As part of our technology special, we canvass the experts and ask where the legal start-up market is headed
Most will fail
‘1,400 legal tech companies are not going to succeed. This is the normal curve for any disruption of an industry: we’re going to see failures and people abandoning software, you’re going to see a consolidation phase. I see some of these failures freaking people out, but that’s normal. Lawyers have to understand in early-stage entrepreneurship most companies don’t make it. Failure is not investing in a little company that went under; it’s the portfolio not generating an overall great return.’
Dan Jansen, chief executive, Nextlaw Ventures
Technophobe or technophile?
‘I’m optimistic about tech change in law and the role of legal tech start-ups, but it’s not easy for them. They have to displace ingrained processes and entrenched technologies, working with users who have little patience for imperfection. It takes grind on both sides. There has been an explosion in legal tech companies in recent times, however. Among them are a few jewels with compelling products, which delight users. With access to the cohort of technophiles that every firm has and the right guidance from key mentors, I can see them being really disruptive.’
Nick West (pictured), chief technology officer, Mishcon de Reya
New tricks
‘For any technology to be successful, you have to have an interface that is recognisable to lawyers. If it’s too far away from Outlook or Word, people won’t use it. You need to think like a lawyer to make it successful in a law firm, but they’re not coming in and disrupting the face of how we work yet. It’ll take a long time to shift people away from what they’re familiar with and the tools of their trade.’
Isabel Parker, director of legal services innovation, Freshfields Bruckhaus Deringer
‘Legal tech start-ups have to displace ingrained processes and entrenched technologies, working with users who have little patience for imperfection. It takes grind on both sides.’
Nick West, Mishcon de Reya
A plug in baby
‘The challenge they face is the market is so diversified and fragmented. There are so many law firms they’ll have to hit to get a significant share of the market. If they want to make progress they need to sell into the corporate legal market as well. You have law firms who have deep technology pockets, but all want something different. Then you have the corporate in-house legal market who probably have small technology budgets but are looking for some plug-and-play solutions. Having to navigate between those two communities will be difficult for them.’
David Halliwell, director of knowledge and innovation, Pinsent Masons
Hard sell
‘The legal profession is not a simple place to sell into, but we are seeing law firms ring-fencing budgets for innovation. The winners will be those that have budgets that can be controlled by a small autonomous team that can really invest and move around the slow-moving piece of the partnership. On a government level, the conversation is too often on supporting fintech, but the ship has sailed. The opportunity is to invest in legal tech. You could get real value and return.’
Jimmy Vestbirk, founder, Legal Geek
Investors get it
‘Investors now understand legal. They understand how much work lawyers perform that could benefit from technology. E-discovery was an indicator. The same thing is happening in contracts, the same thing is happening in other areas. If you use tech to replace the first 30% of what a lawyer does – if you take 30% of the global legal market – that’s huge. That’s got investors saying: “Wow, that’s a huge market.”’
Pratik Patel, vice president innovation and products, Elevate
Lights on
‘It’s absolutely taking off now – law firms have gone from having IT teams that just keep the lights on to all sorts of new roles, like technology innovation manager. It’s a great time to be a start-up, because even if the technology and the ability to do this was there five years ago, the law firms are interested now. They know their industry’s about to change.’
Anthony Seale, founder, Legatics
‘You have to make it recognisable. If it’s too far away from Outlook lawyers won’t use it.’
Isabel Parker, Freshfields Bruckhaus Deringer
New minds
‘I’ve noticed a massive shift from when we first started out. We’d go into a room and they wouldn’t be interested in his technology background. But now innovation and tech are the buzzwords, and he’s often asked by chief technology officers to go into these firms to chat to them. That said, the sales process with the law firms is slow, whereas the sales process for general counsel is fast. I went from being a lawyer to running a start-up and you need a completely different mindset.’
Mary Bonsor, chief executive, F-Lex
Staying relevant
‘If all of these start-ups pop up, and some make it and most won’t, that’s OK, they will learn a lot in the process. The big risk is if buyers of these legal products – law firms or in-house legal teams – give a brand new start-up a shot and it goes out of business a year later, they might not say yes so readily the next time. That could ultimately hurt the market. The companies that have the money to innovate aren’t doing it because they aren’t incentivised. In a partnership, the strongest voice might be those who are going to retire in five years – are they going to do what they need to do be relevant in 20?’
Daniel van Binsbergen, chief executive, Lexoo