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By Stephanie B. Goldberg & Gary Poole
FEBRUARY 9, 2000


Success at Nolo Press

A Berkeley upstart of the '70s becomes the guru of legal self-help

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It's the formula for California's success-story cliche: Take an iconoclastic entrepreneur, add a garage, stir in some zeal, sprinkle imagination—and presto, out comes a world-changing technology. That's almost the story of Ralph "Jake" Warner, the founder and president of Berkeley-based Nolo.com Inc., the nation's largest publisher of legal self-help books. Well, O.K.—Warner launched the company from his attic, and, it being 1971, the motive was more politics than profit, and he didn't invent a technology. But the product sure changed at least a corner of the world: Warner brought the consumer movement to the hidebound practice of law. His little startup smashed the Establishment firms' lock on legal advice to become a $9.5 million company over the next 28 years, first by telling ordinary folk how to avoid lawyers for routine work such as wills and more recently by doing the same for small-business owners. Meanwhile, Warner and his team have maintained their focus and philosophy with remarkable consistency, even as Nolo moves onto the Web and Warner, its sole owner, grows more intrigued by the idea of major expansion.

Swimming with sharks. Today, with myriad self-help Web sites and books available, the do-it-yourself concept seems like a no-brainer. But in 1971, drafting your own partnership agreement made as much sense to most people as taking out your own appendix. Warner, a former Legal Aid lawyer from Berkeley, knew better—most legal work isn't surgery. So Warner started with a book on do-it-yourself divorce that he tried to sell to New York publishers. "I kept getting blank stares," he recalls. "One guy thought his brother-in-law was playing a practical joke."

Instead of giving up, Warner went home to found his own company, Nolo Press, now a publisher of books, software, and a Web site that draws 14,000 visitors a day.

As a business, Nolo is something of an anomaly, trying to stay true to its '60s roots while gearing up for Net-paced growth. Walk through Nolo's offices, a converted clock factory in what was once an industrial neighborhood, and you'll find walls covered with posters depicting lawyers as sharks—the company logo. You'll also find the salaries of all 80 employees posted in the lobby, including Warner's $110,000 compensation. Meetings are run like therapy sessions; at Nolo feelings count. "There's a lot of love in our company," says attorney Stephen R. Elias, Nolo's associate publisher and one of the original crew. But there's also a work ethic. Its 150 titles on average take three years of research and writing and then undergo review by 10 editor-lawyers. The company has never been sued—and seldom been challenged—on accuracy.

After Nolo weathered attacks from the organized bar in the '70s, resistance melted. Lawyers and law libraries are among its customers, and competitors include the American Bar Assn., which has published its own line of Nolo-style self-help tomes. Others gunning for Nolo's software business include Block Financial Corp. of Kansas City, Mo., under the Kiplinger name, and Parsons Technology Inc. of Hiawatha, Iowa, using the Quicken moniker (table). But Warner thinks Nolo knows its audience best. It is "the National Public Radio crowd" he says. "These are people who find it reasonable to read up on law for a couple of hours and then only buy the legal services they need."

New packages. The company approaches law much as Bob Vila demystified home renovation and Charles Schwab online investing—by translating arcana into plain English and breaking things down step by step. While Nolo's biggest seller is its WillMaker software—a hit since it was introduced in 1985—business titles have been an important part of the list since the early 1980s. The leading business book is The Employer's Legal Handbook, which, like most Nolo books, comes, with forms, on a diskette, although the book can also be downloaded from the Web site. Finding new ways to package the product is far from a gimmick, Warner points out. "The thing about legal problems is that people need answers right now," he says. Ted Weinstein, marketing and development vice-president, predicts market research will start playing a key role in a company that has tended to play its hunches. "We don't want to end up like political candidates, but it's really important to listen to our audience."

That's one reason why retooling Nolo into a Web content-provider is a priority. The company recently renamed itself Nolo.com Inc. On the horizon are services that let users draft documents and store records on its Web site. Web sales, which have doubled every year since the site's 1993 launch, now account for 15% of profits. Licensing its content is just starting to generate revenue, says Weinstein. Agreements were recently signed with Yahoo! Inc. and boomer-oriented Third Age Media Inc., while 65 other deals are in development—mainly with sites focused on small business, personal finance, and real estate. On the software side, Microsoft Corp. has licensed some Nolo products for the small-business version of Office 2000. Book sales, on the other hand, have been fairly flat for the past two years, but Warner is optimistic—and not just because he now has a marketing director. "The Web gives us a chance to help more people," he says. "It's really an obvious business choice for us." And an inescapable one. As Web-based rivals proliferate, Warner intends to remain the preeminent purveyor of legal self-help. After a career of shark-baiting, he's not about to get swallowed.



Table: A Law Unto Yourself

You'll never litigate the big ones, but some legal work is well within the capabilities of an ordinary entrepreneur. Here are some of the better resources:

Web Sites:

— CCH Business Owner's Toolkit (www.businessweek.com/smallbiz/lifestages/guidebook.htm): Covers startups, business planning, and personnel management for companies of up to 10 employees. ''Powertools'' section (requires registration and fee) has Lexis, trademark, copyright, and patent databases. Sample letters, contracts, forms, policies, checklists available.

— FindLaw (www.findlaw.com): A valuable legal research portal, although resources for small business are limited. Good for topical searches and locating state and federal law quickly.

— LawGuru (www.lawguru.com): Has searchable library of 10,000 questions and answers in 25 legal categories; also extensive resources for searching state and federal law, plus chat room and topical legal mailing lists.

— Nolo (www.nolo.com): Read up on small-business law, employment matters, and intellectual property. Detailed sections on startups, taxes, and home-based businesses. Companion products—legal forms, books, and software—available for download. Easy to navigate and free.

Lawyer-in-a-Box:
These kits all come with elaborate disclaimers that they are not meant to take the place of legal advice—and they don't. The documents are generic and aren't tailored to reflect state law or your particular situation. Still, if you want your information from a brand name...

— Kiplinger's Small Business Attorney '99 (Block Financial): Has 81 legal documents in eight areas—technology, corporate, sales and marketing, real estate, sale and purchase of goods, personnel, power of attorney, and financial. Also includes updated three-volume business-law library. Rated a best buy by HALT, a nonprofit group that lobbies for public access to the legal system. $19.95. (800) 813-7940.

— Small Business Legal Pro 3.0 (Nolo): A library of six Nolo self-help books for small businesses, each of which includes a CD-ROM. Includes 136 forms and sample termination and employment letters, sexual-harassment policies, correspondence to IRS, etc. Also rated a HALT best buy. $79.95. (800) 992-6656.

— Quicken Business Law Partner 4.0 (Parsons Technology): Interactive features suggest which forms are best suited to your needs. The software contains more than 100 documents, government forms, and worksheets, plus informational articles. HALT rates this product a good value. $29.95. (800) 779-6000.




This article was originally published in the January 31, 2000 print edition of Business Week's Frontier. To subscribe, please see our subscription policy. http://businessweek.com/smallbiz/contact.htm




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