Dot-coms sober up

The recent escape from liquidation by pioneering legal IT company Epoch, on the back of the shut-down of the well-funded UK news arm of US Web site Law.com in January, has predictably raised the question of whether the Internet is a viable place for the legal profession to conduct its business.The dot-com phenomenon that seemed such a profitable market 18 months ago has proved a false dawn and has claimed such high-profile casualties as boo.com and letsbuyit.com - and the same story seems to have extended into those offering legal services in cyberspace.

'A few years ago there was something of a gold-rush,' says Mark Keenan, operations director of divorce advice Web site Divorce Online.

'A lot of people launched sites and spent millions on advertising and customer acquisition thinking it was the way to make a quick buck, but it hasn't turned out that way - those companies that concentrated on steady growth are the ones left standing.'Such sentiments are echoed by Alan Tomlinson, business director of legal service provider Lawyers Online.

He says: 'It was imagined that if you had the acorn of a good idea, you could put it on-line and rake it in.

However, this is not so - it is important to keep control of the company and its growth, and stick to the ethics and principles you started out with.'Such lessons have been learned by solicitor Richard Cohen, co-owner of Epoch, the company behind Desktop Lawyer, that narrowly escaped liquidation following a management buyout last week (see [2001] Gazette, 13 September, 5).

'Our recent experience has shown that things are not happening as fast on the Web as people expected them to,' he says.

'Just because you spend a lot of money on a dot-com venture does not guarantee you a large revenue in return.'He adds: 'I foresee that funding for companies will become less and they will have to rely more on surviving on their own revenue stream.'Advertising to capture clients was not a route followed by Mr Keenan, who said in the year or so since Divorce Online has been up and running he 'concentrated on keeping costs to a minimum'.He explains: 'We have had no private funding, as other dot-coms have; our only investment has been our start-up costs.

Any money we have then made is ploughed straight back into the company to create new services, not wasted on speculative advertising.' Mr Keenan says the way to advertise without breaking the bank is by 'creative PR'.

He says: 'It is important to get yourself a good listing in a search engine, as that is where the public goes to find information.

Because of the nature of our business, we try to ensure that if a user enters the word "divorce" in a search facility, we appear on the first page of listed sites.'A similar stance is adopted by Joe Reevy, managing editor of LawZone, an Internet community for the legal profession, who sees the key to success as 'complete customer focus'.

The company has been on-line for two years and can legitimately boast 12,000 individual users, but Mr Reevy says: 'I have never advertised.

In fact I have probably spent less than 5,000 on marketing.'He continues: 'Nearly all our referrals come through word of mouth and we make sure to offer exceptional customer service.

By this I mean, if we receive an e-mail with a query, we reply in 15 minutes.

I know how good that feels and its important to build people's trust, especially with a faceless entity like the Web.'Mr Reevy sees the trust issue as one of the principal reasons for the failure of legal service Web sites.

'People want an interpersonal relationship with a lawyer and you can't develop this over a computer screen.

This outlook will change but not for probably more than ten years,' he says.

Mr Cohen also sees time as the barrier to the establishment of a genuine on-line legal service.

'I think we are five years away from the mass delivery of legal services on the Internet,' he says.

'I think it will make an impact at the top and bottom end of the market - but not as quickly as was anticipated.'Lawyers Online is based in Hereford and Mr Tomlinson says this gives him a perspective on just how slowly technology is being grasped in some law firms outside the M25.

'It's a very different picture outside London,' he says.

'I have visited a lot of firms across England who are still thinking twice about whether to get e-mail installed.'It appears that legal dot-com companies got slightly ahead of themselves and the rest of the legal profession.

The failure of Law.com/UK shows, for example, that despite large amounts of money ploughed in by its US parent, the appetite for legal news on the hour, every hour, rather than through traditional weekly journals, is not there yet.Mr Keenan says: 'There has been too much generalisation and not enough proper marketing and this has led to the market becoming saturated.

I would recommend companies to "think big, but start small" and build a reputation over time.'Legal IT expert Delia Venables, who has her own IT information site, says the problem is that people do not expect to pay to use a Web site.

'Thus, the only way to make money is to sell a service and - whilst users love free information via the Web - law is not a service they want to buy via this medium.'This reflects a problem for legal referral sites, which require firms to pay for entries on their database: the Law Society's Solicitors-online site, which has been a considerable success, offers a free searchable database of every practising solicitor.Fellow legal IT commentator Charles Christian agrees with Ms Venables' analysis.

'People would rather have a real life lawyer there,' he says.

'Legal advice is not like on-line banking - it's a personal service like going to see a GP.'Mr Christian says that while as a rule there is no future for virtual law firms - despite the apparent success of FirstLAW, albeit mainly in terms of brokering legal services - there is a role for the Internet in the legal profession.

'Firms should use their Web sites as a preliminary service,' he said.

'If they can harness information and services that complement the work they do in person or over the phone, I feel the Web can be beneficial to them.'