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Damien Allen: Good morning and welcome to GAL Radio. My name is Damien Allen, and joining me today on the phone is Enrico Schaefer of Traverse Legal, PLC. Good morning and welcome to the program, Enrico.
Enrico Schaefer: Good morning, Damien.
Damien Allen: Today, we are going to be discussing how the internet has changed the practice of law, and we’re definitely speaking to the right person. The internet has changed virtually every aspect of how people do business. How has it changed the practice of law, Enrico?
Enrico Schaefer: Well, Damien, it’s really interesting because the internet has changed so much about the way people do business across the board, but I’ve always believed that it’s changed the practice of law more than most other businesses. It’s changed the practice of law in so many ways. Lawyers, unlike other companies, other businesses, other professions, are largely insulated from competition. Lawyers have limitations on advertisement, and there’s this huge cultural pent-up aggression towards lawyers who advertise their services. Well, when you think about it, advertisement is the way that consumers find out about options, about what types of variations there are in legal services, etc. So, the lawyers who are in power, the lawyers who have been there for a while, of course, want to preclude any changes from the system because that system is providing them hundreds of thousands or millions of dollars in wages to themselves. So, there’s this huge bias in our legal system against any change. And so lawyers have been insulated from competition, lawyers have been insulated from having to deal with consumer information, and they’ve always held the upper hand when it comes to prospective clients. A prospective client walks into the big fancy conference room, sits down, knows almost nothing about their problem, and even a lawyer who knows a little bit more than they do can make it sound like they’re the person for the job, and you know what, what other options does the client have. Do they walk down the block to the next law firm. Now, all of that has changed because of Google, because of the internet. Clients had very little access to lawyers previously. Now, they have virtually infinite access to lawyers and options. They can vet lawyers. There’s this huge transparency that has now occurred within the law because of the public information online to consumers of legal services. I can, as a consumer of legal services, let’s say I’m looking for an Internet lawyer. I can type in “internet lawyer” into Google, and I now have hundreds or thousands of results. Those results are going to be, in many cases, law firms who are saying something about internet law or advertising themselves as internet lawyers, and guess what, that consumer can now go through and call those various law firms, can review those websites to see whether or not there is expertise there and see how authoritative these lawyers are in terms of where else they’ve been published on the internet. So, this transparency and access to information has tilted the scales for the first time in history towards clients. Fundamentally, that’s the biggest change that has occurred.
Damien Allen: Would your law firm even have been possible if the internet hadn’t have been at the stage of growth and adoption that it had been when you started five years ago?
Enrico Schaefer: No, not a chance. My timing was perfect. When I started Traverse Legal, our goal was to reinvent the business model of law, the practice of law to be consumer oriented, and if the internet had not been there, we couldn’t have achieved any of the things that we ultimately have achieved. We started with myself and one secretary five years ago, and in five short years we’ve grown to eight attorneys and lots of staff and tons of virtual workers and an international practice where we try cases across the United States and arbitrations across the globe, and the vast majority of that business model and that success is attributable directly to the internet. The interesting thing is that I live in small town of about 10,000 people, and here there’s a pecking order that’s very well defined amongst the law firms and attorneys, and anyone that steps out of line gets squashed. So, for the young or less well-known attorneys in town or the well-known attorneys who are working for someone else, it’s very hard to break off. There are very few instances of successful start-up law firms in my town and, of course, there’s all of the baggage of whisper campaigns and the rest against people who step out of line. So, that’s the environment in which I found myself five years ago. I was able to get beyond all of that because I was able to offer my services online and, essentially, I started out just blogging about my expertise, blogging about various legal issues, blogging about various business models for law, reinventing the business model of law. The internet offered me two key things. Number one, clients could find me in Traverse City, where I live, and outside of Traverse City, which allowed us to offer legal services to clients around the globe. And as internet lawyers specializing in internet law, a lot of the issues that we deal with are global issues. A lot of the issues that we deal with are federal law issues where we could step into court across the United States in the federal court to deal with trademark and copyright and patent and other internet law issues. So, the internet made the law firm that I founded and work for, Traverse Legal, it made it all possible, and my timing could not have been more perfect. Five years ago, people thought I was crazy. People said it wouldn’t work. No one had really done it before the way I ultimately did it. Five years later, it’s not quite commonplace, but it’s certainly is now the model that other firms shoot for and the one that clearly has been shown to work.
Damien Allen: There’s a lot of law firms struggling out there. How much do you think is the economic downturn and how much of that is the fact that many firms have simply grown stale in their hourly billing models, they’re not willing to grasp new pieces like technology or what not?
Enrico Schaefer: Well, the downturn, from my point of view, has really just exposed the pretenders. It took what I saw already happening, which was this transparency, this information access, the ability to use technology to reduce the overall costs of legal services for clients as opposed to lining the coffers of law firms’ profits. And so the downturn just simply hastened what was already occurring. It exposed the pretenders. Firms who were stale, who weren’t innovating, who weren’t customer oriented, who weren’t focused on delivering more to the clients for less, firms that were simply interested in billing hours, firms who were disinclined to compete, whose only thought was to increase hourly revenue. Those firms have done very poorly in the downturn, and they’ve done very poorly in the internet era, and I think that the downturn simply exposed the pretenders. There are still lots of options out there for consumers who need legal services, and boy, those consumers have a lot more power than they ever had before. They have a lot more options they can take a look at, not only the law firm but the attorney, and do their homework and make a very good consumer decision about who’s going to represent them on a particular matter.
Damien Allen: Is it too late for law firms to get into the game, has the ship already left port, is it gone?
Enrico Schaefer: No, it’s never too late. It’s interesting because we’re so far ahead of the game that sometimes we’ll talk to other lawyers and law firms about what we’re doing, and we always share our business model and information. We want law firms and lawyers to innovate like we’ve done, and we’re very open about how we were able to achieve it. We share it with everyone. It sometimes is intimidating to them; they will never catch up to you. Well, the goal isn’t to catch up to Traverse Legal. You probably won’t ever catch up to Traverse Legal, we’ll be gone by the time you get here, but you’ll still be ahead of 90% of the other law firms who remain in the delusion that things will sometimes return to normal hourly billing, normal non-transparency, normal huge advantage to the lawyer in a conversation with a potential client. Those days are gone. And if you get in the game today, you’re still going to be ahead of most of the market. Even my old law firm, I saw, recently revamped their business model, their website, to more mimic what we were doing here to take advantage of the things that we’ve been talking about, and I applaud them. I encourage them and would help them at a moment’s notice. I don’t get up in the morning to simply represent my clients. I get up in the morning to change the way law is practiced, and I think that lawyers need to innovate not only for themselves but because there are better business models out there that are better consumers that will offer a lot more to people and establish lawyers’ reputations back where we started when we founded this company as problem solvers, as solution providers, as interested in more than just simply the bottom line.
Damien Allen: We’ve been discussing how the internet has changed the practice of law with Enrico Schaefer of Traverse Legal, PLC. Thank you for joining us today, Enrico.
Enrico Schaefer: My pleasure, Damien.
Damien Allen: You’ve been listening to GAL Radio. My name is Damien Allen. Everyone have a great afternoon.