Legal Startup UpCounsel Shutting Down

UpCounsel, an online marketplace for lawyers, will be shutting down permanently on March 4. UpCounsel provides affordable access to freelance attorneys or full-time legal staff. The startup, founded in 2012, raised $26 million from investors. The company announced the shutdown via email to customers on February 3.

UpCounsel was co-founded by Matt Faustman, an attorney who represented Silicon Valley startups and who became the company’s CEO, and Mason Blake, an engineer who served as the company’s CTO. The company’s principal market was small businesses.

The decision was approved by shareholders and the board of directors. Once it is shut down, users will not be able to login to their accounts and all account information and data will be deleted. Users can retrieve a copy of their data.  

The company blog post stated, “[i]t has been a delight to work with each of you along the way, building innovative products to make the legal experience better. Pursuing our mission of creating a remarkable legal experience was made possible because of you… It is with a heavy heart that we deliver this news and understand that this abrupt announcement will come as a shock to some of you that have come to rely on UpCounsel.”

A lawsuit accused UpCounsel of disregarding ethics and competition laws. It claimed that UpCounsel breached California Bar Association rules that prevent lawyers from sharing legal fees with nonlawyers. The claim was denied by UpCounsel and the case was settled.  The ABA Journal reported that the founder of the plaintiff company in that lawsuit, LegalForce RAPC, became a “significant shareholder” in UpCounsel as part of the settlement. Raj Abhyanker said, “My plan and my hope is that we will retool it and bring it back in a form that will allow it to continue thriving and doing the good work that it does.” He added that UpCounsel needs “retooling to be compliant with the law.”