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“They don’t know about the superpower that comes with great legal counsel.”

That is not the first line of an ill-fated John Grisham novel. It’s a trenchant observation by Charley Moore, founder and CEO of Rocket Lawyer, provider of online legal services. He was referring specifically, in a recent conversation, to the value of legal services for small and young businesses.

This isn’t exactly the topic that gets the blood going of business owners and entrepreneurs—except maybe their blood boils out of anger and frustration at the cost and complexity of seeking legal advice. Addressing those challenges is why Moore started Rocket Lawyer in the first place, “to make law affordable enough and simple enough for everyone.”

It seems probable that legal service will never be affordable or simple enough to satisfy most people, especially small business owners and entrepreneurs. For many of them, reliance on legal advice is a last resort, something to be avoided until absolutely necessary. That’s a mistake. Yet while it’s not cheap to avoid this mistake by seeking legal counsel before it’s needed, it’s likely far more expensive to try to ignore it and only seek the services of an attorney when a problem arises.

The potential legal problems for small businesses and entrepreneurs are nearly limitless: contract disputes, employment, intellectual property, leases, debt collection, liability, and so on. Problems are unavoidable, which means paying for legal services is, too. That became especially true during the COVID-19 pandemic.

In a recent survey of small businesses, Rocket Lawyer found that 60 percent had worked with an attorney in the past year, far higher than in prior years. That still leaves 40 percent of small businesses who had not worked with an attorney.

In a wide-ranging and highly enjoyable conversation with Moore, we talked about these findings and what they mean for small businesses, the experience of starting a business during a downturn, and the future of “legal tech” (yes, there is such a thing).

Law As Strategy

Legal input must be treated as “front of mind” by small businesses rather than an afterthought, as it is today for many. That was Moore’s point in the superpower observation above and it emerged from his brief experience practicing law in Silicon Valley in the 1990s. It contrasted with his experience growing up, when his father ran a chain of gas stations.

One of the first clients he worked with was Yahoo! “I saw it go from three guys to IPO in three years. I looked at the difference between Silicon Valley startups and the rest of the world and thought, what if my dad had the kind of lawyer I’d become?” Thus was born Moore’s mission to “democratize access” to legal services.

Well-funded startups, guided by angel and venture investors, “know to do this first,” Moore says. Dealing with contracts and employment law is something they do right away, it’s “front of mind” for them. For most other small business owners and entrepreneurs, it’s not. Look at the leading types of businesses that Yelp says were started in the third quarter of this year: oxygen bars, dance clubs, body contouring, children’s museums. Think they should be seeking legal counsel? Absolutely.

Trial By Fire

Moore started Rocket Lawyer in 2008, a month before the Lehman Brothers meltdown. Starting a business during bad economic times isn’t unheard of. Over half of the companies on the Fortune 500 got started during a recession or downturn. Historically, business formation fell during recessions, but over the past year it has surged at record levels. Moore says they’ve seen this reflected in an uptick in the number of businesses seeking help with incorporation.

Today is a bit different, of course. The official recession was brief, and consumer spending has barely slowed. In 2008 and 2009, the global financial system was on the brink of melting down. A new entrepreneur starting in 2020 or 2021 hasn’t necessarily faced the same pressure as Moore and others did in prior downturns. His lessons for this new wave of entrepreneurs, however, are enduring:

  • Get in touch with your customer
  • Understand the value you’re delivering
  • Stay lean

Can The Law Innovate?

The words “law” and “innovate” rarely belong in the same sentence, unless someone is citing the legal industry as a barrier to innovation. That’s not an entirely fair characterization, as legal codes have shown remarkable adaptability for centuries. Yet the last decade has witnessed a global explosion in “legal tech” companies—Rocket Lawyer was at the front end of that growth. In a recent presentation, law professor Daniel Martin Katz charted this growth but said that the legal industry still needs a “productivity revolution.” (About a decade ago, I suggested to one startup organization that they do a program focused on entrepreneurship in the legal industry. I was laughed out of the room.)

For his part, Moore sees the future of legal tech as “incredibly bright” and sees Rocket Lawyer as helping build that future. “We’ve never pivoted from that original mission of making law affordable and simple enough,” he says.

It’s this core mission that is guiding the company to help new startups in the space: “We want to provide the rocket fuel for the next generation of legal tech startups.”

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