The Legal Sector Continues to Ripen for Disruption

November 21, 2013

5:00 pm

Want to pay less for a lawyer? There are startups for that.  Want your lawyer to be more productive? There are startups for that. Want to NOT use a lawyer at all?  Yes, there are even startups for that. Make no mistake, lawyers serve a purpose in today’s business environment, but as the legal sector continues to expand, the traditional lawyer’s share of the pie is shrinking.

The demand for US law firm services is shrinking in 2013 by about 5 percent while the overall global legal market is expanding. Traditional legal services are still key to businesses, but how those services are delivered, and by whom, is changing. Entrepreneurs are taking notice and so are investors.

Currently there are a number of recent funding rounds closed or about to be closed for legal startups. The investors range from independent angels to notable venture firms. The founders at LawDingo recently announced that it closed a $690k round to further their “talk to a lawyer now” platform. This builds on the earlier funding and success from being a part of Y Combinator. Speaking of YC, SimpleLegal just came through the last batch and is piloting its “transparency for legal bills” platform with many clients – large and small.

UpCounsel closed its most recent round of $1.5 million in October. This startup is focused on the underserved yet robust small business market. Its platform allows customers to post jobs that lawyers can then bid on. This market focus is one often neglected by large firms and proves difficult to reach for solo lawyers and small firms. UpCounsel is basically creating a dynamic marketplace for businesses and lawyers to find and engage one another as well as handle the payment for services. Many startups are taking a similar approach in part due to the enormous market potential of the small business and consumer markets.

Looking for more productivity or efficiency as a lawyer? Startups like ERM Legal Solutions and CaseRails are worth considering. If you are a client, not a lawyer, perhaps it is time you suggest that your lawyer at least find out about these companies. ERM is doing for legal project management what Mint.com did for personal finances. By aggregating all the billing assets a law firm has at its disposal, along with enabling easy scoping of projects, ERM’s platform creates the ability for law firms to manage and budget for their clients’ legal matters. This most likely does not sound all too sexy (but unsexy is the new sexy), but consider that most law firms have little ability to prepare a budget for a client and typically send out their invoices 60 to 90 days after the project first began. Sticker shock is a common occurrence.

CaseRails is tackling another productivity challenge for lawyers. As you can imagine, when it comes to legal writing, formatting, headings, client- and court-specific information are a huge portion of what goes into the document. Most lawyers have to do all of this themselves, which means finding the information that often lies within numerous other documents, adjusting fonts, margins, letter casing, tabbing or tables, and other mundane yet vital tasks. Missing any of this information or doing it wrong will most likely lead to bad and embarrassing outcomes for the lawyer. CaseRails is basically word processing beefed up with automated document generation and knowledge management. The lawyer simply has to focus on the content they must write – all the other formatting issues are automatically taken care of. Without CaseRails, you may be paying your lawyer to format a Word doc.

While none of these startups may be industry shattering, they represent a significant and growing trend in the legal sector. As the storied, stoic, and status quo legal profession ignores feels the pressure to innovate, iterate, or otherwise get with the 21st century, others are taking advantage of this market’s stockpile of demand for new services, tools, and processes. If the lawyers and law firms will not deliver, startup founders will and are. With an $800 billion and growing global legal market– founders and investors are finding it increasingly difficult to ignore.

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Joshua Kubicki is a business designer for the legal markets and a seasoned entrepreneur and intrapreneur. He helps startups and companies focused on the legal markets create new business models and revenue streams. Follow him at @jkubicki.

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