Differing Perspectives on the Prospects of Today’s Legal Tech Startups

light-bulb-376924_1280[This post was originally uploaded on August 18, 2014. It has been updated below with new information on January 12, 2015.]

The title of a report on TechCrunch.com on August 5, 2014, The Jury Is Out On Legal Startups , appears to say it all. As it describes the current state of this specialized market for technology aimed at supporting law offices as well as benefiting consumers, investments by venture capital investment firms in this sector has fallen rather dramatically thus far in 2014. With just a few exceptions that have received substantial rounds of funding, many other have not fared well in raising money for their operations. I recommend a click-through and full read of this for the full details of this slump including some informative charts and accompanying quotes by experts in this field explaining the difficult dynamics currently affecting this market.

This turn of events and dollars seems to run contra to all of the five far more optimistic and enthusiast posts I have grouped here under the category of Law Practice and Legal Education. These cover different aspects of ongoing innovations in the marketplace for legal services as well as legal education.

Notwithstanding this situation, I continue to remain optimistic about the ongoing prospects for legal startups. There is a vast under-served market for people who need legal services but do not have the funds to engage them. I think it is nearly inevitable that some of these developing systems, services and apps will find a place in this market segment out of pure necessity and the economics of getting things done faster and cheaper. Continuing to monitor this situation will thus likely prove interesting during the next several years. Perhaps there is a legal app yet to be developed that will prove to be so helpful to lawyers and their clients, as has happened in so many other consumer markets, which will act as a genuine tipping point.

January 12, 2015 Update:

Less than four months after TechCrunch.com posted the article described above, the site followed up with a much more upbeat assessment of the legal startup environment in a most interesting post on December 6, 2014 entitled Legal Tech Startups Have A Short History And A Bright Future by Basha Rubin. I will sum this up and add a few additional links in order to present the author’s contrasting point of view. (I previously saw Ms. Rubin give a very informative presentation at a legal industry program called Reinvent Law NYC in February 2014.)

The author is much more sanguine about the prospects of startups in the legal services market, even while acknowledging the combined effects of the lag in venture funding, regulatory environment and the “rick-averse, disaggregated stakeholders”. Nonetheless, she identifies three significant trends to track during 2015 in a market she believes is right on the cusp of being disrupted.*

First, do-it-yourself (DIY) legal services will continue to gain momentum. An important element in this trend will be an increased focus upon which transactions and processes do or do not require the services of an attorney. Rubin cites the successes in this space such as LegalZoom and RocketLawyer.  Even DIY mobile legal apps such as Shake that “create, sign and send” contracts have begun to appear and provide new value to consumers who might otherwise either not have sought to engage a lawyer for certain types of  private agreement. However, she further emphasizes that the role of a lawyer still remains quite important when strategic decisions are involved.

Second, the marketplace for alternative arrangements of legal services provided by startups will see continued growth. This includes startups providing new online conduits for locating and engaging lawyers.   Cited as examples are Priori Legal (where Rubin is a co-founder and CEO), and UpCounsel, among others.

Third, is the appearance of more versatile and affordable new websites and applications that meaningfully improve attorneys’ efficiency and, in turn, clients’ convenience and satisfaction. These include offerings for legal research, document review, project management, document generation and billing.

I completely agree with Rubin’s assessment these market forces and look forward with great anticipation to additional legal startups launching and shaking up the profession.

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*  For a very insightful and enlightening analysis of whether the legal profession is actually being “disrupted”, I highly recommend reading Ron Friedmann’s July 31, 2014 post on his Prism Legal Blog entitled Big Law Changing or Being Disrupted?

 

Book Review of “The Mother Court”

When an author writes a book about his or her lengthy and distinguished career and infuses the text with an endless passion for their work, the reader’s attention is likely to be quickly captured. It is rare indeed when someone truly loves what they do and can convincingly convey their experiences, insights and commentary for all readers to thoroughly enjoy and absorb the lessons within. Attorney and author James D. Zirin has done a masterful job of achieving this informative and entertaining mix in his new book entitled The Mother Court: Tales of Cases that Mattered in America’s Greatest Trial Court (American Bar Association, 2014).

The “Mother Court” is the U.S. District Court for the Southern District of New York (SDNY). Mr. Zirin has had a remarkable career which has provided him a wealth of material to explore. He began his career as an Assistant U.S. Attorney in the SDNY, working for Robert Morgenthau. He then continued on to become a distinguished trial attorney in private practice. He is a prolific writer and the host of the ongoing TV show Conversations in the Digital Age. (Click through the link above to his site to review his extensive work richly linked within it.)

The book is organized into sections about a series of landmark cases tried in the SDNY, trial techniques, judges he has appeared before, the changes and challenges in the court during his career all the way through modern trial technology and sentencing guidelines. His skillful prose, storytelling technique*, and endless enthusiasm for the law and respect for the SDNY as an institution, permeate each page. I believe he would have achieved the same possession of the reader’s attention if he had, in some alternative life, been almost anything else from a doctor to professor to inventor.

He presents an insightful array of legal practice stories and subject analyses that are not just meant to be “inside baseball” for lawyers only, but rather, a genuine and granular sense of litigation practice from his admiring point of view. Thus, I believe that anyone who works in the legal profession as well as anyone who does not, will enjoy reading Zirin’s paean to the SDNY.

In the midst of all this legal lore, there is also a brief and hilarious story near the end about a sidebar conference during a trial concerning an observer in the courtroom who might have been creating a distraction. The inclusion and execution of it also speaks very well of the author’s literary craft.

Returning to a concise and critical phrase we always used to include in all of our book reports at Public School 79 in Queens, I definitely recommend this book to everyone in the class.

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*  See also this Subway Fold post on November 4, 2014 about the power of effective storytelling.

Venture Capital Investments in Legal Tech Startups Declining in 2014

The title of a report on TechCrunch.com on August 5, 2014, The Jury Is Out On Legal Startups , appears to say it all. As it describes the current state of this specialized market for technology aimed at supporting law offices as well as benefiting consumers, investments by venture capital investment firms in this sector has fallen rather dramatically thus far in 2014. With just a few exceptions that have received substantial rounds of funding, many other have not fared well in raising money for their operations. I recommend a click through here the full details of this slump including some informative charts and accompanying quotes by experts in this field explaining the difficult dynamics currently affecting this market.

This turn of events and dollars seems to run contra to all of the five far more optimistic and enthusiast posts I have grouped here under the category of Law Practice and Legal Education. These cover different aspects of ongoing innovations in the marketplace for legal services as well as legal education.

Notwithstanding this situation, I continue to remain optimistic about the ongoing prospects for legal startups. There is a vast under-served market for people who need legal services but do not have the funds to engage them. I think it is nearly inevitable that some of these developing systems, services and apps will find a place in this market segment out of pure necessity and the economics of getting things done faster and cheaper. Continuing to monitor this situation will thus likely prove interesting during the next several years. Perhaps there is a legal app yet to be developed that will prove to be so helpful to lawyers and their clients, as has happened in so many other consumer markets, which will act as a genuine tipping point.