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Small & Home Office

E-Law: Is it Safe to Go in the Water?

Don't let the recession scare you away.

By Gary A. Munneke

E-Law: Is it Safe to Go in the Water? IT'S summer, and for many, thoughts of sand, surf and the image of that shark from Jaws resurface once again. But this isn't an article about water safety, it is about fear. How reports of dot.com failures and the resultant e-cession have frightened away many lawyers from entering the waters of e-lawyering.

There are lessons to be learned from the downturn in e-commerce, but not necessarily the ones you read about in the papers. For small firms, solos and home office lawyers, now is an excellent time to take the plunge.

E-lawyering businesses felt the impact of the e-commerce downturn as much, or more, as companies outside the legal world. Because e-lawyering services lagged behind online services in many other fields, many law-related businesses were just starting out -- or in the planning stages -- when the dot.com slump hit.

For the past year, many law offices have resisted moving forward in the electronic marketplace, out of fear that the future of e-commerce, and specifically e-lawyering, was murky.

But fear not, online legal information, advice and document assembly services indeed are viable -- and ultimately, perhaps mandatory.

E-lawyering encompasses a variety of different activities, with the common thread that information and services are delivered electronically over the Internet. These include:

* Providing consumer information about the law, such as distribution messages, electronic newsletters and law firm material posted to law firm Web sites.

* Online legal forms that can be downloaded and utilized by consumers.

* Preparing documents on line, utilizing analytical tools with logical questionnaires to guide consumers through the process.

* Offering consumer advice in conjunction with a document preparation site, a question and answer component of a law firm site, or a referral service site.

* Participating in online discussions about legal issues with consumers in chat rooms, electronic discussion groups, or public discussion lists.

* Incorporating Web-based elements into the delivery of traditional legal services, including e-mail, document exchange, research and trial preparation.

* Utilizing online services to secure referrals, to bid on prospective cases and to resolve disputes nonjudicially.

* Filing cases and other court papers electronically,

* Client-supported Extranets that connect professional service teams representing the client.

These are just a sampling of the ways that law firms and other legal providers are incorporating the Internet into their services. Although commercial e-lawyering Web sites have opened to mixed reviews, the trend toward incorporating elements of e-lawyering into the practice of law is inescapable.

It is clear that e-commerce is not going away. The demise of www.pets.com does not mean that online shopping is a thing of the past. If anything, consumers shopped online in greater numbers during the first six months of 2001 than they did in the last six months of 2000.

Certain products and services, such as travel, stocks, music and commodity consumer items seem to invite Internet buying. Other areas such as automobiles that need to be test-driven and groceries that need to be eyeballed or touched are less appealing online.

E-Law: Is it Safe to Go in the Water? As the electronic marketplace shakes out, the mix of products and services that consumers purchase online may change, but the prospects for long term growth in the dot.com industry are good.

As for e-laweying, the availability of legal information will continue to increase and legal services online will continue to become more sophisticated. More lawyers as well as non-legal providers will enter this arena. Some ventures will involve partnering among legal, technology, financial and marketing professionals to deliver services to users (or is that clients?) -- thereby creating true multidisciplinary practices. More law firms will develop at least some Web presence, if only for marketing or recruiting purposes.

Lessons Learned?

For lawyers, what can be learned from the dot.coms? Did the failures and successes teach us anything that we should know about practicing online? The lessons might be surprising, but here they are:

* E-law firms that are not well capitalized and funded are doomed.

You must have enough cash to run your business. If you run out of cash before you bring in enough to pay your bills, you do not survive. For small firms that traditionally operate on a shoestring, financing debt for e-lawyering may be daunting and unwise.

Ditto for e-partners who burn through cash to create or sustain an extravagant lifestyle.

Tighten your belt and save your pennies until the business is on solid footing. Put your cash into the technology for the short term. The Ferrari and the beach home in Bali can wait.

Remember: Bill Gates and Bill Allen lived in a car in the early days of Microsoft.

* Develop a realistic business plan for your e-lawyering practice.

You could have a great concept, but your venture will flounder if you do not have a viable plan. Whether in the world of bricks and mortar or the world of e-commerce, those who build their dreams on euphoria do not stay in business long.

* Do your homework.

It is better to conduct research into the technology, the demographics of customers, and the competition in the marketplace before you start, than after you get into trouble.

* Know your product.

E-Law: Is it Safe to Go in the Water? Law businesses, like all businesses, must understand what products and/or services they provide and for whom.

This seems easy enough, but amazingly, many lawyers fail to create their own market niche, and it is no different for e-lawyers.

* Budget conservatively or you may get burned.

It is easier at the end of the year to write out bonus checks than to go back to investors (in the case of law firms, this means the partners) for more dough. Dot.coms that went back for more cash in 2000 found out that investors can say no.

You must reach your consumers or you will not have customers. The field of dreams approach to marketing ("If you build it, they will come.") is great for the movies, but in the real world nothing beats a sound marketing strategy.

* E-marketing alone is not enough.

To entice consumers to go online, you need to look for them offline. Product recognition is critical, and for new products time is of the essence. For e-lawyers, this may entail convincing people that they will be better served by e-lawyering services than traditional legal services.

* Deliver on you promises, or you are dead in the water.

Whether it is a restaurant or a Web site, you have one shot with consumers. If you cannot deliver the goods, customers will go somewhere else. Many dot.coms neglected their core products and services, relying instead on hype, banner ads and novelty to hold customers. Law firms in cyberspace will flourish or wither by the same precepts.

Poorly run businesses do not survive, and e-businesses, like traditional businesses, depend on good management. An examination of recent dot.com failures reveals that many startup companies were high on creativity, but low on long term organization. The skill needed to start a business is not necessarily the same skill required to sustain the business.

In the final analysis, the rules for running an e-business are the same as those for running a traditional business:

*Develop a dynamite product.

*Secure adequate financing

*Follow a solid business plan.

*Launch and market the new product or service effectively.

*Deliver to your consumers whatever you promise.

*Build a management team that can sustain your operations for the long run.

*Wait to take your profits until the business is profitable.

Understand Rules

E-Law: Is it Safe to Go in the Water? If lawyers and legal service providers understand these fundamental rules and follow them, their chances of successfully entering the e-lawyering market will be greatly enhanced.

It is worth noting that any nascent industry will inevitably produce casualties. When the airline industry emerged in the 1920s, a number of many long forgotten carriers took to the skies. And the names of most of the early automobile brands are nothing more than trivia questions today.

In a capitalist system, less competitive companies will lose market share to more successful ones. Consolidation over time is an inevitable consequence of business creation. It should not surprise anyone that some dot.coms did not make it. Far from being an indictment of e-commerce, the shakeout of 2000 was a natural outcome of an emerging free market.

Perhaps that is the last lesson for lawyers thinking about entering the e-lawyering market. Entrepreneurial activity is risky. Some e-lawyering providers will succeed and others will fail. Some early successes will be supplanted by more efficient providers.

There are no guarantees. For the risk averse among us, it might make more sense to eschew e-lawyering altogether.

For others, however, it is a great time to jump in the water and swim.

LTN Editorial Advisory Board member Gary Munneke is a professor at Pace University School of Law, and a past chair of the ABA Law Practice Management section.

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