’t meet the low-income criteria. They can’t afford the whole fee – hourly, retainer – for an attorney,” Arsedo said.

But the response to flat fees and other online legal services from attorneys has not always been positive.

In January, the American Bar Association abandoned ABA Law Connect, a pilot program with partner Rocket Lawyer that allowed consumers to ask a lawyer a question for only $4.95. The program tested in California, Illinois and Pennsylvania was intended to offer legal services to cash-strapped businesses. After drawing sharp criticism from some voluntary bar association officials, it ended after only three months.

LACBA’s flat fee program also generated some negative responses among attorneys initially. “Many thought that this was a very bad idea, that the sky was going to fall,” Chavez said. But since its launch, LACBA has seen an increase in attorneys joining the lawyer referral service. The association may even add new types of flat fee services within the year, he said.

“I suspect that some bars will integrate programs like this throughout the country once there’s been a little feedback,” he said.

Consumers priced out of the legal services market will continue to look for do-it-yourself alternatives, others said. Only last February, the online legal firm expanded into 18 states – including California – by launching a service offering legal advice by phone for a flat fee. Avvo has about 2,200 attorneys participating in its legal services, about 400 in California, according to Avvo officials.

Seattle-based Avvo CEO Mark Britton said his firm found a large market among consumers because a majority of them – up to 80 percent, he said – can’t afford an attorney or find the process of hiring one painful.

Attorneys have to overcome a huge obstacle: “Lawyers just make things complicated,” said Britton, a former counsel for Expedia Inc. In the end, it will come down to customer service, he added.

LACBA “absolutely has a lot of credibility and part of their charge is to build products for the consumer,” Britton said. “As far as us vs. them, we are talking about such a massive market that there is room for a lot of different approaches.”