The Selling Of The Law
Len Jacoby doesn't look much like an attorney this morning: He's wearing jeans, a shirt open at the collar, and Top-Siders, and he's peering through the eyepiece of an Arriflex movie camera.
The rear room of the headquarters of Jacoby & Meyers Law Offices -- a huge two-story space lined with bookshelves that hold legal forms -- has been transformed into a small movie studio. Grips are adjusting lights, a dozen extras dressed as moving men mill about, and a woman in a lavender jumpsuit clicks off photos with a Nikon.
Jacoby relinquishes the camera to the director, who assembles his actors on the set, a massive desk in front of a paneled wall hung with elaborate paintings and law-school diplomas. An actor playing a lawyer sits down at the desk, but when the director gives the cue, the moving men descend on the set, remove the diplomas, and haul away the desk, the paneled wall, everything.
The woman in the jumpsuit reads what will become the voice-over for a TV commercial: "If you take an experienced, knowledgeable lawyer and take away his expensive office and fancy trimmings" -- the posh office is replaced by a small desk, a functional bookcase, and a plant -- "what have you got left? An experienced, knowledgeable lawyer."
A moving man hangs the diplomas on the new wall, which has a "Jacoby & Meyers" sign on it. Len Jacoby smiles and confides, "Making commercials is a lot more fun than practicing law."
This unlikely combination of law and show business has helped make Jacoby & Meyers the largest legal clinic in the country, with 75 offices in California and New York, and annual revenues in excess of $14 million. It also helped earn the firm a spot on INC.'s list of 100 of the nation's fastest-growing closely held companies ("The INC. Private 100," December 1981). With a compound annual growth rate of 133%, the firm ranked number 23.
Len Jacoby and Steve Meyers discovered that, even now, it is possible for a small business to reinvent the wheel -- they redesigned the practice of law. And, once they had the new product in hand, they merchandised it with flair, something the old established law firms said was not only impossible, but also unprofessional.
The men who brought about a minor revolution in the practice of law graduated from UCLA law school in 1967. Jacoby went to work for a medium-sized general practice firm and eventually became a house counsel for Purex Industries Inc.
Meyers joined a legal services program for farm workers, and later became a partner in an entertainment law firm in Los Angeles.
When their paths crossed again in 1972, both Jacoby and Meyers were ready for a change. Meyers and a friend, Forrest S. Mosten, then a law student at UCLA, had been talking about the fact that legal services weren't reaching everyone who needed them: "If you're rich, you can afford a good lawyer, and if you're poor, there's free legal aid," Meyers points out, "but if you're in the middle you're stuck." Mosten recalls, "I had visited an orthodontic clinic and had been impressed by its appearance and the service, so I told Steve: 'It would be great if we could do something like that with the legal profession -- if people could walk in and get qualified advice and then, if they wanted service, get it at a fair price."
Meyers contacted his old friend Jacoby who, he knew, was also interested in finding a wider market for legal services. The three sat down to plan a way to capture that market. "Our idea," says Meyers, "was to set up a new type of law practice, one that would handle the complaints of typical consumers, economically, within the free enterprise system."
An American Bar Association study released in 1977 concluded that people consult lawyers for less than a third of all the problems they have that might require legal assistance. The average middle-class American, the study found, sees an attorney only two or three times during his or her lifetime. Jacoby, Meyers, and Mosten already knew what the study was to confirm: that there was a vast and virtually untapped market. But there were also sound financial reasons why no one else had gone after the uncounseled massess. The types of cases such potential clients have -- divorces, wills, personal injury, bankruptcy, real estate transactions -- are low-ticket items; an attorney couldn't survive on them alone. A mass merchandiser of legal services would have to lower prices, increase volume, and make sure that the public knew about him. And since, at that time, advertising your services as a lawyer was prohibited, getting your name before a mass market was virtually impossible.
Jacoby, Meyers, and Mosten were ready to try anyway. "We sat down and decided what types of cases we could handle efficiently," Jacoby says. "Then, for each type of case we developed a system for handling it from beginning to end." When they were through designing the systems to track cases and drawing up the forms -- opening letters, second letters, interview forms, standard interrogatories, form pleadings, and so on -- to make them work, they had notebooks containing hundreds of forms that could shepherd cases from A to Z. The lawyer could fill in the blanks on the standardized forms, check off appropriate boxes, and turn them over to a secretary who, following other standardized procedures, would draft letters, wills, contracts, and agreements. Delegating virtually all the paperwork to nonlegal personnel freed the attorney to deal with clients. The standardized forms also reduced the likelihood of errors.
It took four months to develop the systems for handling cases. Meanwhile, they had to come up with ways to make their services attractive and accessible. "People are really afraid of lawyers," Meyers says. "The ordinary working person doesn't have much experience with them, and going up to an expensive high rise can be intimidating. We wanted to demystify the law, so we put our offices in storefronts and started taking credit cards." A person coming into the clinic for the first time would pay a $15 consultation fee (it's now $25), and discuss his problem with an attorney for as long as he liked. If the attorney decided further action was necessary, the client would be given a written estimate of the fee. Fees would be substantially lower than those of conventional firms; Jacoby & Meyers's charge for a simple uncontested divorce, for example, is now $195 in California, as opposed to at least $500 at a traditional law firm.
As for advertising, that was still a problem. But before they opened their first Jacoby & Meyers office in Van Nuys, Calif., they made sure that it was going to be something different, and that the press knew about it. So on September 13, 1972, The Legal Clinic of Jacoby & Meyers, the first legal clinic in the country, opened for business. (Mosten's name wasn't included on the shingle because he hadn't yet been admitted to the bar.)
The press showed up, and Jacoby & Meyers was off to a running start. "We were the beneficiaries of a lot of free advertising," says Meyers, "and, in retrospect, I don't think we could have survived without it." But even "free" advertising drew the ire of the local bar, and two weeks later Jacoby and Meyers received a letter informing them that the firm was under investigation. Eventually, the State Bar of California initiated disciplinary proceedings against them, charging, among other things, that they had violated the ban on advertising by speaking to the press.
Jacoby & Meyers fought the charges for more than four years -- and got considerable coverage in the press as a result."The California Bar's overreaction provided us with publicity that we couldn't have bought at the time," says Mosten. Finally, in May 1977, the California Supreme Court dismissed the charges. Then, a month and a half later, the U.S. Supreme Court ruled, in Bates v. State Bar of Arizona, that attorneys had a constitutional right to advertise.
The day after the Bates decision, Jacoby & Meyers placed an ad in the Los Angeles Times. Two months later, they launched the first television advertising campaign ever conducted by a law firm.
Advertising made the difference between successful and stupendous. Jacoby & Meyers had added a second office in 1973, and a third and a fourth soon followed. But during the 18 months after the Bates decision, they opened 18 new offices in California. Jacoby and Meyers themselves were forced to give up the practice of law to run the business: "We canceled all our subscriptions to law journals and began reading business magazines," Meyers says. Meyers now oversees financial planning and advertising placement, while Jocoby is in charge of systems and internal operations. Mosten left the firm in 1976 to teach law, but now heads his own legal clinic, The Law Center of Mosten & Associates, in Los Angeles.
The firm's revenue in 1976, before the Bates decision, were $300,000. By 1979, they were more than $5 million, and there were 26 Jacoby & Meyers offices throughout California. The next step was across the country. In January 1979, they opened 11 offices in New York, largely at the urging of a new partner, Gail Koff, who now runs the New York branch.
"It was certainly a big gamble for us," says Koff. "New York's a very tough market, but if you can make it here, it gives you a lot of credibility. It will also make it possible for us to expand more easily. I think all of us have a drive to see this concept done on a national scale."
The partners are secretive about their plans for expansion, but expect to have 100 offices by the end of 1982, and admit that they're taking a close look at numerous metropolitan areas. One possible base for expansion was established in 1980, when the firm opened offices in seven Montgomery Ward stores in California. Clients could now shop for legal advice as easily as they shopped for curtains. (In one instance, a shoplifter arrested in a Montgomery Ward store demanded to see a Jacoby & Meyers attorney; the firm declined because of a possible conflict of interest.) There are now 27 offices in Montgomery Ward stores. More recently, the New York branch of Jacoby & Meyers has opened 10 offices in the Times Square Store chain.
The firm's 150 attorneys now see approximately 10,000 new clients each month. About half of the cases they handle are divorce or domestic relations, but clients range from teenagers charged with criminal trespass to an old woman who came in to a New York office because the Internal Revenue Service had found out that she was claiming her dog and cat as dependents. (An attorney sat down with the IRS and worked out a settlement.)
The firm's accessibility doesn't make life easy for its lawyers, who earn salaries ranging from $25,000 to $75,000. "I get the feeling that the bus from the mental institution stops at our door," one Jacoby & Meyers attorneys says. Another New York attorney, Susan Laufer, was nearly murdered while representing a Brooklyn cab driver whose family was being forced out of its apartment.
In the course of her investigation, Laufer discovered that the owner of the building was terrorizing tenants. "The owner or his sons would appear in the middle of the night and bang on the doors with baseball bats," Laufer says. "Three elderly people died in that building."
At one point, she says, the owner tried to bribe her. "He offered me $1,000 to drop the case, and said he'd send all of his legal business -- $20,000 or $30,000 a year -- our way." Instead, Laufer went to the district attorney and, at his suggestion, wore a tape recorder and a transmitter to her next meeting with the landlord and his sons.
"We'd been talking for about 15 minutes when they got suspicious," she recalls. "They ripped open my purse and dumped out the tape recorder and the transmitter. One of the sons shoved me up against the wall and put a knife to my throat. He told me, 'I'll cut your heart out. You try to do this to me and my family -- I'll cut your heart out."
Fortunately, the police kicked the door down and rescued Laufer. The landlord and his sons have been charged in a 91-count indictment, and are no longer allowed to live in or manage the apartment building.
With its characteristic flair for publicity, Jacoby & Meyers turned the episode into a full-page advertisement in the New York Post: "It's about time somebody finally stood up for New Yorkers," the copy read.
Despite the case load, recruiting attorneys has been no problem for Jacoby & Meyers. In 1980, more than 35,000 law degrees were awarded in the United States, but there were only 26,400 jobs for attorneys. "It's a buyer's market," says Gail Koff, who estimates that the company interviews 10 to 20 people for each position it fills.
On the other hand, there are signs of discontent, according to Forrest Mosten. "The experience and educational background of their lawyers is spotty," he says. "From the resumes I get, I'd also say they're having a problem with turnover. Part of that is inevitable -- they've been successful enough to create a bureaucracy and, as a result, the relationship with their employees has suffered." Other lawyers say that the attorney-client relationship suffers at Jacoby & Meyers because of the volume of cases each attorney must handle.
Some of the criticisms directed at Jacoby & Meyers are undoubtedly the result of the legal establishment's unwillingness to believe that mass-produced law can be good law. Some lawyers who have argued against clinic lawyers say their opponents were poorly prepared, but only a handful of the thousands of cases Jacoby & Meyers has handled have resulted in legal malpractice suits.
Perhaps the best answer to the critics is that the legal clinic was an idea whose time had come. Since the founding of Jacoby & Meyers, more than 700 legal clinics have sprung up. Few of them, however, have achieved the success of the original.
The toughtest competitor, rapidly closing in on the frong-runner, is Hyatt Legal Services, which since 1977 has grown from one office in Cleveland to a 61-office, 120-attorney business operating in nine states. The firm has most of its outlets in H&R Block tax offices; it plans to have 120 locations and 275 attorneys by the end of 1982.
Joel Hyatt, one of the founding partners, thinks that Jacoby & Meyers "has made some mistakes. They've had some difficulties in New York. They may have moved too precipitately then, but they seem to be consolidating now."
The partners shrug off all the criticisms, and point to their successes: They've set up their own in-house advertising agency, and they've developed a subsidiary that produces continuing-education materials for attorneys. The productivity of their attorneys has soared: In 1975, receipts per lawyer were $41,000; in 1977, they were $55,000; in 1978, $85,000; and today they stand at $100,000.Eventually, they say, Jacoby & Meyers will have a thousand offices nationwide.
They talk about almost everything but profits. When that subject comes up, they talk about the complicated nature of their business arrangement, claim that profits don't define a law firm in the same way they might another kind of company, and note that in any case, most of the profits are being plowed back into expansion. They do everything, in fact, but plead the Fifth Amendment.
They will, however, admit to profits of about 5%. But employees have indicated that they're more likely to be in the 20% to 25% range.
"Don't worry about us," says Meyers finally. "We're doing fine, just fine."