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Rocket Man

By Kari Santos | Jun. 2, 2014
News

Law Office Management

Jun. 2, 2014

Rocket Man

Many online legal services companies are competing for business today -- but Charley Moore wants Rocket Lawyer to be the go-to website for this market.

The seventh-floor downtown offices of the online legal services company Rocket Lawyer don't look like your typical San Francisco tech start-up. There are no cabinets stuffed with energy drinks or Google Glass-wearing geeks high-fiving each other at a whiteboard filled with computer code. But there is a ping-pong table, and plenty of rocket-themed paraphernalia sprinkled around.

Workers quietly tap away at their computers, while smaller teams meet in glass-enclosed conference rooms - one of which features a movie poster for the courtroom drama The Verdict. A large, open space houses a call center staffed by more than a dozen customer service employees, who purr in the reassuring tones used at law offices everywhere: "When you reach out to that attorney, I'm sure they can help you with that. ..."

Presiding over all of this is Rocket Lawyer's founder and CEO, Charley Moore - who exudes both the entrepreneurial energy implicit in rocket and the calm rationality of lawyer. Throughout his career, Moore has kept one foot firmly planted in the legal world, and the other in start-up land.

Moore's first job as a lawyer, during the dot-com boom of the late 1990s, was in Silicon Valley at Venture Law Group, a pioneering firm whose clients included emerging tech start-ups such as Yahoo, Hotmail, and WebTV Networks. Moore later launched his own start-up, Onstation, to serve the automotive industry, then sold the business to a digital marketing company.

Moore's experience both as an entrepreneur and as an attorney for start-ups convinced him that something was missing in the market - namely, a simple and affordable way to handle common legal situations. So in 2007 he launched Rocket Lawyer. A true entrepreneur, Moore put his own money on the line to fund the business, risking personal bankruptcy if it failed. And like a true lawyer, he protected his idea, securing U.S. Patent No. 8,255,800, "Systems and methods for facilitating attorney client relationships, document assembly and nonjudicial dispute resolution." Rocket Lawyer was in business.

"The legal system ... ran out of gas in the latter part of the 20th century," Moore says. "The physical, paper-based system couldn't keep up with the increasingly electronic commercial economy. Now, the Internet is helping the legal system be more efficient at what it was already doing. But it's also bringing more cases and controversies into the legal system ... The majority of the people who use our network have never interacted with a lawyer before. Ever. That, to me, is the big idea."

With a deep, resonant voice and an easy laugh, Moore, 48, turns evangelical when discussing his "big idea," serving consumers and small-business owners who have never hired a lawyer before because of cost or complexity.

Currently, more than 25 million people and 4 million business owners use Rocket Lawyer to create custom legal documents, connect with a lawyer, incorporate a business, draft a will, or handle other common legal situations, such as bankruptcy or divorce. The company has secured nearly $51 million in funding from venture capital firms, including Google Ventures. Last year, according to Moore, Rocket Lawyer pulled down revenue of nearly $30 million, and the company has twice made Inc. magazine's list of the nation's 5,000 fastest-growing companies. However, the company has yet to show a profit.

Rocket Lawyer is hardly the only company these days hoping to offer legal services online and connect people with attorneys. (See "The Law, Virtually"). The highest-profile player in the space is LegalZoom, co-founded in 2001 by Los Angeles attorney Robert Shapiro, best known as a member of O.J. Simpson's defense team, and three other lawyers. The private company doesn't disclose revenue figures, but in a public filing for a since-abandoned IPO, the site reported $156 million in revenue for 2011. In the same filing, LegalZoom stated that customers placed 490,000 orders on the site that year - including more than 20 percent of the new limited liability companies formed in California. Earlier this year LegalZoom sold a controlling stake for more than $200 million to European private equity firm Permira.

According to Moore, Rocket Lawyer focuses more on lawyers than LegalZoom does, integrating attorney services directly into the legal documents workflow online. But the two companies do compete against each other: Both sites strive to make legal services affordable to everyday customers; both offer a wide range of customizable legal documents, with step-by-step instructions on how to complete them.

The competition between Rocket Lawyer and LegalZoom has also spilled over into the courts, in an acrimonious legal battle. In November 2012 LegalZoom, represented by heavyweight litigator Patricia L. Glaser of Glaser Weil in Los Angeles, sued Rocket Lawyer for trademark infringement, unfair competition, and false advertising. (LegalZoom.com, Inc. v. Rocket Lawyer, Inc., CV-12-9942 (C.D. Cal.)). (Goodwin Procter is defending Rocket Lawyer.) Last year, a federal judge denied LegalZoom's motion for summary judgment, and the case is scheduled to go before a jury in October. Even if the case is settled before then, it's clear that some bad blood lingers between Rocket Lawyer and LegalZoom.

"From the beginning, [Rocket Lawyer] have been imitators, not innovators, from their service to their name," says Chas Rampenthal, LegalZoom's general counsel. "We think the suit has gone on as long as it has because Charley Moore wants it to keep going. He likes the publicity he is getting. He needs it."

Moore sees the lawsuit as an attempt by LegalZoom to misuse unfair-competition laws to protect its own market position, noting it was filed just as Rocket Lawyer was launching its service in the United Kingdom.

"I always wanted to be a lawyer from really early on," Moore says. "I was on a trial team in high school that won the Missouri mock trial championship, and that made a big impression on me."

After graduating from the U.S. Naval Academy with a degree in history, he worked briefly in the Washington, D.C., area as a research assistant on a naval logistics study until Saddam Hussein invaded Kuwait. He immediately volunteered to serve in what became Operation Desert Storm. Before the war was over, Moore applied to law school; he earned his JD from UC Berkeley's law school in 1996 and was admitted to the California bar the same year.

As a lawyer at Venture Law Group, one of his first clients was Yahoo. "I was working on exciting issues," Moore recalls. "At that time, people still didn't know answers to questions like, 'Was content on the Internet copyrightable?' And, 'What are the defamation rules for online bulletin boards?' There were so many things that are now taken for granted, precedents that didn't exist. I was in love with it."

Moore left VLG in December 1998, while the firm was still flying high, and he spent the next several years as an entrepreneur, building Onstation. He also saw how in the digital world, even a runaway success like VLG can suddenly founder. The dot-com collapse of the early 2000s nearly brought VLG down with it, and in 2003 the beleaguered firm was forced to merge with San Francisco-based Heller Ehrman White & McAuliffe, which in turn went belly-up five years later.

After Moore and his investors sold Onstation in 2006, he looked around for another entrepreneurial opportunity. He found it in the intersection of two passions: technology and the law.

"When I looked at the law, there really wasn't anything in the cloud that could take a person from start to finish and back again with everyday legal matters," says Moore. "The operative thing is in the cloud. Anything that can be digitized will be. It's just too bone-crushingly efficient. When this idea came to me, everything else melted away."

Unlike LegalZoom, Moore says, Rocket Lawyer from the start has integrated attorney services in the online consumer legal documents workflow, one of the discriminating features that forms the basis of his patent. Moore says LegalZoom was "late to the party" in offering users one-on-one consultations with licensed attorneys.

"The key difference between Rocket Lawyer and Legal Zoom is that attorneys are front and center as part of the Rocket Lawyer solution, and always have been," says Moore, who had to convince his wife, Monique, to let him roll the dice on the venture, putting the family's finances at risk. (She now directs Rocket Lawyer's HR department as the company's vice president of administration.)

Rocket Lawyer managed to generate $1 million in revenue in its first twelve months, a respectable sum for a start-up. It wasn't long before outside investors saw the opportunity in Moore's company: LexisNexis invested $2.1 million in 2009, and two years later Google Ventures, August Capital, and Investor Growth Capital kicked in a combined $18.5 million.

Rocket Lawyer offers do-it-yourself legal documents for users who don't want an attorney's advice - but connecting with legal help is encouraged and available. For $39.95 a month or $399.95 a year, Rocket Lawyer Legal Plan members can create, edit, store, print, and share as many legal documents as they want, getting step-by-step instructions along the way. They can sign their documents electronically and store them in the cloud on Rocket Lawyer's servers, making for entirely paperless transactions. Members also get free help with quick legal questions and 40 percent off fees for attorneys linked through the site. New users are offered one free document and a one-week free trial membership.

(LegalZoom charges users a monthly fee, starting at $9.99, for consultations and document reviews with network attorneys.)

Certainly, Rocket Lawyer has its share of people who download a free document and never come back. But the site courts users who have recurring legal needs, such as small and medium-size businesses that need to incorporate, draw up contracts, protect intellectual property, and manage business disputes. Those companies find the monthly or yearly subscription an efficient and relatively inexpensive way to handle their ongoing legal needs. Currently, Rocket Lawyer processes more than 40,000 legal documents a day; the most popular are business contracts, and documents pertaining to family law.

Unlike many other online legal document services, Rocket Lawyer cuts attorneys in on the action, and the work lawyers do via the site can lead to more opportunities to represent clients. Self-help legal documents are fine for simple matters, Moore says, but some legal issues are so complicated, they demand professional advice.

"That's why I put the word lawyer in the company name," he says.

Any licensed attorney can post a free profile on Rocket Lawyer. Attorneys who want unlimited access to its warehouse of electronic legal documents and the site's e-signature service can pay $39.95 a month, like any other member of the site.

Attorneys can also apply to be a Rocket Lawyer "On Call" attorney, a program that matches counsel with users, who get specific legal questions or issues addressed. There are roughly 530 On Call lawyers (about 100 from California), representing a range of practice areas, from real estate to employment law, with a particular emphasis on attorneys serving small and medium-size business owners. On Call attorneys get real-time client requests by phone or email, and a Rocket Lawyer representative helps to schedule a time for the parties to talk. (See "Rocket Lawyers On Call".)

In March, Rocket Lawyer launched the Attorney Task Board, a cloud-based client services tool that manages each On Call lawyer's interactions with potential clients. Questions are limited to 600 characters, and responses are confined to 1,200 characters to simplify the interaction. The tool incorporates some of the technology Rocket Lawyer acquired last year when it bought LawPivot, a legal Q&A platform. Rocket Lawyer also added a Twitter-like feature to its mobile app that lets users submit brief questions to attorneys, who answer with advice.

Moore says the vast majority of Rocket Lawyer's revenue comes from members who subscribe for access to attorneys. For this reason, Rocket Lawyer has mostly avoided legal challenges over the unauthorized practice of law (UPL). Rival LegalZoom has been sued for engaging in UPL in several states, including California, and a number of the cases have settled. The South Carolina Supreme Court reviewed LegalZoom's business practices and, in March, found that the site does not engage in the unauthorized practice of law. (Medlock v. LegalZoom.com, Inc., No. 2012-208067 (S.C. Sup. Ct., order issued Mar. 11, 2014).)

Rocket Lawyer hasn't faced UPL claims in California, partly because LegalZoom has been around longer and offers a higher-profile target. Both websites display disclaimer language at the bottom of their respective home pages stating that they are "not a law firm or a substitute for an attorney or a law firm." And each has extensive terms-of-use statements saying that the sites are not substitutes for the advice of an attorney.

However, last January Rocket Lawyer did settle a class action in Missouri alleging UPL. (Lemay v. Rocket Lawyer, Inc., Mo. Cir. Ct. No. 11SL-CC04557 (St. Louis Cnty.).) In the settlement, Rocket Lawyer denied any wrongdoing and agreed to pay up to $175,000 in cash or in-kind services to class members.

Moore says he doesn't foresee additional UPL problems down the road. "Rocket Lawyer works just fine under the existing rules," he says. "We're not lobbying to liberalize the rules about who can practice law."

Though Moore "wouldn't rule out" taking Rocket Lawyer public some day, he says the company has sufficient venture capital to continue to grow and compete against rivals. And the best way it can grow, Moore believes, is to bring useful and affordable legal services to people and businesses who aren't being served. If Moore can pull that off, it'll be a big win for consumers - not to mention lawyers.

"There are tens of thousands of California lawyers who need more work, and millions of small-business owners who need legal services," says Moore. "People need lawyers."

Tom McNichol is a San Francisco-based freelance writer.

The Law, Virtually
The number of online services seeking to make the law more efficient for both consumers and lawyers continues to grow. Berkeley-based Nolo.com, a pioneer of do-it-yourself legal services since the 1970s, also offers online legal documents and software, along with a "find-a-lawyer" directory for customers who need professional help. In 2011, Nolo was purchased by Internet Brands in El Segundo, which owns more than 200 consumer websites, including AttorneyLocate.com, Lawyers.com, and AllLaw.com.

A host of online companies-FindLaw, LegalMatch, Lawyer.com, and UpCounsel-are jockeying for Web traffic, revenue, and venture capital funding. Many want to grab a slice of the estimated $45 billion "latent" market for legal services, those low- to middle-income earners who have been priced out of the traditional legal market.

Gillian Hadfield, a professor of law and economics at the University of Southern California, has long advocated for bringing affordable legal representation to the underserved. She believes online legal services are an important tool for providing more access to justice.

"Online legal is absolutely necessary for increasing access because the Internet is how we interact with most markets these days," says Hadfield, who also serves on LegalZoom's legal advisory board but has no financial interest in the company. "We also need to allow a much broader array of providers besides lawyers to provide services. You don't need the full-scale JD and bar license to do some things."

Here is a sampling of companies offering legal services on the Web to consumers and attorneys. -T.M.

Avvo
avvo.com - Founded in 2007 by Mark Britton, former general counsel for Expedia.
Investors: Benchmark Capital, Coatue Management, Ignition Partners, and DAG Ventures.
Posts ratings and reviews for lawyers in every state. Offers a free legal Q&A service and advice on finding the right lawyer.

FindLaw
findlaw.com - Founded in 1995 by lawyers Stacy Stern and Tim Stanley.
Owner: Thomson Reuters.
Provides online legal information and "find a lawyer" services for consumers.

Justia
Justia.com - Founded in 2003 by FindLaw co-founder Tim Stanley.
Owners: Tim Stanley and Stacy Stern.
Offers free case law, legal resources, and a "find a lawyer" feature. Premium service provides websites, blogging, and online marketing to law firms.

Lawyer.com
lawyer.com - Launched in 2009 by owners Gerry Gorman and Gary Millin, co-founders of Mail.com.
Offers help finding a lawyer, access to legal articles, and free legal advice from participating attorneys.

LegalMatch
legalmatch.com - Founded in 1999 by lawyer Dmitry Shubov.
Investors/Owners: Angel investors and American Lawyer Media.
Helps users find prescreened lawyers, and offers attorneys leads that match their legal specialty.

LegalZoom
legalzoom.com - Founded in 2001 by lawyers Edward R. Hartman, Brian S. Lee, Brian P. Y. Liu, and Robert Shapiro.
Investors: Permira, LegalZoom's management team, Institutional Venture Partners, Kleiner Perkins Caufield & Byers, and Polaris Venture Partners.
Offers customizable legal documents and a network of attorneys.

Pro-Se-Litigation.com
pro-se-litigation.com - Founded in 2013 by legal investigator Robert Townsend.
Investors/Owners: Undisclosed investors.
Connects self- represented civil litigants with lawyers who offer unbundled legal services.

Rocket Lawyer
rocketlawyer.com - Launched in 2007 by lawyer Charley Moore.
Investors: Charley Moore, August Capital, Google Ventures, Investor AB, and Industry Ventures.
Provides customizable legal forms that can be signed, stored, and shared electronically, along with access to an on-call network of attorneys.

UpCounsel
upcounsel.com - Founded in 2012 by entrepreneurs Matt Faustman and Mason Blake.
Investors: AngelPad, Collaborative Fund, Homebrew, Haroon Mokhtarzada, SV Angel, and others.
Helps businesses connect with lawyers through an online bidding service. Users post a request for specific legal work, and attorneys respond with quotes for fixed fees or hourly rates.

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Kari Santos

Daily Journal Staff Writer

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