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Appeals Court Rules Anonymous Yelp Reviewers Must be Revealed

As on-line marketing continues to evolve, consumers reviews continue to gain importance to almost any business, including law firms. However, anonymous negative consumer reviews can be harmful, and a growing number of law firms are vexed with inexplicable negative reviews of self-proclaimed clients that cannot be identified as ever having been a client of the firm.

The Virginia Court of Appeals, in a decision that is sure to grab attention throughout the country, ruled that Yelp must reveal the identities of seven negative reviewers whose experiences cannot be confirmed by the merchant as ever having been customers.

“The anonymous speaker has the right to express himself on the Internet without the fear that his veil of anonymity will be pierced for no other reason than because another person disagrees with him,” wrote the court. However, "if the reviewer was never a customer of the business, then the review is not an opinion; instead, the review is based on a false statement” and not subject to First Amendment protection, the court further explained.

Other courts have been tougher on merchants seeking to compel consumer Internet sites to reveal names of anonymous reviewers, so why is Virginia different? As explained in the court's opinion, Virginia has a statute on the process for unmasking the identify of people communicating anonymously over the Internet. Virginia Code § 8.01-407.1 sets that standard--not the court opinions of other states as curiously requested by Yelp counsel.

Law firms are not the only businesses impacted by anonymous negative consumer reviews by people claiming to be past clients, but I know a number of excellent lawyers who are struggling with these types of reviews. They have sought relief directly from the websites without relief, so must either engage in a time consuming battle to "push" the negative review down in importance or engage a costly on-line reputation repair company to to the work for them.  

My congratulations to carpet cleaner, Joe Hadeed, and his counsel for pursuing this for all of us.

 

 

If You Wonder if Someone is Watching You, Click Here

The Wall Street Journal just finished running a fascinating and downright scary investigative series revealing how our privacy is compromised when we are surfing the Internet or using a cell phone, and how big players such as Microsoft have purposely failed to provide tools to protect our data in order to cash in on the on-line advertising bonanza.

The What They Know series began July 30 with The Web’s Gold Mine: Your Secrets, which Doc Searles (of Cluetrain Manifesto, et al) has pronounced as the tipping point in on-line advertising. That is, when people realize how much they are being tracked they will opt-out of providing data to surreptitious data miners who, in turn, will move on to greener (as in money) pastures on the Internet.

As part of this investigative series, the WSJ ran a series of tests including one that calculated the number of surreptitious tracking files that were installed when visiting the top 50 most visited sites on the web. The results are astonishing: "The 50 sites installed a total of 3,180 tracking files on a test computer used to conduct the study. Only one site, Wikipedia.org, installed none. Twelve sites, including Dictionary.com, Comcast Corp.'s Comcast.net and Microsoft Corp.'s MSN.com, installed more than 100 tracking tools apiece in the course of the Journal's test." Yes, Virginia, free stuff on the Internet carries a steep price.

This information is collected and sold on data auction sites, such as BlueKai, and used to provide on-line companies with more information about you as you visit their websites. For example, Capital One Financial Corp uses data it purchases to instantly decide what credit card offers when you visit their website. Websites are gaining the ability to decide whether or not you'd be a good customer, before you tell them a single thing about yourself.

This isn't all about money, but privacy and personal security too. In the August 3 installment in the series, the WSJ highlights how cellphone tracking can be used in domestic abuse cases to help the perpetrator locate their victim in a shelter. If you are a family lawyer, this is something you may want to advise ALL of your clients!

The WSJ also provides valuable links to the on-line advertisers, including Google, Microsoft, Yahoo, Lotame, and BlueKai, to allow consumers to change their preferences (i.e. voluntarily provide accurate data about yourself) or opt-out completely.

If you want to learn more about the privacy policies of the sites you visit--especially when using your firm's computers, try TrackerScan (by PrivacyChoice.org) via the WSJ site. To help stop this intrusion of privacy, visit the links above, and then get the TACO (Targeted Advertising Cookie Opt-Out) add-in for Firefox to prevent future privacy intrusions.

Besides the individual privacy aspects revealed in this WSJ series, it should give law firms pause to review and reflect upon their firm technology and Internet use policies with an eye to reduce the amount of information gleaned from employees while surfing for work and for pleasure.

Sifting Through the Ashes of Law Firm Dissolutions

I finally had some time by the pool this summer to read the June 2010 issue of Law Practice Today. The theme of the issue is Sifting Through the Ashes of Law Firm Dissolutions, which turns out to be a very revealing look back over the past few years of economic turmoil within our profession.

While I recommend reading all three articles on the topic of why firms dissolve, I found the thesis of one article far more insightful and compelling than the others.

The first article, by venerable management guru, Ed Poll, focuses on the need for firms to aggressively manage cash in harsh economic times. Paying attention to cash flow, promptly collecting receivables, and reducing overhead are his keys to avoid failure.

J. Mark Santiago, makes a strong case in the last article that the lack of three traits--leadership, strategic focus, and financial discipline—has brought down some once-mighty firms.

But the article by San Francisco lawyer Will Nathan contains the most compelling and often overlooked reason behind law firm failure: The move from true partnerships to limited liability companies. Nathan writes that LLCs have made it easier for rainmaking partners to flee their firms at the first sign of trouble because their personal assets are not at risk. He contrasts this to true partnerships where lawyers risk losing their personal assets; partners tend to stick together longer to work though financial problems in order to avoid losing personal assets to creditors. To support his thesis, Nathan points out a number of San Francisco firms that converted to LLCs and have gone bankrupt in the past few years, namely Brobeck, Heller, Graham, and Thelen.

Without the responsibilities of a true partnership, Nathan writes, rainmakers flee to other firms on more solid ground, leaving remaining LLC members and creditors to stave off bankruptcy or dissolve.

I seems to me that leadership, cash flow and focus are important, but without the integrity and accountability of a true partnership, a firm will remain subject to the whims of a few.

With the U.S. and world economies still not in the clear, if I were a “partner” in a big firm LLC today, I would definitely be checking my firm financial reports on a regular basis, and check out any rumor of a big rainmaker leaving the firm.

 

How to Catch an iPhone Thief

Thanks to Jeff Richardson of the iPhoneJD blog for pointing me to this blog written by an iPhone owner who had his iPhone stolen on a plane, and then pieced together information using a variety of Internet tools and some chutspah to get it back. With the recent debate over the real security of the iPhone, it is nice to know there are tools to get it back, even if it does take some effort.

Outlook 2010: It's the Economy!

Well, I almost forgot I was interviewed for a story published in Lawyers USA in early January about the outlook for lawyers this year, but the story popped up on one of my Google Alerts.  Senior editor Nora Tooher spoke with several lawyers across the US to get a feel for what to expect in 2010. The forecast? Cloudy with a chance of gain. Love that headline, Nora!

Ideas to Recession-Proof Your Law Firm

A tweet from Dennis Kennedy yesterday brought my attention to this blog post from Ron Baker of the Verasage Institute about recession-proofing your law firm. I met Ron several years ago at a LexThink event, and have been a huge fan ever since.  Ron is a value-pricing guru, and his post highlights that his philosophy has even more value for firms now than when the economy is humming. Furthermore, I believe that firms that do change their pricing/expense structure along the lines Ron advocates will find themselves in a better financial position when we exit this recession.

Smaller firms will find it easier to implement value-billing, but many lawyers just aren't sure where or how to start this process. It seems too daunting, too risky. However, as Ron points out, firms that take the risks will reap the profits. In other words, if you keep doing what you are doing, you'll keep getting what you are getting!

Ron has a number of articles and books that will help firms get started (and now is the time when we have a few extra hours to fill) on this conversion process. The ABA also publishes one of the best books on this subject, Winning Alternatives to the Billable Hour, by Jim Calloway and Mark Robertson.

YouTube and the Changing Legal Profession

I recently posted an item on the ABA TECHSHOW blog and forgot to share it here. It highlights Professor Michael Wesch's insight and research about YouTube, with links to several of his video presentations.  After watching the videos prepared by Professor Wesch, I can see that YouTube (and other video storage/delivery tools) is not just a toy, but is a viable tool for the legal profession at many levels.

Lawyers and firms should begin to exploit the benefits of this growing technology in order influence debate on law and policy, serve as an educational delivery system to clients and potential clients, gather information to learn more about the flattening world marketplace, and expand law firm marketing. It seems that most of the videos/visuals presently contributed by lawyers and law firms on YouTube are amateurish, boring, and ineffective, so there is plenty of room for others to command a presence.

In fact, a good portion of the contributions from lawyers on YouTube may diminish reputations, not enhance them. Consumers don't want talking heads statically sitting at a desk talking. To make it interesting, firms must add graphics, camera movements, quality sound, and even music. Yes, YouTube is for amateurs, but that does not mean videos can be amateurish. Remember, what is produced and distributed on YouTube (and similar sites) will be viewed by people used to viewing television as well as seeing professional websites on computer screens. Your competition for consumer eyeballs is not just limited to other law firms, but is made up of all other media your potential clients are viewing.

The use of the Internet for the storage, sharing and delivery of visual/video information is still in its infancy, and is certain to grow in importance in 2009 and beyond. Law firms that take the time and initiative to create, share, and promote interesting, professional, and timely videos will certainly have an advantage in the evolving legal marketplace.

Time to Raise Your Rates!

Over the past several years, I have noted that large firms continue to raise their standard rates while smaller firms have raised rates modestly, if at all. At least part of the reason is that big firms have higher cost structures, but they also have a world view that their legal services are not commodity services. Smaller firms, have lower cost structures, but seem to view their services as commodities and, therefore, more price sensitive.

I have urged smaller firms for some time to raise their rates and do it in light of the value they provide to clients, not in response to perceived economic trends.  However, now comes this post from the Harvard Business Press to raise rates and raise them now. Driven by the rapidly escalating cost of energy and other commodities, all businesses--including law firms will be squeezed. It is best to get ahead of the curve so that if the current economic trends continue your firm will have raised rates and can better withstand cost increases. Those increases will be magnified further when employees begin seek higher pay increases to cope with their own rising household costs.

Raising rates is part art, part science, and must be accomplished with open and direct communication to existing clients, especially those with open-ended engagement agreements. Many firms tend to want to only raise their rates of new clients; however, with new clients, it often takes six months or longer to have any impact on cash flow. Now is not the time to be timid.

A Lesson From Starbucks

In case you hadn't heard, Starbucks is closing all of its stores today at 5:30 to retrain their baristas and enhance the customer experience. It is another in a series of steps initiated by CEO Howard Schultz to "revisit the standards of quality that are the foundation for the trust that our customers have in our coffee and in all of us. Schultz also views it as "a time to celebrate who we are and to be proud of what we have built." Powerful stuff that offers several lessons to those of us in the legal profession.

1. Closing the doors to devote time to enhancing the customer experience is an expensive endeavor. All costs and no revenue for 3 hours. OK, maybe it is a slow time at many outlets, but it is still making a commitment to all customers and to the future well-being of Starbucks. How many law firms close to enhance the experience of their clients?

2. Howard's real reason for the closings may be to make more money in the long run, but he is focusing it on rebuilding the trust of the consumer. Far more admirable, but ultimately with the same result. Never underestimate the power of trust in an attorney-client relationship.

3. Rather than just announce a temporary closing, Starbucks has trumpeted the store closings and the reasons why for several weeks. And the media has obliged with stories about getting your afternoon Starbucks fix early today. It has been a great marketing coup.  They are letting their customers know they have heard their complaints and are making the answer very public.

So take a page from Starbucks, set a date for staff training focused on client service, announce to your clients that you are closing for an afternoon to enhance their experience. It will deliver multiple benefits, just ask Howard Schultz!

Law Firms Top Forbes Profitability Survey

Citing the low cost of entry and a steady flow of lawsuits, Forbes.com lists legal services as one of the most profitable businesses to start in America. Statistically, says Forbes, "[b]ean counters trumped all, with a 25% average pretax margin. Next came the legal-service firms, at 21.6%, followed by dental offices (20.9%) and specialty design shops (17.6%).  Specialization helps in health services, too. Chiropractors, optometrists, podiatrists, and physical, speech and mental health therapists--the fifth most profitable group as a whole, with a 17.5% margin."

I bet that comes as a surprise to many smaller law firms in the U.S. who are facing rising labor and real estate costs, but a slow-down in the rate of fee increases.  However, I have worked with a number of firms that will not settle for less than 25% pre-tax, and some who can raise that five or more points.

Still, it is nice to know that despite the demands of practicing law today, if managed properly, a firm can be among the most profitable businesses to launch and build today.