Legal Zooms In On Sam’s Club

Call it a twist in the rivalry between Internet vendors and brick-and-mortar retailers. A strategic alliance between LegalZoom.com Inc. and Sam’s Club will merge online and in-store marketing strategies to sell legal services to small business owners. Under terms of the deal, announced Oct. 23 by the Glendale legal document company, members of the warehouse store owned by Wal-Mart Stores Inc. can buy a $299 package of legal documents, as well as discounts on other services. But for now, don’t expect to see a three-piece-suit attorney greeting you at the door at Sam’s Club. The offer is run online through the web page SamsClub.com/legal, although the customer service desk can answer questions about the program, officially named Sam’s Club Legal Solutions powered by LegalZoom. However, MiKaela Wardlaw Lemmon, vice president of member services at Sam’s Club, based in Bentonville, Ark., said the main challenge for the project is customer awareness, and she plans to have banners and potentially people in stores to sell it. “We want to leverage the brick-and-mortar experience, and there will be plenty of ways to learn about LegalZoom online and in the store,” she said, “That doesn’t mean we will do it tomorrow.” Sam’s Club has 620 locations nationwide. In the greater Valley region, there are outlets in San Fernando, Santa Clarita and Palmdale. Another store in Oxnard serves Ventura County. The partnership marks the biggest deal yet for Legal Zoom since Permira, a European private equity firm, acquired a controlling stake earlier this year for $200 million with plans to expand the company. The most high-profile legal form provider on the Internet, LegalZoom was founded in 2001 by three Internet entrepreneurs and Roberto Shapiro, a prominent L.A. attorney. Originally it focused on wills, but has expanded to rental agreements, invoices and even dog-walking contracts. Now it sells more than 160 different documents Laura Goldberg, chief marketing officer at LegalZoom, said she’s still working on the advertising plan for the cooperative program, but she expects to use both online and offline media. “Sam’s Club was looking to expand their offerings to their business customer and LegalZoom is always looking for innovative ways to reach new customers,” she said. “With any new partnership, the key is to find the products and services that best fit the audience. We will work closely with Sam’s Club to find the right offering for their customer base.” Low-price leader Wardlaw Lemmon said the retailer conducted research for several years before making the deal with LegalZoom. The research found that small business members didn’t know where to go for legal advice and often avoided it completely because of the cost. The partnership’s first product is a package of estate planning documents and one year of attorney consultations for $299. The documents include a will, a power of attorney letter and a living trust. While the plan is available to all card-carrying members of Sam’s Club, it is marketed to small business owners who have a special membership card. The package features discounts on LLCs, incorporations, trademark applications and other documents. More importantly, the package gives the buyer a year of attorney consultations. Customers find an attorney by searching an online database by location and legal specialty. The package gives them a free half-hour consultation for any number of legal matters. If the member decides to hire the attorney, he or she gets a 25 percent discount on the hourly billing rate. “This partnership strengthens the LegalZoom brand and demonstrates our commitment to making the law more accessible to small business owners,” said Johanna Namir, a spokeswoman for LegalZoom. “By teaming up with Sam’s Club, we’re able to reach their network of traditionally brick-and-mortar customers, and provide an additional shopping experience.” John Grimley, a Hong Kong-based marketing consultant for law firms, said the LegalZoom and Sam’s partnership speaks to an unmet need for legal services and represents an improvement over the word-of-mouth and lawyer-referral sites that most law firms currently use to promote their services. “It’s a market efficiency long overdue in law and I applaud LegalZoom and Sam’s Club for seeking to meet the needs of small business owners,” he said in an email. “The biggest challenges might be operational – how to optimally integrate the two organizational structures to provide as seamless a service to customers as possible. But these businesses are run as businesses and are going to be more nimble than traditional law firms.” Multiple partners The alliance marks a big step up for LegalZoom, although the company is growing. In preparation for a cancelled initial public offering in 2012, the company reported 2011 net income of $12.1 million on revenue of $156 million. The Permira deal valued LegalZoom at $425 million in January. By comparison, Sam’s Club contributed $56 billion last year to Wal-Mart’s revenue of $469 billion. Legal Zoom will now have access to 47 million Sam’s Club members. In its IPO documents, Legal Zoom reported about 2 million customers during its history, with 490,000 orders in 2011. For the legal profession, Grimley hopes the LegalZoom-Sam’s Club deal will showcase online marketing and bring pressure to liberalize rules about how lawyers work and market their services. Currently, U.S. law doesn’t allow non-lawyer ownership of law firms. “The fundamental challenge is that LegalZoom can’t practice law,” he said. “It’s why LegalZoom is offering legal forms and a lawyer referral service.  U.S. law firms could do this sort of marketing but the legal services sector is essentially too conservative or not sophisticated enough.” If the rules changed to the point where lawyers could work for non-lawyers, a provider such as Sam’s Club could develop a law division with consistent quality control and marketing. “You’d see legal services prices drop, more access to legal services for more people, and greater but less remunerative employment for probably many more lawyers,” Grimley said.  LegalZoom isn’t the only partner Sam’s Club has lined up to help small businesses. The warehouse simultaneously announced deals with Aetna, the Hartford, Conn.-based insurer, to sell small-group health insurance, and Execupay in San Antonio to handle payroll services. The retailer already had a travel service in conjunction with Turico Holidays and a merchant payment process service with First Data Corp. “We have a bit of a services portfolio,” Wardlaw Lemmon said. She added that “we are still planning to launch one more service this fiscal year,” but declined to give details. Grimley suggested Sam’s Club could add banking services and management consulting to round out its “one stop shop” strategy for selling business services.