GIg Economy

Earlier this month, the UpCounsel saga seemingly came to an end. On April 2, holding company Enduring Ventures announced it purchased the online marketplace platform for an unspecified amount, according to Crunchbase.

The new owners and industry observers say the freelance lawyer marketplace connecting small businesses and startups to lawyers is still viable, but some warned those platforms may have to contend with shrinking client budgets and ethical rules barring fee sharing with nonlawyers.

UpCounsel's road to new ownership included a February announcement that it would close in March. Days later, the ABA Journal reported the shutdown was required after UpCounsel entered into a licensing agreement with LinkedIn Corp.

Soon after, UpCounsel shareholder Raj Abhyanker filed a temporary restraining order to stop the company's closure pending further court review, according to documents provided to the ABA Journal.

Now under new leadership, UpCounsel users shouldn't expect significant changes in the short term, said Enduring Ventures co-founder and UpCounsel's new chief financial officer Sieva Kozinsky.

Outside of requests from businesses and lawyers, Kozinsky doesn't anticipate modifying the platform while the new team is "figuring everything out and ramping up," he said.

Their transition doesn't only include owning a new company, but also venturing into the legal tech sector, a first for Kozinsky and Enduring Ventures co-founder and new UpCounsel acting CEO Xavier Helgesen. However, UpCounsel isn't completely new to Kozinsky.

Kozinsky's college tutoring startup was an UpCounsel client when he received an email, like other UpCounsel users, that the platform was closing. He and Helgesen reached out about acquiring the company under its new firm Enduring Ventures.

As the new owners adjust to the legal tech sector, they've brought in a team to run products and they have an in-house lawyer to work with customers. The company's goal is to provide high-quality legal services to any business, Kozinsky said.

Despite a declining economy, Kozinsky argued there's still a viable market for these services. 

Indeed, the recently passed Coronavirus Aid, Relief, and Economic Security Act (CARES Act) included payroll protections, emergency funds and other provisions that are difficult to navigate but are applicable to small businesses, Kozinsky noted. Startups and small businesses will likely need legal counsel to understand those provisions.

"I think most businesses don't have an in-house lawyer, and the ones that don't can turn to UpCounsel, and those that do, maybe they don't have enough work to hire another in-house lawyer but too much work for the [one] general counsel," he said.

But his expectations may face a harsher reality, noted one legal staffing owner.

Basha Rubin, CEO and co-founder of outside counsel provider Priori Legal, said while Fortune 500 companies may experience revenue downswings and tighter legal spend budgets in a tough economy, small businesses and venture-backed startups struggling to raise capital may fare worse.

"I think that depending on the segment of the market you are staffing that can be different," she said. "If you're providing services for venture-backed companies, that's a different dynamic."

Still, a recession creates a necessity for flexible billing and creative approaches, noted Hire an Esquire Inc. CEO and founder Julia Shapiro. "Our clients are rethinking how they are going to hire, and I think alternative legal services like staffing are going to be accelerated once we get out of the pause freeze period we are in."

However, Shapiro cautioned that directly connecting attorneys to clients may run afoul of ethical rules.

"There's the higher potential for confusion and mismatched expectations in a consumer-to-counsel marketplace setting," she said. "If you are trying to broker those relationships, mediating the client—counsel relationship can be a landmine. When you try to broker those and are not carefully vetting lawyers for their ability to manage client relationships, you'll have a lot of issues aside from just a violation of ethics rules."

Indeed, UpCounsel ran into ethical issues when it was sued in 2018 for violating the California bar rule that blocks lawyers from sharing legal fees with nonlawyers, according to Bloomberg Law. Similar challenges from various state bar associations dogged Avvo Legal Services, including being banned in New Jersey after its state Supreme Court deemed its fee splitting unethical. 

But Kozinsky said he looks forward to providing high-quality work to businesses without the Big Law price tag. "My hope is it's basically been a really nice resource for lawyers and businesses like myself. Our hope is to keep the company alive and provide a similar service."