Kicking and screaming and kicking some more! As lawyers and law firms engage with the post Legal-tech world, it’s not so much like embracing a girlfriend but kissing grandmother while trying to avoid her whiskers.
Lawyers are conservative by nature and cautious by training. They are paid to find and cover risks. Law firms promote this: difference and innovation is by definition not encouraged (despite what the corporate brochures say!). From this viewpoint, the rise of Legal-tech platforms might be seen negatively: with entrepreneurs focused on helping lawyers work faster, be more efficient, more transparent, and of course cheaper. In some cases Legal-tech services are replacing the need for lawyers altogether.
But law firms are smart, they realise their intellectual property is less valuable than it was. Technology now allows answers to many legal questions and can create legal documents in seconds. Technology is democratising legal services, like in many other professions.
So are law firms embracing change and what new models have emerged?
On the human capital front, investment is flowing into new law firm models – Axiom, A&O’s Peerpoint, Lawbite – which group consultant lawyers under a brand umbrella. Cynics might say it’s the legal equivalent of zero hours contracts but whether or not you agree, it’s definitely a shift from heavy fixed cost to variable cost models, driven by misalignment in supply and demand for legal services and poor profitability ratios forcing law firms to re-think structures.
On the intellectual property front, which is the focus of many Legal-tech solutions, development and investment is slower. Open-source access to documents and know-how is limited and where available it’s still relatively expensive to obtain. Some law firms offer basic document packs (shareholder agreements, termsheets) free on their websites for start-ups, but this remains low-tech: i.e. download and manually update. Other platforms such as US based Docracy have had more success bringing open-source legal documents: and unsurprisingly the founders are technology kids not lawyers. But a wiki-style approach to legal documents may not be certain enough for all clients. Other Legal-tech document platorms have tried and failed, such as Angelist’s Docs platform, which was aimed at providing documents for business fundraising rounds but was too rigid to cope with the complexities of typical multiparty negotiations.
So where do we stand on development of Legal-tech services? As of now there are over 600 legal start ups, mostly Legal-tech focused, with average valuation at $4.1m (source: Angelist). In 2009 there were only 15! Funding for Legal-tech companies increased from $100m in 2013 to $450m in 2013 and is set to increase again in 2014. In the UK the size of the legal services market (based on turnover) currently hovers around £25bn, which makes it an attractive target for disruption. The start-up company market is booming and dynamic (certainly in UK and US) and demands legal services to match. Legal-tech companies (whether founded by law firms or perhaps more likely by tech entrepreneurs) will continue to find niche areas to explore and disrupt at the expense of traditional legal service providers. Our view is that this will continue to benefit legal clients by giving open source access to legal services at more competitive costs.
Who Needs Law is developing its Open Document Generator v1.0 and Well Company Check, targeted at start-ups and other companies to access high quality documents and check compliance basics quickly and within a low cost “freemium” package.