LegalZoom.com Inc v. Rocket Lawyer Incorporated

Filing 93

DECLARATION of Hong-An Vu In Support of MOTION for Summary Judgment as to AND/OR ADJUDICATION; MEMORANDUM OF POINTS AND AUTHORITIES IN SUPPORT THEREOF (REDACTED) 60 filed by Defendant Rocket Lawyer Incorporated. (Attachments: # 1 Ex A-D and F)(Vu, Hong-An)

EXHIBIT A

EXHIBIT A

Vu, Hong-An
From:
Sent:
To:
Cc:
Subject:

Vu, Hong-An
Tuesday, May 13, 2014 10:29 AM
Patricia Jones Winograd; Hainline, Forrest A; Jones, Michael T
Fred Heather
RE: Expert Report

Thanks Patti.  I just called and left a message.  Do you mind calling me at 
 to discuss the expert reports in 
general?  We just want to make sure we are all on the same page now that the Court has extended the deadlines. 

Thanks, 
Hong‐An 

‐‐‐‐‐Original Message‐‐‐‐‐ 
From: Patricia Jones Winograd [mailto:[e-mail]]  
Sent: Tuesday, May 13, 2014 10:05 AM 
To: Vu, Hong‐An; Hainline, Forrest A; Jones, Michael T 
Cc: Fred Heather 
Subject: RE: Expert Report 

Thank you for your response, Hong‐An.  I am looking into Dr. Isaacson's data.  We'd certainly agree to an exchange of 
databases.  Let me know what you are able to find out. 

Thanks, 
Patti 

‐‐‐‐‐Original Message‐‐‐‐‐ 
From: Vu, Hong‐An [mailto:[e-mail]]  
Sent: Monday, May 12, 2014 6:35 PM 
To: Patricia Jones Winograd; Hainline, Forrest A; Jones, Michael T 
Cc: Fred Heather 
Subject: RE: Expert Report 

Patti, 

We are checking  into whether we have the survey data in the below formats.  Do you have Dr. Isaacson's data in excel 
or other native format? Regarding the data maps, I believe what you need can be found in appendices K and L of the 
supporting materials.  Please let us know if this is not what you are requesting. 

Thanks, 
Hong‐An 

>Hong‐An Vu 
>Goodwin Procter LLP 
Three Embarcadero Center, 24th Floor 
San Francisco, CA  94111 
>T: 415‐733‐6114 
>F: 415‐677‐9041 
1

EXHIBIT A -5-

>[e-mail] 
>www.goodwinprocter.com 

‐‐‐‐‐Original Message‐‐‐‐‐ 
From: Patricia Jones Winograd [mailto:[e-mail]] 
Sent: Monday, May 12, 2014 6:04 PM 
To: Vu, Hong‐An; Hainline, Forrest A; Jones, Michael T 
Cc: Fred Heather 
Subject: Expert Report 

Counsel: 

Would you be in a position to forward us a copy of the database in standard electronic format, such as Excel or comma 
delimited, containing the responses to all questions from all respondents in connection with your expert report.  We 
would appreciate receiving the database and any data map or key explaining how data fields or data codes correspond 
to questions and responses.  If we missed it among your appendices, please let us know.  Please let us know as soon as 
possible if you are able to provide this information. 

Regards, 
Patti 

******************************************************************* 
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To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this 
communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose 
of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another 
party any transaction or matter addressed herein. 
******************************************************************* 

******************************************************************* 
This message is intended only for the designated recipient(s).  It may contain confidential or proprietary information and 
may be subject to the attorney‐client privilege or other confidentiality protections. 
If you are not a designated recipient, you may not review, copy or distribute this message.  If you receive this in error, 
please notify the sender by reply e‐mail and delete this message.  Thank you. 
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2

EXHIBIT A -6-

EXHIBIT B

EXHIBIT B

i PATRICIA L. GLASER -State Bar No. 55668
pgl~aser glas~erweil.com
2 FRED .HEATHER -State Bar No. 110650
fheather glaserweil.com
.ALLAN -State Bar No. 144406
3 AARO
aallan(a~glaserweil.com
4 GLASER WEIL FINK
HOWARD AVCHEN & SHAPIRO LLP
10250 Constellation Boulevard, 19th Floor
s
Los Angeles, California 90067
6 Telephone: (310_) 553-3000
Facsimile: [phone]
Attorneys for Plaintiff
LegalZoom.com,Inc.
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CENTRAL DISTRICT OF CALIFORNIA

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UNITED STATES DISTRICT COURT

WESTERN DIVISION

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LEGALZOOM.COM,INC., a Delaware
corporation,

CASE NO.: CV 12-9942-GAF(AGI~)
Hon. Gary A. Feess

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Plaintiff,

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ROCKET LAWYER INCORPORATED,
a Delaware corporation,

LEGALZOOM.COM,INC.'S
RESPONSE TO ROCKET
LAWYER INCORPORATED'S
THIRD SET OF REQUESTS FOR
PRODUCTION

Defendant.

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21
22
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24
25
26
27
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LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTS FOR PRODUCTION
EXHIBIT B -7899190

2

Pursuant to Federal Rule ofCivil Procedure 34, Plaintiff LegalZoom.com,Inc.

3

(hereinafter "LegalZoom")responds to the Third Set of Requests for Production

4

served by Defendant Rocket Lawyer Incorporated ("Rocket Lawyer")on July 1,

5

.2014, as follows:
PRELIMINARY STATEMENT

6

1.

The following responses are based solely on the facts, information,

s documents and witnesses presently available and specifically known and recalled by
9 LegalZoom, which LegalZoom presently recognizes as relevant and responsive to the
io Requests. LegalZoom has not completed its investigation, research and analysis as to
~i all facts, circumstances, documents and witnesses relevant to this action. LegalZoom
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anticipates that its discovery, investigation, research and trial preparation may reveal

i3 additional facts, documents and witnesses not presently known or recalled by them,
is which they may introduce or rely upon at trial. LegalZoom anticipates that discovery,

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investigation, research and trial preparation will add meaning to known facts,

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documents and witnesses, thereby leading to new contentions and conclusions which

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1~ it may introduce or rely upon at trial. LegalZoom further anticipates that discovery,
is investigation, research and trial preparation will render relevant or responsive
19

additional facts, documents and witnesses, which it did not recognize as relevant or

20 responsive when responding to these Requests. Consequently, the following
ai discovery responses are not intended to, and shall not, preclude LegalZoom from
22

asserting further objections, making further contentions and relying upon or

23

introducing additional facts, witnesses and documents at trial, based upon the results

24

of subsequent discovery, investigation, research and trial preparation.

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2.

By these responses, LegalZoom does not waive and, in fact, expressly

26

reserves:(a)any objections as to the admissibility, competency, relevancy and

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materiality of evidence and any privilege attaching to any documents or information

Zs produced; and(b)the right to object to other discovery requests or undertakings
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FOR PRODUCTION
LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTSEXHIBIT B -8899190

i involving or reflecting the subject matter ofthe documents or information requested
2

herein.
GENERAL OBJECTIONS

3
4

LegalZoom in general objects to the Requests on each and every one ofthe

s following grounds, which are incorporated into and made a part of LegalZoom's
6

response to each and every individual request.
1.

LegalZoom objects to the extent the Requests seek to impose obligations

g upon LegalZoom not required by the Federal Rules of Civil Procedure.
9

2.

LegalZoom objects to the extent the Requests call for documents or

~o things that are neither relevant to the claim or defense of a party, nor reasonably
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3.

LegalZoom objects to the extent the Requests, individually and taken as

a whole, are unduly burdensome and oppressive and virtually unlimited in time and

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4.

LegalZoom objects to the extent the Requests call for the disclosure of

i6 documents subject to the attorney-client privilege, the attorney work-product doctrine,
1~ the taxpayer privilege or any other applicable privileges.
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19

S.

LegalZoom objects to the extent the Requests seek the production of

documents that are in the possession of independent parties over whom LegalZoom

ao has no control or that are publicly available and hence equally available to all parties
21
22

to this litigation.
6.

LegalZoom objects to the definition of "You" and "Your" as including

23

LegalZoom's "past and present agents, representatives, and all persons now or

24

previously under its control, and all persons currently or previously acting or

2s purporting to act on its behalf." This definition is impermissibly vague, ambiguous,
26

and overly broad, and renders any related requests unduly burdensome, unreasonable,

27

and oppressive. LegalZoom shall limit the terms "You" and "Your" to mean

2a ~ LegalZoom.com,Inc.
2
FOR PRODUCTION
LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTSEXHIBIT B -9899190

RESPONSES TO REQUESTS FOR DOCUMENTS

i.

2 REQUEST FOR DOCUMENTS NO. 1:
3

All Documents and Communications Concerning the answers provided in Your

4 response to Rocket Lawyer's Second Set of Interrogatories.
s RESPONSE TO REQUEST FOR DOCUMENT NO.1:
6

LegalZoom incorporates by reference each ofthe foregoing General

~ Objections. LegalZoom further objects to this Request to the extent that it is vague,
s overbroad, unduly burdensome, harassing, and virtually unlimited in time and scope.
9 REQUEST FOR DOCUMENTS NO 2:
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All Documents relied on by Your experts in rendering their expert opinion.
RESPONSE TO REQUEST FOR DOCUMENT NO.2:
LegalZoom incorporates by reference each ofthe foregoing General

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13 Objections. LegalZoom further objects to this Request to the extent that it is not

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is properly directed to LegalZoom, overbroad, unduly burdensome, harassing, and
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is virtually unlimited in time and scope.
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16 REQUEST FOR DOCUMENTS NO 3:
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All Documents Concerning any analysis You have conducted on Your

1g customers such as, analysis into their purchasing decisions, their experience on
19

LegalZoom.com,their thoughts on LegalZoom.com compared to competitors such as

20 Rocket Lawyer or Law Depot, and their reactions to Your products and services.
21 RESPONSE TO REQUEST FOR DOCUMENT NO.3:
22

LegalZoom incorporates by reference each ofthe foregoing General

23 Objections. LegalZoom further objects to this Request to the extent that it is vague,
24 compound, overbroad, unduly burdensome, harassing, and virtually unlimited in time
Zs and scope.
26 REQUEST FOR DOCUMENTS NO 4:
2~

All Documents Concerning how much You spend on advertising each quarter.

2s RESPONSE TO REQUEST FOR DOCUMENT NO.4:
3
LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTS FOR PRODUCTION
EXHIBIT B -10899190

LegalZoom incorporates by reference each ofthe foregoing General

i
2

Objections. LegalZoom further objects to this Request to the extent that it is

3

overbroad, unduly burdensome, harassing, and virtually unlimited in time and scope.

4

REQUEST FOR DOCUMENTS NO 5:
All Documents Concerning Your advertising spend by channel, including, but

5
6

not limited, radio, television, online, etc.
RESPONSE TO REQUEST FOR DOCUMENT NO.S:
LegalZoom incorporates by reference each ofthe foregoing General

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9

Objections. LegalZoom further objects to this Request to the extent that it is

io overbroad, unduly burdensome, harassing, virtually unlimited in time and scope, and
ii seeks irrelevant documentation.
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i2 REQUEST FOR DOCUMENTS NO 6:
All Document Concerning Your advertising spend by product.

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is RESPONSE TO REQUEST FOR DOCUMENT NO.6:

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LegalZoom incorporates by reference each ofthe foregoing General
Objections. LegalZoom further objects to this Request to the extent that it is

1~ overbroad, unduly burdensome, harassing, virtually unlimited in time and scope, and
is seeks irrelevant documentation.
i9 REQUEST FOR DOCUMENTS NO 7:
20

All Documents Concerning Your customers, including, but not limited to:

21

(a)

how many customers You have had since November 2008;

22

(b)

how customers are enrolled —whether by organic traffic vs. paid

23

advertising;

24

(c)

the average amount spent on LegalZoom.com by your customers;

25

(d)

the average length oftime Your customers are enrolled in a LegalZoom

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(e)

breakdown of customer purchases by product;

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percentage of customer who make repeat purchases;

26 . ~ plan;

4
LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTS FOR PRODUCTION
EXHIBIT B -11899190

i

(g)

percentage breakdown of customers; and

2

(h)

Average order size per customer.

3
4

RESPONSE TO REQUEST FOR DOCUMENT NO.7:
LegalZoom incorporates by reference each ofthe foregoing General

s Objections. LegalZoom further objects to this Request to the extent that it is vague,
6

compound, overbroad, unduly burdensome, harassing, and virtually unlimited in time
and scope.

s REQUEST FOR DOCUMENTS NO 8:
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All Documents Concerning your average order size.
RESPONSE TO REQUEST FOR DOCUMENT NO.8:
LegalZoom incorporates by reference each ofthe foregoing General
Objections. LegalZoom further objects to this Request to the extent that it is

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overbroad, unduly burdensome, harassing, and virtually unlimited in time and scope.

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LegalZoom further objects to the term "average order size" as vague and ambiguous,

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causing LegalZoom to speculate as to what documents and information, if any, is

16

responsive.

17

REQUEST FOR DOCUMENTS NO 9:

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All Documents Concerning the number oftransactions customers have
completed on your website.

Zo RESPONSE TO REQUEST FOR DOCUMENT NO.9:
21

LegalZoom incorporates by reference each of the foregoing General

22

Objections. LegalZoom further objects to this Request to the extent that it is

23

overbroad, unduly burdensome, harassing, and virtually unlimited in time and scope.

24

LegalZoom further objects to the term "transactions" as vague and ambiguous,

25

causing LegalZoom to speculate as to what documents and information, if any, is

26

responsive.

27
28
5
LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTS FOR PRODUCTION
EXHIBIT B -12899190

i

DATED: July 30, 2014

GLASER WEIL FINK
HOWARD AVCHEN & SHAPIRO LLP

2
3
4

s
6

By:
PATRICIA L. GLASER
FRED D. HEATHER
AARON P. ALLAN
Attorneys for Plaintiff
LegalZoom.com, Inc.

s
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10
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LEGALZOOM'S RESPONSE TO ROCKET LAWYER'S THIRD SET OF REQUESTS FOR PRODUCTION
EXHIBIT B -13899190

PROOF OF SERVICE
STATE OF CALIFORNIA,COUNTY OF LOS ANGELES
I am employed in the County of Los Angeles, State of California; I am over the
a e of 18 and not a party to the within action; my business address is 10250
onstellation Boulevard, 19th Floor, Los Angeles, California 90067.

c

On July 31, 2014,I served the foregoing documents) described as
LEGALZOOM.COM,INC.'S RESPONSE TO ROCKET LAWYER
INCORPORATED'S THIRD SET OF REQUESTS FOR PRODUCTION on the
interested parties to this action by delivering thereof in a sealed envelope addressed to
each of said interested parties at the following address(es):
SEE ATTACHED LIST
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(BY MAIL)I am readily familiar with the business~ practice for collection and
processing of correspondence for mailing with the United States Postal Service.
This correspondence shall be deposited with the United States Postal Service
this same day in the ordinary course of business at our Firm's office address in
Los Angeles, California. Service made pursuant to this paragraph, upon
motion of a party served, shall be presumed invalid if the postalcancellation
date of postage meter date on the envelope is more than one day after the date
of deposit for mailing contained in this affidavit.
(BY ELECTRONIC SERVICE)by causing the foregoing documents)to be
electronically filed using the Court's Electronic Filmg System which
constitutes service ofthe filed documents)on the individuals) listed on the
attached mailing list.

D

(BY E-MAIL SERVICE)I caused such document to be delivered
electronically via e-mail to the e-mail address ofthe addressees) set forth in
the attached service list.

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(BY PERSONAL SERVICE)I caused such envelope to be delivered by hand
to the offices ofthe above named addressee(s).

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(State)

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23
24

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I declare under penalty of perjury under the laws of the State of
California that the above is true and correct.

(Federal) I declare that I am employed in the office of a member of the bar of
this court at whose direction the service was made. I declare under
penalty of perjury that the above is true and correct.
Executed on July 31, 2014 at Los Angeles, California.
I

CHEREE L. CASTILLE

26
27
28

EXHIBIT B -14899190

i

SERVICE LIST

2

Forrest A. Hainline III
3 Hong-An Vu
Goodwin Procter LLP
4
Three Embarcadero Center, 24th Floor
s San Francisco, California 94111
Tel.: [phone]
6
Fax.: [phone]
fhainline~a, o~ o, dwinprocter.com
g

Counselfor Defendant
Rocket Lawyer Incorporated

hvu(a~goodwinprocter.com

9

Michael T. Jones
io Goodwin Procter LLP
13.5 Commonwealth Drive
it 1Vlenlo Park, California 94025-1105
12 Tel.: [phone]
Fax.: [phone]
13
m 'of nes(a~ og odwinprocte~.com

Counselfor Defendant
Rocket Lawyer Incorporated

14

Counselfor Defendant
Rocket Lawyer Incorporated

Brian W.Cook,Esq.
is Goodwin Procter LLP
53 State Street Exchange Place
16
Boston, MA 02109
i~ Tel.:[phone]
bcook(a~goodprocter.com
is
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EXHIBIT B -15899190

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EXHIBIT E

[CONFIDENTIAL
LODGED UNDER SEAL]

EXHIBIT E

EXHIBIT F

EXHIBIT F

Online Legal Services in the USMay 2014   1

WWW.IBISWORLD.COM

Cyber security: Cheaper legal services online
will lead to higher revenue

IBISWorld Industry Report OD5638

Online Legal Services in the US
May 2014

Will McKitterick

2 About this Industry

17 International Trade

33 Key Statistics

2

Industry Definition

18 Business Locations

33 Industry Data

2

Main Activities

2

Similar Industries

20 Competitive Landscape

3

Additional Resources

20 Market Share Concentration

33 Annual Change

20 Key Success Factors

4 Industry at a Glance

33 Key Ratios

34 Jargon & Glossary

20 Cost Structure Benchmarks
22 Basis of Competition

5 Industry Performance

23 Barriers to Entry

5

Executive Summary

24 Industry Globalization

5

Key External Drivers

7

Current Performance

25 Major Companies

9

Industry Outlook

25 Legalzoom

11 Industry Life Cycle

28 Operating Conditions
13 Products & Markets

28 Capital Intensity

13 Supply Chain

29 Technology & Systems

13 Products & Services

29 Revenue Volatility

15 Demand Determinants

30 Regulation & Policy

16 Major Markets

31 Industry Assistance

EXHIBIT F -72www.ibisworld.com | 1-800-330-3772 | info @ibisworld.com

Online Legal Services in the USMay 2014   2

WWW.IBISWORLD.COM

About this Industry
Industry Definition

Operators in this industry provide legal
services to clients using the internet
and associated technologies as the
primary means of communication. The
industry includes virtual law firms
without brick-and-mortar locations that

Main Activities

The primary activities of this industry are

offer both bundled and unbundled
services, as well as companies that
primarily provide online legal
documentation services like interactive
documents that can be tailored to a
client’s specific need.

Providing online family law services
Providing online estate law services
Providing online intellectual property law services
Providing online real estate law services
Providing online tax law services
Providing online commercial law services
Providing online personal injury services
Providing online property law services

The major products and services in this industry are
Interactive legal documents
Subscription legal plans
Other services

Similar Industries

52592 Trusts & Estates in the US
This industry includes personal trusts, estates and agency accounts that are managed on behalf of
beneficiaries under terms of a trust agreement, will or agency agreement.
54111 Law Firms in the US
This industry comprises offices of legal practitioners, known as lawyers or attorneys, who primarily practice
law.
54121d Tax Preparation Services in the US
Tax preparation firms provide financial and associated management services.
54161 Management Consulting in the US
This industry advises organizations in areas such as organizational design, human resources, corporate
strategy, information technology strategy, marketing and sales, finances and logistics.
45411a E-Commerce & Online Auctions in the US
This industry encompasses establishments that primarily sell goods online over the internet.

EXHIBIT F -73-

Online Legal Services in the USMay 2014   3

WWW.IBISWORLD.COM

About this Industry

Additional Resources

For additional information on this industry
www.americanbar.org
American Bar Association
www.elawyeringredux.com
eLawyering Blog
www.americanlawyer.com
The American Lawyer
www.nalp.org
The Association for Legal Career Professionals

I
 BISWorld writes over 700 US
industry reports, which are updated
up to four times a year. To see all
reports, go towww.ibisworld.com

EXHIBIT F -74-

WWW.IBISWORLD.COM

Online Legal Services in the US May 2014  

4

Industry at a Glance
Online Legal Services in 2014

Key Statistics
Snapshot

Revenue

Annual Growth 09-14

Annual Growth 14-19

Profit

Wages

Businesses

$4.1bn

10.9%
$596.8m $1.3bn

Percentage of services conducted online

Revenue vs. employment growth

Market Share

Legalzoom 
5.8%

13

20

11

15

9

%

25

% change

7.7%
16,692

10

7

5

5

0

Year 06

08

10

Revenue

12

14

16

18

20

3

Year 05

07

09

11

13

15

17

19

Employment
SOURCE: WWW.IBISWORLD.COM

p. 25

Products and services segmentation (2014)

10%

Key External Drivers

Other services

Number of businesses

Percentage of services
conducted online
Corporate profit
Per capita disposable
income

25%

Subscription legal plans

Crime rate

65%

Interactive legal documents

p. 5
SOURCE: WWW.IBISWORLD.COM
SOURCE: WWW.IBISWORLD.COM

Industry Structure

Life Cycle Stage
Revenue Volatility

Growth
Medium

Regulation Level

Heavy

Technology Change

High

Capital Intensity

Low

Barriers to Entry

Low

Industry Assistance

Low

Industry Globalization

Low

Concentration Level

Low

Competition Level

High

FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33

EXHIBIT F -75-

Online Legal Services in the USMay 2014   5

WWW.IBISWORLD.COM

Industry Performance

Executive Summary   |   Key External Drivers   |   Current Performance
Industry Outlook   |   Life Cycle Stage
The Online Legal Services industry has
experienced robust growth over the past
five years. The industry has expanded at
an annualized rate of 10.9% in the five
years to 2014 due to a number of factors
that have made generic legal services
more accessible to consumers and
small-businesses. Demand has been
driven by price-conscious consumers and
businesses seeking reasonably priced
alternatives to traditional lawyers.
Industry growth has been assisted by
improved technology, such as highly

interactive web interfaces and seamless
payment systems have made online legal
services more convenient and reliable. In
2014, industry revenue is expected to
continue its upward trend, growing 8.1%
to $4.1 billion.
The industry consists of two main
segments: traditional law firms that
employ qualified attorneys that primarily
interact with clients using the internet or
other electronic communications and
legal document service providers. The
second segment comprises of companies
that have no lawyer-client relationship

Executive
Summary

and supply documents that can be
customized using interactive software.
The number of websites offering legal
document services has steeply escalated
over the past five years to meet the huge
demand for generic legal services,
allowing customers to draw up their own
business incorporation, wills and trusts
and powers of attorney. These legal
startups have been controversial with
some lawyers and bar associations
because they are not law firms and are
barred from dispensing legal advice.
However, in 2012, the American Bar
Association’s eLawyering Task Force
released best practice guidelines covering
entities that operate outside the lawyerclient relationship, helping to legitimize
the practice.
Strong demand for online legal
services is projected to continue over
the five years to 2019. Competition to
provide web-enabled legal document
preparation will heat up as better
technology allows a wider range of
forms and legal actions to be completed
online. Interactive advice provided
online by attorneys is also projected to
grow as web platforms continue to
develop and nationally branded
networks allow small firms to band
together to increase their visibility. The
industry is projected to grow 7.7% to
$5.9 billion over the five years to 2019.

Number of businesses
Small businesses employing less than 10
people are the most likely to require
online legal services because they are
more likely to be price-conscious. Small
businesses require legal assistance to
incorporate their business, register
trademarks and meet compliance
obligations, as well as when entering into
legal contracts. The number of businesses
is expected to increase in 2014.

Percentage of services conducted online
The percentage of services conducted
online represents the money spent by
businesses and consumers on the
internet for services, such as legal
assistance, that they traditionally paid for
in a physical form. The industry benefits
from higher numbers of consumers and
businesses transacting online. The
percentage of services conducted online
is projected to increase in 2014.

D

 emand has been driven by consumers and
businesses seeking cheaper alternatives to
traditional lawyers

Key External Drivers

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Industry Performance

Corporate profit
Businesses are more likely to engage in
transactions that require legal services
when corporate profit is high or growing.
When corporate profit is healthy,
businesses generally hire employees, buy
or rent property, protect intellectual
property rights or conduct lawsuits, all of
which may require online legal services.
Corporate profit is expected to increase
throughout 2014.
Per capita disposable income
Consumers are a major market for
online legal services and per capita
disposable income determines an
individual’s ability to purchase goods
or services. Changes in income can
occur because of movements in wages,
government benefits, unemployment

levels, tax rates and returns on assets.
When income is rising, people are
more able to afford basic legal
services, generally benefiting the
industry. Per capita disposable income
is expected to increase over 2014,
creating a potential opportunity for
industry growth.
Crime rate
An increase in the rate of reported violent
and nonviolent crimes generally leads to
higher demand for legal advice. While the
industry specializes in unbundled
services, those in trouble with the law
may seek online legal services as a first
resort. The crime rate is expected to
follow its long-term trend in 2014 and
decline, representing a potential threat to
the industry.
Number of businesses

Percentage of services conducted online
13

3

11

2

% change

9

%

Key External Drivers
continued

7
5
3

Year 05

1
0
−1
−2

07

09

11

13

15

17

19

−3

Year

07

09

11

13

15

17

19

SOURCE: WWW.IBISWORLD.COM

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Industry Performance

Industry structure

The Online Legal Services industry has
surged ahead over the past five years
as demand for affordable alternatives
to traditional lawyers has boomed and
technology to facilitate online services
has improved. Online legal platforms
have made legal services more
accessible to small businesses and
consumers, which were both hurt by
the recession and have remained
price-conscious. Demand for online
legal services increased during the
recession while the rest of the economy
floundered, as consumers and small
businesses sort to avoid unnecessary
legal fees by completing basic legal
documents, including wills and trusts,
power of attorneys and trademark
registrations themselves online. The
industry has recorded annualized
growth of 10.9% over the past five
years and its upward trajectory is

expected to continue in 2014. With
more consumers migrating online to
purchase legal services, industry
revenue is expected to reach $4.1
billion in 2014, representing growth of
8.1% for the year.

The Online Legal Services industry
encompasses two main segments.
Traditional law firms that employ
attorneys that interact with clients using
the internet or other electronic
communications make up the first
segment. According to the American Bar
Association’s 2013 Legal Technology
Survey, 5.0% of lawyers describe their
practice as a “virtual” law practice. While
the definition for such a practice varies
from “lack of traditional physical office” to
“minimal in-person contact with clients”
or “use of web-based tools for client
interaction”, the number of virtual law
firms is on the rise. Small firms have been
helped by nationally branded networks
like www.ezlaw.com and www.smarterwill.
com that aggregate their marketing
resources, allowing them to compete with
larger non-lawyer technology companies.
This has helped push up the number of
industry enterprises by 10.5% to 16,692
over the five years to 2014.

The industry’s second segment
consists of online legal document service
providers that are not law firms.
Technology startups have shaken up the
entire legal fraternity by rushing to meet
demand for generic legal documents that
can be customized by clients online to
meet their specific needs. LegalZoom,
one such service, is estimated to earn
revenue of $235.8 million in 2014,
making it by far the industry’s largest
player. However, these online legal
documentation companies have stirred
up controversy with some lawyers and
bar associations because they are not
law firms and are barred from
dispensing legal advice. These
companies refer more complicated legal
cases to attorney partners for a fee.
Legal document service providers were
helped by the American Bar
Association’s eLawyering Task Force,
which released best practice guidelines
for them in 2012. While these guidelines

Industry revenue
24
20

% change

Current
Performance

16
12
8
4

Year 06

08

10

12

14

16

18

20

SOURCE: WWW.IBISWORLD.COM

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Industry Performance

Industry structure
continued

do not take a position on whether
certain document services constitute an
unauthorized practice of law if not

Profit and labor
intensity

Online legal services companies
generally have lower profit margins than
traditional brick-and-mortar law firms
that conduct high-value work for
corporations and high-income
households. The generic unbundled legal
services that online firms provide elicit
lower prices, which lead to slimmer
profit margins; many firms rely on
volume to earn a profit. Increased
competition within the industry over the
past five years has limited profit margin
growth due to fierce price-competition,
especially from legal document service
providers that provide some basic
services free of charge to drive web
traffic. However, growing aggregate
demand for online legal services has
allowed many firms to reach a critical
mass of clients that justifies their heavy
investment in technology.
Industry profit margins have
increased over the past five years,
helped by more advanced technology
that has increased turn-around times
and reduced the labor-intensity of the

performed by a licensed attorney, they
help to legitimize the common practice
and aid transparency of the industry.

C

 omplex cases still require
the attention of a qualified
attorney, meaning labor
costs are still high
industry’s services. Fully integrated web
and software platforms that automate
simple tasks like creating generic legal
documents have disrupted traditional
business models. However, more
complex tasks normally require the
attention of a qualified attorney,
meaning labor costs are still high as a
percentage of revenue. The typical
industry firm spends 31.0% of its
revenue on labor costs in 2014, although
this amount is much lower for legal
document service providers that do not
employ attorneys directly. Wages paid
by the industry are expected to grow
9.5% per year on average to $1.3 billion
over the five years to 2019, at a slightly
slower rate than revenue.

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Industry Performance

Industry
Outlook

The Online Legal Services industry’s
healthy growth is expected to continue
over the five years to 2019 as demand
for affordable alternatives to traditional
lawyers surges. Competition to provide
online legal document preparation will
intensify as more startups seek to
improve on the technology of existing
companies to make a wider range of
legal services available online. Legal

Fundamentals to
drive demand

The industry will be boosted by growth
of the broader economy over the next
five years. The number of businesses is
anticipated to increase 1.7% per year on
average over the outlook period. New
businesses will require legal services
like Limited Liability Partnership and
trademark registrations and documents
to meet compliance requirements.
Corporate profit is also expected to
grow, increasing at an average annual
3.4% over the five years to 2019,
meaning companies are more likely to
invest in new product lines, engage in
more services and undertake more
transactions, all of which require legal
services. Furthermore, per capita
disposable income is anticipated to
grow 2.2% per year on average over the
next five years, arming consumers with

deeper pockets to purchase legal
services. The industry’s services are
squarely aimed at price-conscious
middle-market consumers that cannot
afford or are unwilling to pay a
premium for full-service lawyer fees.
Any increase in household income is
unlikely to change consumer
preferences to any large degree,
meaning consumers are unlikely to
substitute online legal services for
full-service law firms.

To compete with the increasing power of
legal document service providers, small
and medium-sized law firms will
continue to band together under
nationally branded networks. To attract
web traffic, these networks will provide
free legal information, complementary
legal forms and question and answer
services from lawyers in the network.
Individual firms will continue to
agglomerate around vertical specialties,
such as wills and trusts, bankruptcy and
business legal needs in order to establish

nationally recognized brands. This will
allow more new firms to enter the
industry, resulting in growth in the
number of establishments of 6.4% to
23,161 over the five years to 2019.
Legal document service providers are
likely to continue to ramp-up their
subscription-based segments over the
next five years to compete with virtual
law firms that can offer specialized advice
through qualified attorneys. LegalZoom
is expected to continue to command top
place in terms of market share by

Industry structure

advice provided by qualified attorneys
through virtual law firms is also
projected to grow as web platforms
continue to develop and nationally
branded networks allow small firms to
band together to increase their
visibility. In light of these positive
trends, the industry is projected to
grow 7.7% per year on average to $5.9
billion over the five years to 2019.

T

 he industry’s services are
squarely aimed at priceconscious middle-market
consumers

EXHIBIT F -80-

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Industry Performance

Industry structure
continued

investing heavily in marketing campaigns
to promote its subscription legal plans
that connect customers with experienced
attorneys. An industry-wide movement

Technology

Technology will continue to improve
throughout the industry, allowing law
firms to deliver online services faster
and with less labor. The percentage of
services conducted online is expected to
grow 3.9% per year on average to 12.2%
over the next five years, with consumers
increasingly expecting to be able to
conduct most professional services
online. Online legal firms will make use
of automated systems that quickly turn
intake questionnaires into a draft
document for a lawyer’s review,
analysis and revision. Widespread

towards subscription models, which
require less fulfillment labor, will likely
see wages decline as a percentage of
revenue, benefiting profit margins.

T

 echnology will continue
to improve throughout the
industry, allowing faster
online services
adoption of this technology is expected,
especially among small law firms. As a
result, wages are anticipated to grow at
a slower rate than revenue, by 7.1% to
$1.8 billion over the five years to 2019,
indicating the industry’s reliance on
human capital will decline.

EXHIBIT F -81-

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Industry Performance
The industry’s contribution to the economy is increasing

Life Cycle Stage

The percentage of services conducted
online is growing rapidly
The law is an important aspect of society

% Growth in share of economy

New startups are rushing to meet the
legal needs of small-business owners and
consumers with limited legal budgets

20

Maturity

Quality Growth

Company
consolidation;
level of economic
importance stable

High growth in economic
importance; weaker companies
close down; developed
technology and markets

15

Key Features of a Growth Industry
Revenue grows faster than the economy
Many new companies enter the market
Rapid technology & process change
Growing customer acceptance of product
Rapid introduction of products & brands

10

Quantity Growth

Online Legal Services

5

0

Many new companies;
minor growth in economic
importance; substantial
E-Commerce technology change

& Online
Auctions

Computer Stores
Trusts & Estates
Civic, Social
& Youth
Organizations

Decline

-5

Shrinking economic
importance

Furniture Stores

-10
-10

-5

0

5

10

15

20

% Growth in number of establishments
SOURCE: WWW.IBISWORLD.COM

EXHIBIT F -82-

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Industry Performance

Industry Life Cycle
T
 his industry
is  rowing
G

The Online Legal Services industry is well
and truly entrenched in the growth stage
of its life cycle. In the ten years to 2019,
industry valued added, which measures
the industry’s contribution to the overall
economy, is anticipated to grow an
annualized 8.8%. This compares with
GDP growth of 2.7% per year on average
over the same period. Online legal
document service providers have
provided significant competition to small
and medium-sized law firms that offer
legal advice over the internet, resulting in
some virtual law firms exiting the
industry, as they were unable to compete
with the greater economies of scale the
larger firms command. However, aside
from this segment, all aspects of the
industry are currently growing due to the
rapid adoption of online services by
consumers and businesses. New startups
are rushing to meet the legal needs of
small-business owners and consumers
with limited legal budgets.
The industry’s growth can be
attributed in large part to an increase in
e-commerce demand driven by the rising
prevalence of high-speed internet
services, reliable payment systems and
high penetration of mobile devices with

internet access. The percentage of
services conducted online is anticipated
to reach 12.2% by 2019, representing
annualized growth of 4.4% over the ten
year period. These services have allowed
more consumers to use the internet to
research and buy services quickly and
efficiently. As a result of this added
convenience, more consumers have been
able to make purchases online.
The industry is unlikely to decline in
the near future. Legal services will
always be needed because property
disputes, business activity and criminal
justice require a legal framework. While
regulatory barriers do exist for the
industry, greater clarity has been
brought to gray areas of the industry
(such as the ability of online operators
to provide legal document services) by
the recently published best practices
guidelines by the American Bar
Association’ eLawyering Task Force,
which serve to legitimize services that
fall outside the lawyer-client
relationship. Demand for low-cost legal
services are likely to remain high as
consumers and small businesses
recognize the benefits of avoiding
unnecessary professional fees.

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Products & Markets

Supply Chain  |   Products & Services  |   Demand Determinants
Major Markets  |   International Trade  |   Business Locations

Supply Chain

KEY BUYING INDUSTRIES
54111

Law Firms in the US
Paralegals use online legal services to help expedite the process of filling out legal documents.

81341

Civic, Social & Youth Organizations in the US
Civic, social & youth organizations use online legal services to apply for 501(c)(3) tax-exempt
status.

92

Public Administration in the US
Public administrations use online legal services to assist them with legal document reviews.

99

Consumers in the US
Consumers use online legal services when filling out documents related to bankruptcy, divorce
or real estate law.

NN007

Commercial Real Estate in the US
Entrepreneurs use online legal services when attempting fill out a real estate lease for their
business.

KEY SELLING INDUSTRIES
44211
44312

Computer Stores in the US
Computer stores supply online legal service companies with office equipment.

51121

Software Publishing in the US
Software publishers develop legal software for online legal companies such as automated
document programs.

53112

Products & Services

Furniture Stores in the US
Office furniture stores supply online legal service companies with office equipment.

Commercial Leasing in the US
The Commercial Leasing industry supplies online legal service companies with office spaces for
lease.

Interactive legal documents
Industry operators provide customers
with access to interactive software
programs that help them prepare legal
documents for processing. Interactive
legal documents are typically formatted
to meet the needs of two groups of
customers: individuals and small
businesses. Automated services help
customers fill out forms necessary for a
variety of different actions, including
starting a business, incorporating a
business, filing for bankruptcy or divorce.
Companies charge their customers to
either gain access to their forms or after
they have filled them out before filing.
Although industry operators differ in
the extent to which they provide
assistance, most offer customers an

initial questionnaire to help determine
what legal documents customers need to
file. Once the document has been
determined, automated online services
will assist users in filling out each form
by asking or simplifying questions and
providing complimentary services
throughout the process. When customers
are finished filling out their forms, the
interactive system will check the
document for any errors including
spelling and grammatical mistakes.
Finally, the system will fill out any
additional information necessary to
address the document to the proper
authority. For a fee, some companies
offer to package and ship documents or
track their progress through the workflow
cycle, giving confirmation when forms
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Products & Markets

Products & Services
continued

Products and services segmentation (2014)

10%

Other services

25%

Subscription legal plans

65%

Interactive legal documents

Total $4.1bn
are finished being processed by a
government agency.
This segment has decreased as a
percentage of total industry revenue over
the past five years, as subscription plans
have increased. However, a greater
variety of interactive legal documents
have become available and more
companies are now offering these
services. For example, prenuptial
agreements, state-specific divorce
documents and state-specific marital
settlement agreements have all been
introduced over the past five years.
Attorney-to-client services
Clients that seek legal aid that goes
beyond the filing of legal documents can
access a lawyer through law firm websites
or through legal matching platforms.
Small virtual law firms provide a section
of their website known as a secure “client
portal” through which customers can log
in with a unique user name and
password. The portal can be accessed by
both clients and attorney’s anywhere
using an internet connection and allows
both parties to communicate securely,
download or upload documents and
conduct other business normally carried
out in face-to-face meetings. Features
will differ depending on the online law

SOURCE: WWW.IBISWORLD.COM

service, but most use a web-based
software-as-a-service (SaaS) application
to provide portal access and store
documents on a cloud computing system.
Purely online-based legal service
providers offer a slightly different set of
attorney to client services through a
variety of packages for customers and
businesses that want to gain access to
unbundled legal advice. These plans
connect subscribers to experienced
attorneys licensed in their jurisdiction
to address their specific legal needs.
Most of the lawyers that participate in
these services operate out of small law
firms and use the agreement to help
supplement income earned at their
practice. The online legal service
provider pays each lawyer a monthly
subscription fee per paid customer
subscription to provide consultations.
Plans may vary depending on the size
and requirements of the customer, i.e. if
they are a small business or an
individual seeking legal aid. This service
is relatively new to the industry but is
gaining widespread acceptance due to
the low cost to industry operators of
providing such intermediary services.
This segment has increased over the
past five years as companies have made
headway in new states and marketing of
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Products & Markets

Products & Services
continued

these services has increased. Growth of
subscription legal plans is expected to
continue over the next five years as they
offer a more profitable and less laborintensive revenue stream for legal
document service providers.
Other services
Online legal service companies also
provide a number of assorted
services that do not fall into one

Demand
Determinants

Demand for online legal services depends
on the general economic and business
environment and comes from a variety of
sources. Clients tend to seek out online
legal services to deal with piecemeal legal
issues that are not substantial or pressing
enough to warrant the higher cost of a
traditional legal services. Clients demand
legal services to deal with banking and
finance law, family law, wills and probate,
criminal law, intellectual property and
commercial regulations. The industry is
also counter cyclical in that it benefits
during economic downturns. Online legal
services are relatively less expensive than
traditional legal services and are
therefore more likely to be utilized when
household incomes fall.
Internet use
Online legal services have benefited from
growth in the number of consumers with
broadband connections. Greater internet
connectivity allows industry operators to
tap into new markets of consumers to
service. Therefore, the industry benefits
from higher numbers of consumers and
businesses transacting online.

particular category. These may
include access to libraries of
information on legal documents,
electronic storage for documents
and document revision services.
Over time, new primary segments
are likely to develop from this group
of assorted services as operators
strive to attract and retain customers
with new products in this rapidly
evolving industry.

Regulation
Changes to legislation affect demand for
online legal services, especially within a
commercial environment. Changes in
regulations occur in nearly every
downstream industry, including
foodservice and retail. Generally, changes
to laws and regulations increase demand
for law firms, as clients often require
expertise to interpret and comply with
these types of changes.
Small business creation
Operators provide a number of services
to help individuals or groups navigate
the complicated process of setting up a
new business. For example, online legal
services are tailored to help customers
establish LLCs, incorporations, sole
proprietorships and general and limited
partnerships. Demand for these services
typically comes from smaller enterprises
with less capital to spend on legal
advice. The greater the number of
individuals or groups attempting to
establish a new business, the more
demand there will be for relatively less
expensive online legal services.

EXHIBIT F -86-

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Products & Markets

Major Markets

Major market segmentation (2014)

7%

Other

41%

Businesses and corporate clients

Total $4.1bn

52%

Individual consumers

SOURCE: WWW.IBISWORLD.COM

As with traditional brick-and-mortar law
firms, online legal service providers offer
a variety of legal aid services to numerous
types of clients. However, the industry’s
largest markets consist of individual
consumers and small to medium-sized
businesses looking to purchase
unbundled legal services. Over the past
five years, the industry has invested in
marketing its products to businesses that
are more likely to purchase higher priced
subscription legal plans. As a result, the
individual consumers market segment for
industry products has shrunk slightly
relative to the business segment.
Nevertheless, both segments have and
will continue to grow as more consumers
and businesses become aware of the
benefits of using online legal services
over the next five years.

using online legal aid services tend to be
part of the 25 to 44 year old age cohort.
This group of consumers is old enough to
have a wider variety of legal needs, such
as filing for divorce or a personal injury
evaluation. The next largest cohort of
online legal service customers is part of
the 18 to 24 year old cohort. Consumers
in this age group tend to be more tech
savvy and used to using online services
than older generations. They also have
less income than older generations and
are likely to seek less expensive means
for acquiring legal assistance. The
smallest group of customers includes
those that are 45 and older. Individuals
at this age are more likely to require
end-of-life legal assistance in the form of
wills, estate planning and insurance
policy assistance.

Individual consumers
The cost of legal services provided by
brick-and-mortar law firms has risen
over the past ten years, pricing out a
significant number of middle class
individuals. As a result, more consumers
have turned to a growing number of
online legal services that provide
unbundled or limited scope
representation for a variety of their legal
aid needs. The majority of customers

Businesses
As with traditional brick-and-mortar law
firms, businesses account for a substantial
share of the Online Legal Services industry’s
revenue. However, while traditional law
firms provide legal aid to clients of all sizes
(from mom and pop shops to multinational
corporations), online legal services tend to
cater their services to small to mediumsized businesses. Industry operators
specialize in assisting entrepreneurs looking
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Products & Markets

Other
The industry also services a smaller
group of varied customers,

Major Markets
continued

International Trade

to start a business fill out the proper
documentation to register their company or
trademark their products. Start-ups are a
particularly important customer base
because they are more likely to use less
expensive services to satisfy their legal
needs. Medium-sized businesses may also
seek to use online legal services and their
unbundled products rather than paying a
higher price to retain a lawyer.

including government, public and
nonprofit clients. For example,
industry leader LegalZoom
provides individuals or groups
looking to establish non-profit
organizations with assistance
registering for 501(c)(3) taxdeductible status. Federal, state or
municipal agencies may also use
certain services provided by
industry operators, although on a
much more limited basis given that
many government bodies already
retain in-house legal council.

Given the service-based nature of
the industry, exports and imports
are not applicable. Moreover, the
majority of industry participants

only operate in the United States. As
a result, international trade is not
applicable for the Online Legal
Services industry.

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Products & Markets
Business Locations 2014

West
New
England

AK
0.2

Great
Lakes
WA

ND

MT

2.1

Rocky
Mountains
ID

OR
1.2

West NV
0.9

1.5

SD
0.3

WY

0.5

MN

0.2

0.4

Plains

CO

0.7

KY

0.8

9

OK
1.5

NC
2.3

TN

AZ

NM

1.7

0.6

Southwest
TX
7.5

HI
0.4

Additional States (as marked on map)
1 VT

2 NH

3 MA

SC

Southeast

5 CT

6 NJ

7 DE

8 MD

1.5

0.4

3.0

2.6

0.2

0.4

1.8

0.9

MS

AL
1.4

1.4

GA
2.9

0.8

LA
2.1

FL
9.0

Establishments (%)

4 RI

0.2

AR

8

0.5

1.5

13.1

7

WV VA
2.3

1.2

1.8

CA

West

2.8

MO

KS

2.0

OH

1.6

4.2

6

3.6

IN

IL

0.5

UT

PA

2.6

0.9

0.4

1 2
3
NY
7.5
5 4

MI

1.2

IA

NE

0.3

WI

ME

MidAtlantic

9 DC
0.7

Less than 3%
3% to less than 10%
10% to less than 20%
20% or more
SOURCE: WWW.IBISWORLD.COM

EXHIBIT F -89-

Online Legal Services in the USMay 2014   19

WWW.IBISWORLD.COM

Products & Markets

Distribution of establishments vs. population
30

20

10

Southwest

Southeast

Rocky Mountains

Plains

New England

Mid-Atlantic

Great Lakes

0
West

The service-based nature of the industry
dictates that the industry is generally
distributed in line with the population,
per capita disposable income and
business activity. While the industry’s
services are distributed over the
internet, lawyers providing services
online must be registered with the
American Bar Association in the state in
which they practice.
Online legal document service
provides are an exception to the above
rule. The growth of technology
companies like Rocket Lawyer and
LegalZoom has influenced the
industry’s geographic distribution.
Technology companies are not
traditional law firms and outsource
specialty legal services to approved
attorneys in the relevant jurisdiction.
Online legal document service providers
rely more heavily on tech-savvy labor,
such as computer programmers, and,
therefore, benefit from being proximate
to other technology companies and
venture capital. For this reason,

%

Business Locations

Establishments
Population
SOURCE: WWW.IBISWORLD.COM

California has a higher concentration of
online legal services operators
compared to its population as it possess
the country’s biggest collection of
technology companies.

EXHIBIT F -90-

WWW.IBISWORLD.COM

Online Legal Services in the US May 2014  

20

Competitive Landscape

Market Share Concentration  |   Key Success Factors  |   Cost Structure Benchmarks
Basis of Competition  |   Barriers to Entry  |   Industry Globalization
Market Share
Concentration
Level

Concentration

in
this industry is Low


Key Success Factors
I
 BISWorld identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:

The Online Legal Services industry has a
low level of market share concentration.
In 2014, IBISWorld estimates that the
three largest companies operating in the
industry will account for less than 9.0%
of the available market share. A
combination of low barriers to entry and
rapid growth potential due to rising
demand for low cost legal services has

encouraged a flood of new operators to
enter the industry over the past five
years. The number of new online legal
service operators is expected to grow at
an annualized 10.5% to 16,692 over the
five years to 2014. As a result, the
industry is highly fragmented with only
one major player controlling over 5.0% of
market share.

Ability to quickly adopt new technology
Ever-changing software systems, internet
speeds and personal information security
systems require operators to continually
update their business to keep pace with
recent technology.

effectively promote their product or
service to be successful.

Must comply with
government regulations
Online legal service providers must
comply with state and federal
legislation, which impacts the services
they can provide.

Development of new products
To distinguish themselves from
their competition, industry firms
must be able to develop new
products and services as demanded
by clients and users.

Effective product promotion
In a concentrated industry with little
product differentiation, operators must

Cost Structure
Benchmarks

Providing client confidentiality
Clients and users submit sensitive and
private information to online legal
services sites. Therefore, it is important
for players to ensure total
confidentiality in all areas of operation
and dealings with clients.

Profit
The Online Legal Services industry’s
profit (defined as earnings before
interest and taxes) is expected to
account for 14.6% of the average firm’s
revenue in 2014. Brick-and-mortar law
firms that conduct high-value work for
corporations typically earn higher profit
margins, with the biggest firms earning
profit in excess of 20.0% of revenue.
However, online operators typically
offer more generic unbundling legal
services, such as document drafting and
form preparation. These services
generally have lower profit margins as
consumers and small businesses that
demand them are price-conscious and

go online looking for affordable
alternatives to full-service law firms.
Industry profit margins are also limited
by the industry’s increasingly high level
of competition. The average industry
profit margin has increased over the
past five years as demand has increased,
allowing many fledgling firms to reach a
critical mass of clients that has enabled
them to break even. For example,
LegalZoom, the industry’s largest
player, made its first profit in 2011 once
it reached a critical scale and cut back
on marketing. Also, improved
technology has reduced labor costs and
increased turn-around times, ultimately
helping profit margins.
EXHIBIT F -91-

WWW.IBISWORLD.COM

Online Legal Services in the US May 2014  

21

Competitive Landscape

Wages
Wages account for an estimated 31.0% of
the average firm’s revenue in 2014, which
is lower than the average wage cost of a
traditional brick-and-mortar law firm.
While the majority of industry firms
employ a high degree of specialized labor,
firms providing online legal services
generally specialize in unbundled services
that are not as labor-intensive. The rapid
rise of online legal documentation
services like LegalZoom and Rocket
Lawyer, which have much lower wage
costs due to their focus on providing
generic interactive legal documents, has
lowered the industry’s reliance on labor
over the past five years. These online
legal documentation services have moved
towards subscription models that require
less fulfillment labor. This trend is
expected to continue over the next five
years, leading to lower industry-wide
labor costs.

Depreciation
While the industry excludes operators
with brick-and-mortar storefronts, online
operators are still faced with depreciation
on fixed assets, such as furniture and
fixtures for offices from which they
operate. Depreciation is also recorded
against technology infrastructure,
internal-use software and website
development. The nature of the industry
means there is a need to continuously
maintain and update websites and
databases. Depreciation costs vary among
operators depending on their size and
business-model, with virtual law firms
generally having lower depreciation costs
than online legal documentation services
due to their less advanced technology
infrastructure. Depreciation costs for this
industry have increased in recent years
due to evolving technology and software
programs and more advanced web
interfaces and payment systems.

Sector vs. Industry Costs
Average Costs of
all Industries in
sector (2014)
100

Industry Costs
(2014)

10.6

42.3

■ Profit
■ Wages
■ Purchases
■ Depreciation
■ Marketing
■ Rent & Utilities
■ Other

14.6
31.0

80

Percentage of revenue

Cost Structure
Benchmarks
continued

60

8.0
40

1.5

13.5
5.1

20

24.8

2.1

1.5

20.0
5.0
19.9

0
SOURCE: WWW.IBISWORLD.COM

EXHIBIT F -92-

WWW.IBISWORLD.COM

Online Legal Services in the US May 2014  

22

Competitive Landscape

Cost Structure
Benchmarks
continued

Basis of Competition
Level & Trend

Competition

in
this industry is
H
 ighand the trend
is  ncreasing
I

Marketing
The amount of revenue a firm devotes
to its marketing budget varies
considerably depending on its size,
life-cycle and business model. Online
marketing is especially important for
firms in this industry as their services
are targeted at consumers or
businesses that are actively online and
are likely to discover a firm’s services
through a search engine or via online
advertising. Online legal
documentation startups usually
devote a considerable amount to
marketing in their initial years to
build brand awareness and then
slowly taper this over time. For
example, LegalZoom devoted over

30.0% of its revenue to sales and
marketing during its high-growth
phase, then reduced this amount over
time. Online firms have ramped up
their marketing over the past five
years as competition has intensified.

Operators in this industry experience a
high degree of internal and external
competition. The industry is highly
fragmented due to the large number of
new industry entrants each year. Barriers
to entry into the industry are relatively
low, allowing a large number of new
startup firms to compete for growing
demand for less expensive do-it-yourself
legal advice. At the same time, online
legal services face steady competition
from a variety of traditional legal
services, such as law firms, solo attorneys
and national legal plan providers.

charging for supplementary services in
order to attract consumers to their sites.
Operators also compete over service
quality. It is extremely important that
customers have an intuitive, hassle free
experience when using online legal
service websites, which deal with
complex legal issues. This is particularly
true given that sites offer do-it-yourself
services, which require a greater degree
of engagement with the customer than
most other online experiences. As such,
operators must commit a large amount
of time and resources to develop
websites that can provide an optimal
customer experience.
Finally, industry participants compete
over their ability to build and market a
recognizable brand. In the vast world of
ecommerce, it is critical for online service
providers to spend large amounts of
startup capital on advertising to establish
themselves with the public. For example,
in 2009, industry leader LeagalZoom
spent 31.7% of its revenue on sales and
marketing to build awareness of its
product. Marketing will become
increasingly important within the

Internal
Online legal service providers compete on
the basis of price, customer service,
brand recognition and online site
efficiency. Price is an important
competition point for industry operators
due to the relatively homogenous nature
of services each provides. This has forced
many industry operators to develop
innovative pricing schemes to help attract
customers to their services. For example,
some operators have made some of their
entry-level primary services free while

Other costs
The industry is exposed to a range of
other costs associate with the normal
course of doing business, including rent
and utilities, insurance costs,
administrative expenses, travel expenses
and professional fees paid to accountants
and external law firms. Administrative
overheads tend to be high, but steady as a
percentage of overall revenue due to the
transactional nature of the work.

EXHIBIT F -93-

WWW.IBISWORLD.COM

Online Legal Services in the US May 2014  

23

Competitive Landscape

Basis of Competition
continued

industry as the field of competition grows
increasingly crowded.
External
Competition from outside comes from
traditional brick-and-mortar legal service
providers, such as law firms, solo
attorneys and national legal plan
providers. Traditional legal service
providers have some advantages over
online legal services. Law offices can

Barriers to Entry
Level & Trend

Barriers to Entry

in this industry are
L
 owand Increasing


This fast-growing industry has low
barriers to entry. Investments for an
online legal services company are
relatively low. Providers must
purchase or develop software, websites
and different client interfacing
programs that can dispense legal
advice. But once these programs are
developed, operators need to invest
little in upkeep to maintain services.
Furthermore, most of these
technological barriers are decreasing
as more people learn how to program
online software and the costs for
servers are expected to continue to fall
with technological advancement.
Industry operators are not
required to achieve accreditation by
any bar associations or legal
jurisdictions to dispense their
services. This is a prominent barrier
for most brick-and-mortar law firms
that requires that they hire qualified
attorneys. As a result, wages for
online legal services are much lower
than traditional law firms. However,
industry operators that lack
accredited employees are restricted
from providing certain legal services,

provide direct legal advice that online
operators are unable to offer due to
regulations that limit companies engaged
in the unauthorized practice of law. Most
customers are also more accustomed to
turning to law firms or solo attorneys
rather than do-it-yourself websites for
legal aid. However, these advantages may
be outweighed by industry operators’
ability to provide services at a fraction of
the cost of traditional legal services.

Barriers to Entry checklist
Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance

Level
High
Low
Growth
Low
High
Heavy
Low
SOURCE: WWW.IBISWORLD.COM

thus limiting their ability to contend
with brick-and-mortar firms.
The industry’s low barriers to entry
have enticed a large number of new
entrants to compete for growing market
share. This has resulted in a high degree
of industry fragmentation and
competition between providers for
customers’ attention. As a result, most
operators must spend a considerable
amount of their start-up money on
marketing in order to stand out from the
competition. This barrier is expected to
continue to rise as more operators enter
the field, making it increasingly difficult
for new entrants to establish themselves
and carve out market share.

EXHIBIT F -94-

WWW.IBISWORLD.COM

Online Legal Services in the US May 2014  

24

Competitive Landscape

Industry
Globalization
Level & Trend

Globalization

This highly fragmented industry includes
some companies that are foreign owned;
however, they do not make up a
significant market share. International

trade does not have a tangible impact on
this industry because software can be
digitally distributed instantly, making
borders irrelevant.

in this
industry is Lowand

the trend is Steady


EXHIBIT F -95-

Online Legal Services in the USMay 2014   25

WWW.IBISWORLD.COM

Major Companies
Legalzoom   |   Other Companies

Major players
(Market share)

94.2%
Other

Legalzoom 5.8%

Player Performance
Legalzoom
M
 arket share: 5.8%

LegalZoom.com is an online legal
documentation service founded in 2001 in
Glendale, CA. The company provides
personalized online document assembly of
legal documents as well as a legal
education center and articles on the legal
aspect of current events. As with many
legal service providers, LegalZoom offers
clients legal document creation services in
various common categories, including
copyrights, DBAs, divorce, immigration,
business formation, trusts, wills name
changes, patents, power of attorney,
prenuptial agreements, real estate leases,
trademarks, estate and personal planning.
The company also serves as a certified
California attorney referral services.
LegalZoom joined with United
Kingdom-based legal services provider
QualitySolicitors in 2012 in an attempt to
expand both companies presence in the
United Kingdom. That same year,
LegalZoom sued rival Rocket Lawyer,
charging the company with misleading
advertising, trademark infringement and
unfair competition. LegalZoom alleges
that Rocket Lawyer’s advertising is false
and misleading, mainly over the latter
company’s free offerings, which can
require paying filing fees or buying a paid
membership plan. The lawsuit was issued
just as Rocket Lawyer was set to expand
its presence in the UK. Unlike LegalZoom
which charges for access to legal forms,
Rocket Lawyer provides customers legal
documents up front for free and then
offers additional legal guidance via
pre-paid legal plans that cost between
$10.00 and $40.00 per month.

SOURCE: WWW.IBISWORLD.COM

LegalZoom also filed for an initial
public offering with the SEC in 2012.
The move was anticipated to raise as
much as $120.0 million for the
company. Nevertheless, due to the
less than enthusiastic response from
the markets, LegalZoom withdrew its
IPO in 2014. That same year,
European private capital firm Permira
announced its intent to acquire
$200.0 million in outstanding equity
of the company and become the
company’s largest shareholder. The
purchase has temporarily provided
the company with enough capital to
help the company continue to expand
its operations.
Financial performance
LegalZoom has grown substantially
over the past decade to become the
leader of the Online Legal Services
industry. Over the period, the company
gathered over two million new
customers, targeting its services to a
broad base of customers that were
priced out of the traditional legal
service market due to the recession.
LegalZoom fared well over the past five
years, growing its business through a
heavy emphasis on marketing, which
represented a high of 31.7% of the
company’s revenue in 2009. This cut
into earnings but helped spread
awareness of the company’s offerings.
Ultimately, the strategy has helped the
company’s revenue increase at average
annual rate of 17.9% to $235.8 million
in 2014.
EXHIBIT F -96-

Online Legal Services in the USMay 2014   26

WWW.IBISWORLD.COM

Major Companies

Player Performance
continued

LegalZoom – financial performance
Year

Revenue
($ million)

(% change)

Operating Income
($ million)

(% change)

2009

103.3

N/C

-0.3

N/C

2010

120.8

16.9

-3.6

1,100.0

2011

156.1

29.2

6.3

N/C

2012

178.0

14.0

10.0

58.7

2013

205.0

15.2

12.1

21.0

2014*

235.8

15.0

14.4

19.0

*Estimates

Other Companies

Rocket Lawyer

Estimated market share: 1.8%
Rocket Lawyer is an online legal services
company founded in San Francisco in
2008. The company provides a variety of
online legal services tailored for small and
medium-sized enterprises. Its services
offerings assist clients with incorporation,
estate plans, legal health diagnostics and
legal document reviews. While Rocket
Lawyer is primarily a “do-it-yourself”
web-based service, the company also
provides customers with access to a
network of attorneys that can help with
consultations on legal issues through its On
Call service. The company has grown
substantially over its six-year existence,
acquiring investment capital totaling some
$40.0 million, including from Google
Ventures and investor Growth Capital plus.
Rocket Lawyer is a private company and
therefore does not disclose financial
information. The company is considered
the industry’s second largest online legal
service provider, with IBISWorld
estimating $75.2 million in revenue
earnings in 2014.

USLegal

Estimated market share: 1.0%
USLegal is an online legal publishing
company that provides online legal

SOURCE: ANNUAL REPORT AND IBISWORLD

solutions for attorneys, small businesses
and consumers. Founded in Jackson,
MS, in 1997, the company’s website
provides customers with a searchable
repository for legal documents and
forms including wills, name changes,
titles and deeds and more. The company
is primarily a “do-it-yourself” document
provider with the largest selection of
legal documents of any legal services
provider. Its product offerings include
many of the most obscure legal forms,
including a complete directory of state
specific legal documents. Besides
providing access to “do-it-yourself”
documents, the company also provides
customers with preparation services to
help fill out forms. USLegal also
provides its customers with free access
to customer care agents online and by
phone 24 hours a day. USLegal is a
privately held company and therefore
does not release financial data.
IBISWorld estimates the company will
generate $42.6 million in revenue
in 2014.

MyCorporation

Estimated market share: less than 1.0%
MyCorporation is a provider of online
document filing services for customers
interested in forming a corporation or
EXHIBIT F -97-

Online Legal Services in the USMay 2014   27

WWW.IBISWORLD.COM

Major Companies

Other Companies
continued

limited liability company. Founded in
1997 in Calabasas, CA, the company
was acquired in 2005 by InTuit, an
American software company that
develops financial and tax preparation
software and related services for small
businesses, accountants and
individuals. In addition to its filing
services, MyCorporation also provides
trademark searches and applications,

copyright registrations, DBA
registrations, registered agent services
and other products to help customers
protect and maintain their businesses.
MyCorporation is a privately held
company and therefore does not
release financial information.
IBISWorld estimates the company
will generate $12.9 million in revenue
in 2014.

EXHIBIT F -98-

Online Legal Services in the USMay 2014   28

WWW.IBISWORLD.COM

Operating Conditions

Capital Intensity   |   Technology & Systems   |   Revenue Volatility
Regulation & Policy   |   Industry Assistance
Capital Intensity
Level

The level

of capital
intensity is  ow
L

This industry is subject to a low level of
capital intensity. IBISWorld estimates
that for every dollar spent on wages,
only $0.05 is spent on capital. Despite
the online nature of the industry and its
focus on generic form legal documents,
the majority of industry firms employ
highly skilled and specialized lawyers.
Attorneys are educated and
knowledgeable in the practice of law.
While face-to-face contact is nonexistent in this industry, some services
may be highly personalized. Even those
firms that primarily provide
customizable legal documents must
keep abreast of any changes created by
acts of legislation. In addition, law
firms require a number of support staff
for research, filing and documenting, as

Capital intensity

Capital units per labor unit
0.5
0.4
0.3
0.2
0.1
0.0

Economy

Professional,
Online Legal
Scientific and
Services
Technical Services

Dotted line shows a high level of capital intensity
SOURCE: WWW.IBISWORLD.COM

well as ad hoc duties. All these factors
contribute to the industry’s high level of
labor intensity.

Tools of the Trade: Growth Strategies for Success
Investment Economy

Recreation, Personal Services,
Health and Education. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.

Information, Communications,
Mining, Finance and Real
Estate. To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.

Online
Legal
Services
Furniture Stores

Traditional Service Economy
Wholesale and Retail. Reliant
on labor rather than capital to
sell goods. Functions cannot
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.

E-Commerce &
Online Auctions
Computer
Stores

Civic, Social & Youth
Organizations

Public Administration

Capital Intensive

Labor Intensive

New Age Economy

Old Economy
Agriculture and Manufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.

Change in Share of the Economy

SOURCE: WWW.IBISWORLD.COM

EXHIBIT F -99-

Online Legal Services in the USMay 2014   29

WWW.IBISWORLD.COM

Operating Conditions

Capital Intensity
continued

The industry’s capital investment is low;
most ongoing expenses are related to the
upgrade and maintenance of office and
computer equipment, including specialized
software packages, and communications
equipment. Firms also record depreciation
against technology infrastructure, internaluse software and website development; the
nature of the industry means there is a
need to continuously maintain and update
websites and databases. While the use of
computer systems, legal databases,
electronic discovery (e-discovery, or the
reviewing of electronic legal documents)

and the internet has improved employee
productivity, technological advancements
have not overcome the need for personnel
in researching, designing solutions,
dealing with clients and completing
administrative tasks.
In the five years to 2019, labor’s
proportion of industry revenue is
expected to continue to decrease as
technology improves and firms rely to a
greater extent on transactional models
requiring less labor fulfillment. This will
ultimately lead to a slightly higher level of
capital intensity.

Technology
& Systems

Technology is constantly developing in
the Online Legal Services industry. New
tech advancements have made it easier
for industry operators to offer unbundled
legal services to a wider audience.
Growth in the number of consumers with
broadband connections has allowed a
greater number of potential customers to
purchase services online. At the same
time, developments in web technology
have enabled service providers to bring
their businesses online.
Industry operators rely on a variety of
legal software to provide their clients
with services. Most own or operate
programs designed to help customers
assemble legal documents automatically,
without the help of live legal council.
These programs often use “intuitive”
forms to collect information from clients.
Clients’ responses to questions by the
program prompt new questions and
direct customers to the appropriate

answers for each document line item.
Responses are then collected and
automatically formatted into a document
template and reviewed by the program
for errors.
Online portals are also used to collect
and store clients’ cases. Software as a
service (SaaS) tools have been developed
to keep digital records of the legal
documents or guidance and instructions
that firms provide clients. Cloud
computing software allows this
information to be stored and accessed
from any location with an internet
connection. Clients have their own secure
homepage online that they can log into at
any time to access the information they
need to complete their legal matters on
their own. This form of digital
communications appeals to do-it-yourself
clients that appreciate the flexibility and
ease with which they can access their
legal documents.

In the five years to 2014, the industry
experienced a moderate level of revenue
volatility. The industry has experienced
strong, consistent growth in revenue
mainly due to the migration of all forms
of services online. It is common for an

industry in the growth stage of its
life-cycle to experience moderate-tohigh revenue volatility, as many of its
services are not yet well established in
the marketplace and are still being
evaluated by consumers. This is true of

Level

The level

of
Technology
Change is High


Revenue Volatility
Level

The level

of
Volatility is  edium
M

EXHIBIT F -100-

Online Legal Services in the USMay 2014   30

WWW.IBISWORLD.COM

Operating Conditions

the Online Legal Services industry,
where new firms are still entering at a
rapid pace, offering new and unique
products that simplify the barrier
clients face when taking legal actions.
The recent recession, which decimated
many industries in the broader economy,
had little impact on the Online Legal
Services industry’s revenue. In fact, many
consumers and small businesses sought
out online legal services during this time
as they became increasingly priceconscious, leading to strong industry
growth despite rising unemployment, a
drop in consumer spending and less
A higher level of revenue
volatility implies greater
industry risk. Volatility can
negatively affect long-term
strategic decisions, such as
the time frame for capital
investment.
When a firm makes poor
investment decisions it
may face underutilized
capacity if demand
suddenly falls, or capacity
constraints if it rises
quickly.

demand for high-end legal services. In
this way, the industry is well positioned
for any future economic turmoil.
The industry is expected to
experience decreased revenue volatility
over the next five years as its services
become more established and the
recent high growth rates taper. Save for
any significant regulatory changes that
seeks to limit the ability of firms to
provide do-it-yourself online legal
documents, the industry is expected to
continue to grow steadily as consumers
and businesses seek low-cost options
for their basic legal needs.

Volatility vs Growth
1000

Revenue volatility* (%)

Revenue Volatility
continued

Hazardous

Rollercoaster

100
10

Online Legal Services

1
0.1

Stagnant
–30

–10

Blue Chip
10

30

50

70

Five year annualized revenue growth (%)
* Axis is in logarithmic scale
SOURCE: WWW.IBISWORLD.COM

Regulation & Policy
Level & Trend

The level of

Regulation is  eavy
H
and the trend
is  ncreasing
I

There are a number of laws and
regulations in the United States
regarding the unauthorized practice of
law, legal document processing and
preparation, legal plans, privacy and
other matters that govern the industry.
These rules have changed rapidly over
the past ten years as the legal landscape
shifted to allow provide for more online
legal service provision. Online legal
service providers must be ready to adapt
or discontinue certain services in order to
comply with the changing legal
environment surrounding the industry.

Most online legal service providers
provide what are referred to as
unbundled legal services. The American
Bar Association (ABA) Model Rule,
which provides rules that prescribe
baseline standards of legal ethics and
professional responsibility for lawyers in
the United States, formally allows for the
unbundling of legal services under a
ruling it made in 2002. According to the
Harvard Law Journal, the rule change
was adopted verbatim or with some
modification by 41 jurisdictions
(including the Districts of Columbia)
EXHIBIT F -101-

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Operating Conditions

Regulation & Policy
continued

across the country. Ten jurisdictions
have yet to adopt the rules since their
addition. Some of these states allow
limited unbundling but only for
noncriminal law matters. Since providing
unbundled services is the primary service
delivered by most industry operators, it
is difficult if not impossible, for providers
to exist in states where such services are
deemed illegal.
The advent of online legal services has
also helped generate legal questions
surrounding the standard definition of
what constitutes an unauthorized
practice of law by a nonlicensed
organization or individual. Many online
legal services providers deliver legal aid
without employing attorneys that have
been certified by the ABA. Considered
“unauthorized legal practices”, these
operators are restricted from providing
certain legal services available to
attorneys. In 2002, the ABA ruled that
each state and legal jurisdiction should
adopt their own definition of what
constitutes the “practice of law”, which

subsequently resulted in the creation of a
multitude of different definitions.
Without uniformity in the definition of
“practice of law,” enforcement and
regulations that pertain to unauthorized
legal practices differ from state to state,
forcing industry operators to adjust their
service provision depending on where
they’re operating.
Beyond laws governing the legality of
unbundling services and unauthorized
legal practice, industry operators must
also adhere to federal laws prohibiting
the scope of legal services they can
provide. According to federal regulation,
online legal service providers are
technically unable to acquire a license to
practice the law in the United States
unless their operations are fully run by
licensed attorneys. Furthermore, they
must abide by laws and regulations that
govern business transactions between
attorneys and non-attorneys, including
those related to ethics of attorney
fee-splitting and the corporate practice
of law.

Industry Assistance

Firms that provide online legal services
receive no formal government assistance,
but have support from various industry
associations. The American Bar
Association (ABA) is the industry’s main
industry association. Founded in 1878,
the ABA is a voluntary bar association of
nearly 400,000 member lawyers and law
students, which is not specific to any
jurisdiction in the United States.
Due to concerns about the gray-area in
which some online legal service providers
were operating, the ABA released draft
guidelines, the Best Practice Guidelines for
Legal Document Service Providers, in 2012
that recommends best practices for
individuals and entities that operate
outside the lawyer-client relationship.
These guidelines aim to cover firms that

provide materials and services for the
creating of legal documents that are
intended to express or affect legal rights,
obligations, claims or positions. These
recommendations have brought legitimacy
to the industry and alleviated the concerns
of new entrants that regulation would
stymie their future growth. These recent
guidelines supplement the Best Practice
Guidelines for Legal Information Web Site
Providers, published in 2003, which
describe more general practices such as
informing customers about dates on which
substantive content was prepared or last
reviewed, the jurisdiction to which the
content relates and the terms and
conditions of use.
The National Lawyers
Association is another voluntary

Level & Trend

The level of

Industry Assistance
is  owand the
L
trend is Steady


EXHIBIT F -102-

Online Legal Services in the USMay 2014   32

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Operating Conditions

Industry Assistance
continued

association of lawyers in the United
States, with about 3,000 members.
The National Lawyers Association

was founded in 1993 in response to
the ABA’s official position in favor
of abortion rights.

EXHIBIT F -103-

Online Legal Services in the USMay 2014   33

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Key Statistics
Industry Data
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

Revenue
($m)
1,525.7
1,830.0
2,183.6
2,303.4
2,441.8
2,687.5
2,875.4
3,272.2
3,780.4
4,087.8
4,452.0
4,807.2
5,234.7
5,567.7
5,935.6

Annual Change
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

Revenue
(%)
19.9
19.3
5.5
6.0
10.1
7.0
13.8
15.5
8.1
8.9
8.0
8.9
6.4
6.6

Industry
Value Added
($m)
743.6
891.6
1,072.4
1,129.8
1,194.5
1,276.8
1,343.7
1,515.0
1,769.2
1,925.3
2,088.0
2,254.6
2,455.1
2,605.7
2,766.0

Establishments
6,225
7,452
8,749
9,117
10,288
11,505
12,295
13,852
15,846
16,948
18,239
19,441
20,878
21,965
23,161

Enterprises Employment
6,139
9,872
7,347
11,841
8,608
13,735
8,979
14,372
10,139
15,906
11,324
17,487
12,103
18,605
13,642
21,110
15,615
23,628
16,692
25,233
17,971
26,500
19,148
28,278
20,564
30,435
21,629
31,816
22,817
33,725

Exports
----------------

Industry
Value Added
(%)
19.9
20.3
5.4
5.7
6.9
5.2
12.7
16.8
8.8
8.5
8.0
8.9
6.1
6.2

Establishments
(%)
19.7
17.4
4.2
12.8
11.8
6.9
12.7
14.4
7.0
7.6
6.6
7.4
5.2
5.4

Enterprises Employment
(%)
(%)
19.7
19.9
17.2
16.0
4.3
4.6
12.9
10.7
11.7
9.9
6.9
6.4
12.7
13.5
14.5
11.9
6.9
6.8
7.7
5.0
6.5
6.7
7.4
7.6
5.2
4.5
5.5
6.0

Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Key Ratios
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019

IVA/Revenue
(%)
48.74
48.72
49.11
49.05
48.92
47.51
46.73
46.30
46.80
47.10
46.90
46.90
46.90
46.80
46.60

Figures are inflation-adjusted 2014 dollars.

Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Exports/
Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Revenue per
Employee
($’000)
154.55
154.55
158.98
160.27
153.51
153.69
154.55
155.01
160.00
162.00
168.00
170.00
172.00
175.00
176.00

Wages/Revenue
(%)
33.80
33.50
33.40
33.20
33.00
32.50
32.00
31.50
31.30
31.00
30.70
30.60
30.50
30.30
30.10

Imports
----------------

Wages
($m)
515.7
613.1
729.3
764.7
805.8
873.4
920.1
1,030.7
1,183.3
1,267.2
1,366.8
1,471.0
1,596.6
1,687.0
1,786.6

Domestic
Demand
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Number of
businesses
(Mils)
7.5
7.6
7.7
7.6
7.4
7.4
7.4
7.4
7.5
7.6
7.8
7.9
8.0
8.1
8.3

Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Wages
(%)
18.9
19.0
4.9
5.4
8.4
5.3
12.0
14.8
7.1
7.9
7.6
8.5
5.7
5.9

Domestic
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A

Number of
businesses
(%)
1.3
1.3
-1.3
-2.2
-0.4
-0.7
1.2
0.7
1.5
2.0
1.5
1.5
1.5
2.0

Employees
per Est.
1.59
1.59
1.57
1.58
1.55
1.52
1.51
1.52
1.49
1.49
1.45
1.45
1.46
1.45
1.46

Average Wage
($)
52,238.65
51,777.72
53,097.93
53,207.63
50,660.13
49,945.67
49,454.45
48,825.20
50,080.41
50,219.95
51,577.36
52,019.24
52,459.34
53,023.64
52,975.54

Share of the
Economy
(%)
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01
0.01

SOURCE: WWW.IBISWORLD.COM

EXHIBIT F -104-

Online Legal Services in the USMay 2014   34

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Jargon & Glossary

Industry Jargon

BRICK AND MORTARA business with a physical
presence of a building or other structure, as opposed to
a business that conducts all their business using the
internet and associated technologies.

UNBUNDLED LEGAL SERVICEA form of limited
representation whereby the scope of services is limited
to generic, a la carte offerings that only pertain to the
clearly defined portion of a client’s legal needs.

LEGAL DOCUMENT SERVICE PROVIDERA firm that
specializes in providing interactive legal forms online
that can be customized to a customer’s specific need.

IBISWorld Glossary

BARRIERS TO ENTRYHigh barriers to entry mean that
new companies struggle to enter an industry, while low
barriers mean it is easy for new companies to enter an
industry.
CAPITAL INTENSITYCompares the amount of money
spent on capital (plant, machinery and equipment) with
that spent on labor. IBISWorld uses the ratio of
depreciation to wages as a proxy for capital intensity.
High capital intensity is more than $0.333 of capital to
$1 of labor; medium is $0.125 to $0.333 of capital to $1
of labor; low is less than $0.125 of capital for every $1 of
labor.
CONSTANT PRICESThe dollar figures in the Key
Statistics table, including forecasts, are adjusted for
inflation using the current year (i.e. year published) as
the base year. This removes the impact of changes in
the purchasing power of the dollar, leaving only the
“real” growth or decline in industry metrics. The inflation
adjustments in IBISWorld’s reports are made using the
US Bureau of Economic Analysis’ implicit GDP price
deflator.
DOMESTIC DEMANDSpending on industry goods and
services within the United States, regardless of their
country of origin. It is derived by adding imports to
industry revenue, and then subtracting exports.
EMPLOYMENTThe number of permanent, part-time,
temporary and seasonal employees, working proprietors,
partners, managers and executives within the industry.
ENTERPRISEA division that is separately managed and
keeps management accounts. Each enterprise consists
of one or more establishments that are under common
ownership or control.
ESTABLISHMENTThe smallest type of accounting unit
within an enterprise, an establishment is a single
physical location where business is conducted or where
services or industrial operations are performed. Multiple
establishments under common control make up an
enterprise.
EXPORTSTotal value of industry goods and services sold
by US companies to customers abroad.
IMPORTSTotal value of industry goods and services
brought in from foreign countries to be sold in the
United States.

INDUSTRY CONCENTRATIONAn indicator of the
dominance of the top four players in an industry.
Concentration is considered high if the top players
account for more than 70% of industry revenue.
Medium is 40% to 70% of industry revenue. Low is less
than 40%.
INDUSTRY REVENUEThe total sales of industry goods
and services (exclusive of excise and sales tax); subsidies
on production; all other operating income from outside
the firm (such as commission income, repair and service
income, and rent, leasing and hiring income); and
capital work done by rental or lease. Receipts from
interest royalties, dividends and the sale of fixed
tangible assets are excluded.
INDUSTRY VALUE ADDED (IVA)The market value of
goods and services produced by the industry minus the
cost of goods and services used in production. IVA is
also described as the industry’s contribution to GDP, or
profit plus wages and depreciation.
INTERNATIONAL TRADEThe level of international
trade is determined by ratios of exports to revenue and
imports to domestic demand. For exports/revenue: low is
less than 5%, medium is 5% to 20%, and high is more
than 20%. Imports/domestic demand: low is less than
5%, medium is 5% to 35%, and high is more than
35%.
LIFE CYCLEAll industries go through periods of growth,
maturity and decline. IBISWorld determines an
industry’s life cycle by considering its growth rate
(measured by IVA) compared with GDP; the growth rate
of the number of establishments; the amount of change
the industry’s products are undergoing; the rate of
technological change; and the level of customer
acceptance of industry products and services.
NONEMPLOYING ESTABLISHMENTBusinesses with
no paid employment or payroll, also known as
nonemployers. These are mostly set up by self-employed
individuals.
PROFITIBISWorld uses earnings before interest and tax
(EBIT) as an indicator of a company’s profitability. It is
calculated as revenue minus expenses, excluding
interest and tax.

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Online Legal Services in the USMay 2014   35

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Jargon & Glossary

IBISWorld Glossary
continued

VOLATILITYThe level of volatility is determined by
averaging the absolute change in revenue in each of the
past five years. Volatility levels: very high is more than
±20%; high volatility is ±10% to ±20%; moderate
volatility is ±3% to ±10%; and low volatility is less than
±3%.

WAGESThe gross total wages and salaries of all
employees in the industry. The cost of benefits is also
included in this figure.

EXHIBIT F -106-

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