Last month, a seismic event occurred in South Carolina which went unnoticed by many. However, lawyers paid close attention to what may have been a harbinger of a massive shift in the monopoly lawyers have long maintained to prevent the “unauthorized practice of law”.
On March 11, 2014, in the case of T. Travis Medlock v. LegalZoom, Inc. the South Carolina Supreme Court in the U.S. rejected a lawsuit filed by lawyers seeking to shut down the online legal document provider, LegalZoom. The lawsuit had been filed in 2012 alleging that LegalZoom was practicing law without a license in the state of South Carolina each time a customer logged on to LegalZoom to create a contract, a lease or a new business charter and bylaws. Not known for its liberal legal leanings, the South Carolina Supreme Court refused to take the bait. Instead, the LegalZoom business model was approved by the court noting that LegalZoom merely served as a “scrivener” for the customer who could choose to seek a lawyer’s assistance or go it alone. Sounds like free enterprise at its best.
B. Rush Smith III, a partner in the Columbia office of Nelson Mullins Riley and Scarborough LLP fought the fight for LegalZoom. Some might say it is scandalous for a lawyer to take business away from his brethren and sisters at the bar. On the other hand, LegalZoom provides access to justice for people who might otherwise be unable to afford legal assistance when they might need it most.
Nelson Mullins is not afraid to pursue initiatives which fly in the face of the protectionist culture of the legal profession. Not too many years ago, law firms billed their clients enormous sums when litigation required reviewing boxes of documents which might be relevant in court cases. The “discovery” phase of litigation could generate hundreds of thousands of dollars in a complex case and occupy many lawyers in profit producing activity at the same time. Many young lawyers recall being sent to a warehouse to pour over literally countless documents in hundreds or thousands of bankers boxes to find the few documents around which a litigated dispute revolved. Law firms enjoyed significant revenue and huge profits from this practice.
However, technology replaced lawyers (and killed the hugely profitable cash cow) through machine assisted automated review in what has become known as “e-discovery”. Nelson Mullins did not fight this development. The law firm joined it. Now the firm operates its own e-discovery business called Encompass through which it not only serves its own clients, but other law firms as well.
More recently, Nelson Mullins partners including Jason Epstein in Nashville, Tennessee and Robert Brunson in Charleston, South Carolina have advanced the primacy of client interests even further.
Historically, the billable hour was the lawyer’s claim to fame and untold riches. When clients would pay bills month after month in a matter (litigation or transactional) without asking questions, lawyers had no economic incentive to do their work efficiently. This cost plus billing model was great for lawyers, but clients were not fond of it in the least.
That all changed with the Great Recession of 2008. Now clients are asking and getting legal matters budgeted and delivered on a fixed fee basis. When the fee is fixed, cost overruns are visited on the lawyer, not the client. At least 13.5% of legal revenues were estimated to be associated with fixed fee engagements in 2013. That ratio is rising rapidly year after year and no one expects that it will decline . . . ever.
However, Robert Brunson had anticipated this development over ten years ago. To serve a major corporate client Robert began using the methods of project management to budget, plan and execute a legal matter (complex litigation in his practice) to a more efficient and cost effective outcome. Companies had been using project management methods for decades in order to “do more with less”. Robert was among the first to do so in the legal profession.
Now he and his partner Jason Epstein (a corporate lawyer) are leading the firm in providing fixed fee engagements in both litigation and transactional work. They and other partners in the firm are bringing new business to the firm because they are willing to price it with certainty (which satisfies clients) and execute it profitably (which satisfies the firm). Using technology tools like Lean4Legal™ provided by ERM Legal Solutions, Nelson Mullins is prepared to put client interests first because they know they are not sacrificing firm interests when they do.
The new incoming President Elect of the American Bar Association is William C. Hubbard, also a partner with Nelson Mullins in the Columbia, South Carolina office of the firm. He has already suggested that the issue of “unauthorized practice of law” is a topic which deserves serious attention by the largest professional association of lawyers in the world.
Some might say it is something in the water. Instead, it appears to be something in the culture of the Nelson Mullins vision of professional responsibility. For a change, it seems that the public, rather than the lawyers, might be better off as a result.