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Revision as of 07:40, 15 June 2020

UpCounsel
Company typePrivate company
IndustryLegal technology, Internet
FoundedAugust 2012; 12 years ago (2012-08)
HeadquartersSan Francisco, California
ProductsAttorney Services, Legal Forms, Legal Planning and Local Attorney Listings
OwnerEnduring Ventures
Websitewww.upcounsel.com/

UpCounsel is an online marketplace for legal services that where users, primarily entrepreneurs and businesses, may find and hire attorneys. The company is based in San Francisco, California, and was founded in 2012. Initially, UpCounsel provided service to users in California and New York.

On February 3, 2020, UpCounsel announced that it would be shutting down March 4, 2020, as required by a licensing agreement with LinkedIn. In mid-February 2020, UpCounsel announced that it would continue operations under a new owner and new management. Holding company Enduring Ventures announced that it had purchased UpCounsel.

History

UpCounsel was founded in August 2012 by Matt Faustman and Mason Blake to give startups and other small businesses access to legal help.[1][2] Faustman, who was UpCounsel's chief executive officer, had previously worked at Latham & Watkins for almost two years.[3][4] Mason Blake, who was UpCounsel's chief technical officer, is an engineer.[5] UpCounsel is based in San Francisco.[6] It went through the AngelPad startup incubator.[2]

UpCounsel initially raised $1.5 million in seed funding led by Homebrew[7] and participated in by Bobby Yazdani, SV Angel, Collaborative Fund, Haroon Mokhtarzada, and other angel investors.[8] In December 2014, the company secured $2.4 million in a seed funding round headed by Metamorphic Ventures and Crosslink Capital and also participated in by Homebrew.[9] Until its second round of seed funding, UpCounsel was largely conducting business in California and New York. It planned to use the funding to offer its services in other states.[9] UpCounsel initially catered to the technology industry but by 2014 had expanded to other sectors such as biotechnology, real estate, retail, food service, and entertainment.[9]

UpCounsel raised $10 million in a Series A round led by Menlo Ventures and participated in by previous investors Homebrew and Metamorphic Ventures, in July 2015.[6][10] In 2015, UpCounsel had 10,000 lawyers sign up for an account, of whom they were selecting a small number whom they had reviewed.[10] UpCounsel had 300 lawyers providing services on its platform.[10] UpCounsel was not profitable at the time of the funding round.[6]

In September 2016, the State Bar of California mailed private admonitory letters to attorneys who were offering their services on UpCounsel. The letters said that the bar had started investigations into possible "improper sharing of legal fees" when the attorneys let UpCounsel secure "a percentage-based processing fee". The letters said the investigation would be ended but could be reopened if there were "complaints or other information demonstrating possible misconduct". On May 2, 2018, Raj Abhyanker and LegalForce RAPC Worldwide P.C., the law firm he founded, filed a lawsuit against UpCounsel in the United States District Court for the Northern District of California alleging that UpCounsel flouted ethic requirements and unfair competition statutes that allowed it to have a competitive advantage over law firms. The lawsuit said UpCounsel "brazenly ignored" ethics requirements disallowing attorneys from giving attorney's fees to nonattorneys. The lawsuit also included attorneys who had participated in UpCounsel's marketplace as defendants.[11] LegalForce filed a modified complaint with the court in September 2018 asserting that UpCounsel had engaged in false advertising that said its attorneys had high quality customer ratings. UpCounsel had advertised that through 5,450 reviews, its intellectual property lawyers in Cotati, California, had received a 5.0 rating. The lawsuit noted though that Cotati had 7,455 inhabitants and 21 lawyers but that none of those lawyers had offered their services on UpCounsel.[12] LegalForce alleged that there were many other examples of UpCounsel's deceiving potential customers of different cities in thousands of pages.[13] In response, UpCounsel said, "LegalForce and… Abhyanker have made a habit of abusing the courts in this district to compensate for their professional shortcomings. Rather than compete in a fair and open market, they attempt to use litigation to squeeze and bully companies that have succeeded where LegalForce failed."[14] In January 2019, Judge Yvonne Gonzalez Rogers permitted the majority of the false advertising and unfair competition assertions to proceed. She rejected the unfair competition claim that asserted UpCounsel breached lawyers' ethics rules about sharing fees with non-attorneys. She also dismissed the false advertising claim where UpCounsel said it was "the world's largest law firm". But she allowed the lawsuit to proceed for other false advertising assertions such as UpCounsel's saying in search engine results that it had the "Top 5" and "10 Best" lawyers in different specialities and locations.[15] The lawsuit was settled in March 2019.[14] As part of the settlement, Abhyanker received UpCounsel stock.[16]

By 2019, UpCounsel had 25,000 lawyers registered to provide services and 18,000 companies that had purchased its legal services.[17] The lawyers on UpCounsel charge clients an hourly fee of between $70 and $250.[17] Customers can use UpCounsel without charge, while lawyers pay a cut of their fee to UpCounsel.[1] UpCounsel's cut of the fee charged to companies is between 12% and 40%.[17] According to The Australian Financial Review, companies that provide related services to UpCounsel include LawyerMatch, Lawtrades, Priori Legal, and Lawdingo.[4] Fortune compared UpCounsel to Rocket Lawyer and LegalZoom.[6]

On February 3, 2020, co-founders Matt Faustman and Mason Blake emailed their users saying that they would close the website on March 4.[5] UpCounsel had signed a license contract with LinkedIn to give its content and information about its customers and attorneys to LinkedIn. About 88% of UpCounsel's shareholders voted in favor of the agreement.[16] Raj Abhyanker, who had previously sued UpCounsel and received a settlement containing UpCounsel's stock, disagreed with the shutdown of the company, had expressed his intent to purchase its assets multiple times, but was not given the opportunity to. He filed a temporary restraining order against its dissolution which was denied by a judge.[18] In mid-February, UpCounsel's co-founders announced that, although they and UpCounsel employees had moved to LinkedIn, UpCounsel would no longer be shut down as a buyer had been found.[18] UpCounsel would be managed by a new team.[18] Holding company Enduring Ventures announced that it had purchased UpCounsel.[19][20] UpCounsel's new management team included Enduring Ventures co-founders Xavier Helgesen as acting CEO and Sieva Kozinsky as CFO. Kozinsky had been a previous UpCounsel user through his college tutoring startup. After Kozinsky read the email he was sent about UpCounsel's closure, he and Helgesen contacted UpCounsel asking whether they could buy it and came to an agreement to purchase it.[21]

Services

UpCounsel started an online marketplace containing lawyers that companies can view and seek the services of.[9] It selects three to four lawyers that fit business owners' needs and spending plans.[1] The lawyers provide tailored proposals and bids and the business can choose one of the bids.[22][23] This allows businesses to secure legal assistance from independent lawyers instead of needing to sign a deal with a large law firm.[9] UpCounsel determines what a business needs and then secures a lawyer who has the necessary skills. It gives lawyers and businesses access to a safe online service that lets them exchange information. UpCounsel takes care of the payments aspect of the relationship between business and lawyers.[9] A significant number of the attorneys on UpCounsel come from a BigLaw background who find that UpCounsel gives them autonomy and more work–life balance.[6] Lawyers who participate on the platform include those who desire to work reduced hours during parenthood, who hoped to found a law firm, and who had lost their previous jobs.[24] The lawyers must have malpractice insurance.[24] Its website has a social networking component  that allows attorneys to ask questions of each other.[2] The company aims to reduce prices for customers but maintain the compensation for attorneys by removing the overhead paid to law firm partners and administrative expenses.[10][24]

Companies that employ UpCounsel's services include startups seeking assistance with trademarking their names and medium-sized company desiring legal advice in writing government or employment agreements.[4] It also offered help to technology employees who needed legal advice for their stock options.[2]

From the company's founding, it worked on obtaining for startups brief assignments of legal assistance.[25] In 2014, it started a new program to connect startups with outside general counsels. UpCounsel receives information from companies about their requirements for an outside counsel.[25] It selects lawyers experienced with legal practice in the company's sector to be its outside general counsel.[25] UpCounsel manages the administrative work such as billing and procurement of paralegal services.[25]

Reception

In 2013, Jeff John Roberts said of UpCounsel, "My initial impression was that this is a recipe to hire Lionel Hutz".[2] In 2015, he wrote in Fortune that UpCounsel was an example of "the gig economy['s] mov[ing] upmarket".[6] Patrick May of the Mercury News cited UpCounsel as an example of an Uber copycat, writing, "the flattery goes on, with the Uber craze even spawning hybrids. Take UpCounsel, which calls itself 'a cross between Uber and eHarmony — the on-demand marketplace matching lawyers and small businesses to curated legal counsel.'"[26]

References

  1. ^ a b c Graham, Meg (2015-03-31). "UpCounsel to connect entrepreneurs to lawyers in Illinois". Chicago Tribune. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  2. ^ a b c d e Roberts, Jeff (2013-06-26). "Need help with stock options or patents? UpCounsel wants to be a TaskRabbit for lawyers". Gigaom. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  3. ^ Abramowitz, Zach (2015-04-06). "Can Tech Disrupt The Legal Industry? A Conversation With UpCounsel CEO Matt Faustman". Above the Law. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  4. ^ a b c Botsman, Rachel (2015-02-18). "How online marketplaces will replace the big services firms". The Australian Financial Review. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  5. ^ a b Skolnik, Sam (2020-02-03). Kamens, Jessie Kokrda; Mintzer, Rebekah (eds.). "Online Lawyer Marketplace UpCounsel to Shut Down (1)". Bloomberg Law. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  6. ^ a b c d e f Roberts, Jeff John (2015-07-28). "UpCounsel raises $10M to grow on-demand lawyer platform". Fortune. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  7. ^ Temple, James (2013-11-24). "Homebrew brings back the craft approach to venture capital". San Francisco Chronicle. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  8. ^ Lawler, Ryan (2013-10-02). "Online Attorney Marketplace UpCounsel Raises $1.5 Million, Opens Its Patent Practice To All". TechCrunch. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  9. ^ a b c d e f Lawler, Ryan (2014-12-09). "UpCounsel Adds Another $2.4M In Funding To Expand Its Online Attorney Marketplace". TechCrunch. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  10. ^ a b c d Magee, Christine (2015-07-28). "$10 Million For UpCounsel Means Small Businesses Can Hire BigLaw Attorneys". TechCrunch. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  11. ^ Habte, Samson (2018-05-03). Bowers, S. Ethan (ed.). "Lawsuit Takes Aim at UpCounsel Business Model". Bloomberg Law. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  12. ^ Rubin, Karen E. (2018-09-20). "LegalForce v. UpCounsel suit challenges on-line lawyer ratings, processing fees". Lexology. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  13. ^ Cueto, Emma (2018-09-12). Phalon, Joe (ed.). "UpCounsel Faked Attorney Ratings, Updated Suit Claims". Law360. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  14. ^ a b O'Brien, John (2019-05-08). "'Trolling for clients': The battle for new plaintiffs creates friction among lawyers and referral services". Legal Newsline. Institute for Legal Reform. Archived from the original on 2019-05-08. Retrieved 2020-06-14.
  15. ^ Strickler, Andrew (2019-01-11). Coffey, Jill (ed.). "Most LegalForce Claims Against Rival UpCounsel OK'd". Law360. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  16. ^ a b Weiss, Debra Cassens (2020-02-06). "UpCounsel announced shutdown after reaching deal with LinkedIn, court papers reveal". ABA Journal. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  17. ^ a b c Braff, Danielle (2019-04-01). "Freelance attorneys benefit from growing demand". ABA Journal. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  18. ^ a b c Weiss, Debra Cassens (2020-02-19). "UpCounsel website for freelance lawyers announces it will continue running under new ownership". ABA Journal. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  19. ^ Schubarth, Cromwell (2020-04-01). "The Funded: StartX extends COVID-19 demo day, adds companies to task force". Silicon Valley Business Journal. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  20. ^ Shen, Lucinda (2020-04-01). "Coronavirus has killed the audacious Xerox-HP deal". Fortune. Archived from the original on 2020-04-05. Retrieved 2020-06-14.
  21. ^ Hudgins, Victoria (2020-04-09). "UpCounsel Avoids Closure, But Concerns Over Legal Marketplaces Remain". Law.com. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  22. ^ Smith, Jennifer (2013-12-02). "Online Matchmakers Offer New Way to Find Legal Help: Small firms can connect with lawyers for complex jobs". The Wall Street Journal. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  23. ^ Smith, Kevin (2015-03-26). "The new Southern California business economy is all about sharing". San Gabriel Valley Tribune. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  24. ^ a b c Stone, Zak (2013-08-02). "UpCounsel Lets Lawyers (And Clients) Escape Life At The Law Firm". Fast Company. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  25. ^ a b c d Lawler, Ryan (2014-02-14). "UpCounsel Launches Outside General Counsel Program For Companies Needing Long-Term Legal Help". TechCrunch. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
  26. ^ May, Patrick (2015-10-22). "Following Uber's success, copycats rush to carve out niches". Mercury News. Archived from the original on 2020-06-14. Retrieved 2020-06-14.
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