New Jersey lowered the boom on AVVO and LegalZoom the other day, finding their practice models violated a number of ethics rules, including fee sharing with nonlawyers and operation of an unlicensed referral service. I doubt this marks the end of them — it's more like a speed bump — but what our chief justice had to say the other day on alternative forms of dispute resolution is probably much more important.

I have been following AVVO, LegalZoom and a host of other players in this “disrupted” legal market for years, trying to figure out whether they are going to really change the way we do business or just cut the pie into thinner pieces. Interestingly, as these enterprises matured, they seemed to grow more like traditional law delivery systems instead of revolutionizing things.

Last I looked, LegalZoom was using lawyers licensed in every state to offer its low-cost legal services in addition to its DIY component, mooting the unauthorized practice issues that plagued it and were the bar's bulwark against competition. AVVO adopted a bit of a different model, soliciting work and then subcontracting it out to local lawyers for a share of the fee. Either way, it was lawyers (mainly solos and small-firm folks) delivering advice and quick “one-off” stuff directly to consumers at prices that were pretty hard to beat. It was a good deal for those who needed legal help, but not so hot for those expecting to make big money, unless you own the service.