August 10, 2016 (Fault Lines) — Ed. Note: Scott Greenfield and David Meyer-Lindenberg cross Eddie Hartman, one of the founders of LegalZoom, lawyer and either your best friend or worst nightmare, according to what the future brings.
Q. You’re a ‘92 Yale grad, with a BS in computer science and a BA in anthropology, which won’t be held against you. That was fairly early for an interest in CS, before the World Wide Web was a “thing” and personal computers were doubling in speed every couple of years. What made you go the CS route? While Yale’s not a bad school, why not someplace serious, like MIT or Cal Tech? Did you have the entrepreneurial spirit in you from the start, or was that something that came along the way? And how does anthropology fit into this?
A. My dad, who is the smartest man in the world, introduced me to computers early. He was a physicist at the Murray Hill, NJ, Bell Laboratories facility, which allowed him to take home a computer terminal. This, in turn, allowed me to play a bunch of early computer games. How early? To give you an idea, we had no monitor; instead there was a traction-feed printer. When you moved your knight or whatever, it would print out an entire new sheet of paper, showing you how the “screen” had changed. All this over a modem that required you to actually plug in a phone handset, like in WarGames.
I think a suitable punishment for misbehaving teenagers would be to replace their iPad with a setup mirroring the one I had.
MIT and CalTech are great schools. Two of my closest high school friends went to MIT, and one of them won the Nobel in Physics in 2011, meaning every conversation with my dad begins with the question, So how’s Adam Riess?
But I wanted something a little more balanced with, you know, girls. Beyond computers, for a while I wanted to be a writer. And for a while I struggled with a delusion you can get if you spend too long in a darkroom, which is the delusion that you can make a living as a photographer.
Anthropology because, like any young man with a shred of common sense, I wanted to be Indiana Jones. Once again, few tribes will pay you to study them. You gotta eat.
Q. From New Haven, you went to Philly, where you did your MBA at Wharton (and were a Palmer Scholar, which is kind of a big deal). What made you decide to not go the coder route? Certainly, coders were in demand at the time, and a lot of the cool kids saw a huge future in creating the internet. Why more school? And if school, why not a graduate degree in computer science? Was it your plan from the outset to go start-up, given that anything with an “e” in front of it was crazy in the irrationally exuberant 90s? Did you have any idea what that start-up might be? Was Legal Zoom even a twinkle in your eye?
A. One of the really hard truths you learned as a Bell Labs brat is that the smartest people, and often the hardest-working people – here, the scientists – often get the short end of the stick. They do not have the control over their destinies that they, by rights, ought to. The way we compensate people is not equitable, but I don’t see it changing. So I wanted to run things, or at least be on the team that runs things.
To do that, to start something and run it well, you generally need capital. And that means speaking the language of capital. I don’t know if I could have gotten into Harvard for business school, but I really wanted Wharton because that is what they teach: how to speak finance. It is the Berlitz of capital. And to be 100% clear, I did not attend until later in life, when we’d already attracted investment and were taking on still more.
Q. While you’re obviously well educated, you’re also a lawyer, admitted in California. Except there is no indication from any of your bios that you ever went to law school. Did you? Did that detail somehow slip through the cracks? And if not, how did you manage to sit for the bar? Worse still, how did you manage to pass, given that less than 50% of law school grads today manage to accomplish that feat? Were you that smart that law oozed into you by osmosis?
A. Fortunately for me, there are three states (to my knowledge) that still allow their citizens to “read for the bar”: Washington, Vermont, and California. That does not mean you show up for the bar exam one day. California has a multi-year program, administered by the state bar that allows you to fulfill your educational requirement without going to law school. If you are thinking about trying it, dear reader, may I first suggest trying to eat and pass a roll of sandpaper as a means of acclimating to the requirements.
You know, it’s funny. England, from which much of our law descends, does not ask its lawyers to obtain a graduate degree in law. Instead, they limit bar membership through apprenticeships, where aspiring lawyers are forced to actually learn something before being admitted to the guild. Some of the luminaries of our profession – Clarence Darrow, Abraham Lincoln – never graduated from a law school. But in the early 1930s, right after the Great Depression dealt a terrible blow to the economic prospects of the existing bar membership, the ABA and the AALS got together and decided three years in an ABA accredited institution would be a dandy way to qualify all future lawyers.
Again, it’s funny. Unless, you know, you are carrying $132K of law school debt and are struggling to find a way to pay it off. Then it’s less funny.
Q. You were admitted to practice law in 2011, well after your prior tech jobs and founding LegalZoom. Why did you want to be a lawyer? Did you ever intend to practice law? Have you ever practiced law? Was this admission to further LegalZoom? Was this to give you legal cred? You’re entitled to call yourself an attorney, but is it fair to compare yourself with lawyers who actually practice, who earn their living by representing clients?
A. My respect for the law – for lawyers, actually – started slow but came on strong.
At first, I thought of LegalZoom as just a way to provide a service. No different, really, than allowing people to book their own airline tickets or trade stocks from their living rooms.
The change came in talking to the customers who came to the website. You could hear the emotion in their voices. I imagine you’ve had this experience yourself. Law is rarely, if ever, a neutral transaction. People seeking legal help are frightened, angry, desperate. Many of our early customers came to us because they had nowhere else to turn, or because they needed something immediately. They were going into surgery the next day and needed a will, because they did not know if they’d make it out. Or they had just lost their job, but had someone willing to pay them for an engagement – if they had an LLC.
You came to realize that a dollar spent on law punches above its weight. It is not the same as a dollar spent on gas or peanut butter. It matters much more, because it protects much more.
I realized the only way to honor this relationship was to actually become a lawyer. And now I am one. But I reserve great respect for lawyers who actually practice. My eldest son is named after Clarence Darrow. That doesn’t mean we all have to be litigators. But every army has those who actually take the field, and those who wear the uniform without being in harm’s way. I feel a special debt to the former.
Q. Prior to LegalZoom, you were Chief Technology Officer at TROON Ventures, and Senior VP of Tech and Marketing at Xceed International. Did you ever have a job with a title like, “guy who fetches coffee” or “guy who digs ditches”? Was your focus on anything tech? Did you have any particular goals at this point, or was it just to find a place for yourself in the business of technology? Was there any inkling in your mind that there would be law in your future?
A. I have had a colorful mix of jobs. I was a journalist in Memphis, Tennessee. I wrote a series of kids’ books for the same publishing house that did Choose Your Own Adventure.
And I was a temp for a long time. I did data entry. It was a great way to learn that renting your nervous system out by the hour is no way to live.
Q. In 2000, LegalZoom was founded, and you were one of the founders. How did that happen? Who decided to take the age-old idea of using legal forms and offer them to the public directly online? What was your role as a founder? Did you know anything about law at that point? Did it matter? Did you buy in to the concept right away, or was it a struggle to leave job security behind and shoot for the moon? The year 2000 was a scary one for tech startups, as the world of money being thrown at tech shifted to the bubble bursting. Did you wonder if this was the biggest mistake you ever made?
A. By the time we finally quit our jobs, the three of us – Brian Lee, Brian Liu, and myself – had batted around a number of business ideas for LegalZoom (it was called Law Garden at the time), all around the central theme of legal services. I credit Brian Liu with nailing the core concept. We all had a hand in shooting down some of the zanier plans; a “1-900” number for legal advice stands out as an idea I’m glad we avoided.
“The Brians,” as we called them, were the lawyers. I was the guy with experience building web businesses. TROON and Xceed had given me solid training in how to bring a business online, from promising startups to Fortune 500s. Of course, advising others is very different than taking the advice yourself.
The hardest thing for me was stepping away from a non-profit I’d built with some friends, called Servicity. It was a charity established to support military families, meaning spouses and children of service members. We don’t do enough to support our soldiers, it’s true, but boy do we come up short on support for the families. Servicity had gotten some traction – we had started by wiring community centers on Air Force bases for Internet access – but LegalZoom’s needs grew much faster. I couldn’t do justice to both and had to choose. That said, one in seven non-profits in the US are now formed through LegalZoom. So I concentrate on trying to do a great job for them.
Q. You are now the Chief Product Officer, which sounds great but doesn’t exactly explain what you do. What do you do? Do you create products, create new products, manage the products already being sold? Where do you fit in with LZ?
A. Early in our relationship with Permira – who are really great guys, by the way, cannot say enough good things about them – one of the partners told me the following. He said, “I can see you have people to make sure the trains run on time. Who is building the airport?” That’s my team’s job, cracking into new areas. We have a pretty big vision. The defining moment came late last year, when we became the first US corporation in the nation’s history to own a law firm. It’s a huge responsibility; we have to step up to the challenge.
Q. Now for the tough stuff. You’ve written quite a bit about lawyers being a guild, using rules that preclude innovation and that the lawyer system is broken. You’ve been quite the advocate for Access to Justice. But let’s be honest, LZ is a for-profit business, and it’s not generating revenues by giving its forms away. Why bother to go to law school, suffer debt, lose three years of opportunity costs, and end up unable to earn a decent living? You know most lawyers aren’t driving Teslas, so where do they fit into this “guild” paradigm? When you undercut their ability to practice by promoting the DIY law concept, it comes at a price. Do you really believe we would be better off without lawyers? Are ethics and competence too old school to keep alive?
A. Lawyers aren’t a guild, but we belong to a guild. (I can’t take credit for the term; note, for example, that the top alternative [Ed. Note: Top? Alternative?] to the ABA is the National Lawyers Guild.) Lawyers are some of the best, smartest people we have. Unfortunately, our guild has let us down. Lawyers have become prisoners of the machine that our legal ancestors created, and that a few lawyers in positions of power perpetuate. Think about this: Based on the tax returns of attorneys in the last census, many lawyers could not afford to hire themselves.
Let me be a bit more specific. Bars should reduce regulation to allow small firms and solos to be more competitive. They should dramatically reform advertising regulations. They should encourage lawyers to accept credit cards. They should allow lawyers to accept equity investment, which would give them the capital to invest in technology and management.
LegalZoom is every bit as for-profit as Wachtell or Skadden, or the newly-minted lawyer trying to set up her practice. I mean, the biggest law firms on the planet rank themselves annually based on the amount of profit they generate! LegalZoom is a market solution. I believe in market solutions for market problems: they create jobs and reduce the strain on the scant resources we have for non-market problems, by which I mean the issues faced by people who cannot and should not pay for a solution, like victims of domestic abuse or kids left at our borders or the desperately poor.
As a market solution, LegalZoom wants to make legal help accessible to many, many more people. We’ll do that by creating a reliable brand, making access convenient, and offering transparent pricing. That requires powerful technology and top-notch experts in operations, management, and logistics – areas where law firms refuse to invest.
I personally don’t see “DIY law” as the desirable solution (see below). The question is, how do you get people the great legal help they need? It is going to take many, many more lawyers. The bulk of these new lawyer jobs will not pay partner-track salaries. But then, as you note, most lawyers are not driving Teslas to begin with.
I want to be clear: the world would NOT be better off without lawyers. Nobody at LegalZoom believes that. People often quote Shakespeare (“The first thing we do, let’s kill all the lawyers”) as proof that lawyers are inherently not good. But the line is often taken out of context. If you read the lead-up to this famous line, the character Dick the Butcher thought that if he could do away with the people that enforced law and order (lawyers), he might be able to become king.
The world needs lawyers, but it also needs more lawyers to focus on the unmet needs of the middle class and small business, not just the rich, powerful and injured. Right now, the math doesn’t quite pencil out. Again, based on census data, we estimate most small firms bill one out of four hours, or fewer. Not quite ten hours of a 40-hour work week. We think that the demand is there to change that equation. You have to figure out how to engage those who have given up on getting legal help, or do not even realize it’s available – not easy, but that’s kind of what we do.
Ethics and competence might seem “old school” as you put it, but they have their place in law and in the future of legal services. But the profession must balance these important ideals with access to law. A legal solution that places ethics above all else, but that only a small part of the population can afford, is a terrible solution.
Q. The primary business of LZ is selling do-it-yourself forms, the madlibs of law. It sounds easy and harmless, but for the experience that most people aren’t capable of filling out a form correctly, thinking through the various considerations necessary to make a basic decision, such as whom to name as executor of a will. Are you concerned that your products are a legal time bomb, waiting to blow up and destroy the lives and fortunes of people who save a few bucks at the expense of having a clue what they’re doing? How can you know how well, or how poorly, your forms are being used? Are you helping people or contributing to their doom? Does it matter?
A. Actually, our fastest-growing service is legal advice, which we offer through a pre-paid legal plan backed by our network of independent law firms. It’s true that for a decade we were known as a place to get DIY services, like registering a trademark or incorporating a business. But these days, we strongly encourage customers to sign on to our plan to get the advice they need and deserve.
I’m not going to stand in the way of freedom of choice. If you’d like to write your own Last Will and Testament without the help of a lawyer – whether through software at Staples or the will forms you can get from most state governments – I won’t stop you. But if you come to LegalZoom, I will urge you to sign on to our plan, through which you can get the help of an independent attorney.
At LegalZoom, we take legal quality very seriously. We have an internal and external team of attorneys, professionals and software that are always on the lookout for a change in the law, or a form, and are always looking for ways to improve LegalZoom’s service. Lawyers have tried for a long time to claim that “since a lawyer did it, it’s quality” but that claim is not actually backed up by any facts. We see celebrities that die without wills, or with out of date wills all the time – access to the lawyer was still not guarantee of quality. We all know that experience, not licensure, is the hallmark of quality service. The lawyers – both in the company and our independent attorneys – are all extremely experienced in the issues that our customers routinely face. We stand behind our offerings with a satisfaction guarantee. I’d like to see BigLaw do that!
And we want to keep getting better, and see more lawyers involved in LegalZoom services. Honestly, isn’t it time that the US follow the example of the UK and allow us to provide legal help outright?
Q. For criminal lawyers, LZ has been little more than a mild curiosity, since it has yet to touch our world. But why not? What does LZ have in store from criminal law? Is it out of the question that form motions to suppress will eventually be available? What about legal arguments for memoranda or briefs, say on the Automobile Exception? Are criminal defense lawyers immune from technology? Is there anything in the works deep in the bowels of Legal Zoom that will “disrupt” our world? What does the tech future hold for criminal lawyers?
A. We like legal services where we can simultaneously improve quality and reliability, while using technology and process to bring down the expense. At first blush, criminal law does not seem like a great fit to those metrics.
The biggest disruption you might see, if you want to call it that, is a willingness to be reviewed – publicly – by clients that come through LegalZoom. We will never tell you how to do your job. Lawyers need to be truly able to give the best legal advice without interference.
But when LegalZoom sends a customer to an attorney in our network of independent law firms, we insist that each and every interaction is able to be rated and reviewed by their client. Yes, we are aware that clients may not be the best judge of a lawyer’s competency, but think of it as bringing a little light to a previously dark room. That’s why we invite every customer that consults with our independent attorneys to review the experience – not just on the advice, but also on more objective measures, like being on time for meetings and explaining complex legal issues in terms that are easy to understand.
Requiring reviews and ratings gives us a view on the lawyer’s willingness to be more customer-centric when dispensing advice. We also conduct secret-shopping and testing to measure quality legal competency, but view that as the “ante” – meaning that “giving a good and accurate answer” is not quality – it’s the bare minimum! If any lawyer doesn’t like the sound of that, then he or she doesn’t have to serve our customers. Of course, that may not be the best move. Remember, those clients will be going to someone. The question is whether it will be you.
