Trouble in Online Lawyerland

Along with another round of layoffs, legal-advice site may also be on the block

Is the World Wide Web big enough to hold 130 e-law sites? (See BW Online, 1/16/01, "The Wild World Web of E-Law"). Maybe not:, whose prestigious backers make it the online equivalent of a white-shoe firm, is saying it may have to find a buyer.

Chief Executive Neal Simon confirmed a report in, a Washington Post Web site, that his Silver Spring (Md.)-based company has dismissed nine people -- the second round of layoffs since November -- and reduced the staff to 23. Simon didn't want to give much detail to BusinessWeek Online about problems at the site, which was launched in November, 1999, and offers discount legal services to consumers and small businesses. Nor would he put a figure on how much cash is left from the initial hoard of more than $10 million invested.


  What Simon did say was that USLaw continues to "grow and prosper," with revenue climbing 15% per month -- mainly from 420 law firms that pay an average $200 a month to participate, contributing the bulk of the site's revenue. USLaw also offers interactive legal forms for do-it-yourself litigants and online advisory chats with attorneys.

The squeeze at USLaw is surprising, in part because of its big-name backers and legal advisory board. USLaw received financing from a group that included UBS Capital America and Broadview Capital, and its advisory board lists the deans of Vanderbilt and Michigan University law schools and Harvard University's Kennedy School of Government.

So far, layoffs have included sales people and staffers working on the site's 24-hour, seven-day-a-week chat service, which gives users informal legal opinions for $9.95 per request. Simon has reduced the time the chat forum is online -- it will now be limited to weekdays -- after finding little demand for legal advice in the wee hours. He also has postponed the addition of new products.

Aside from selling the company, USLaw also is seeking new financing in hopes of continuing as an independent entity. What if those efforts fail? Simon says he's committed to doing whatever will create the most value for his investors. As most other Web entrepreneurs will tell you, that's a tall order.

By Rick Green in New York

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