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Are You Ready to Disrupt?

26/3/2013

4 Comments

 
Picture
A Law Firm "Merger" Yesterday!
Let’s be honest about this, most people will want to


try and avoid lawyers. They are in the same


category as the police; you don’t want one until you


need one.  Which is probably why a lot of their 


marketing comes to nothing.  It’s very much a “distressed” purchase for most people


unless of course you are in business.  


In that case, you will need lawyers at some stage.

Through my connection with Angels Den, I deal with a lot of new businesses and start-ups and there’s plenty of anecdotal evidence and articles written about how lawyers ruin deals at the due diligence stage or even how they can stall innovation.

But while individual lawyers might be seen as obstacles, the legal profession and the legal industry in general still represent great opportunity. This sector, which historically has been ignored by entrepreneurs and investors, is starting to experience a start-up invasion.

In his book The End of Lawyers? Richard Susskind suggested disruptive technologies would be the key to massive change in the legal sector.


Here are six key facts that make the legal industry ripe for disruption and innovation.

1. The UK Legal Services Market is worth £26 billion a year.  The Business to Business (B2B) section of that is worth 89% or £23 Billion. The largest 3% of firms, that’s under 900 firms, generate 55%  or nearly £13 Billion of that.

That means that there are almost 29,000 “firms” chasing the remainder. And since 2006 there has only been a  compound annual growth rate of 2%

You can get the full UK Legal Services Sector report here: http://tinyurl.com/cvnwkt4

2. Technology is Still in its Infancy. New tools and platforms that have reached many other sectors are only now beginning to enter the legal marketplace. For example, data analytics – while massive in other commercial markets – is barely existent in the legal sector. Data is abundant in the legal profession – everything from a company’s entire email archive to the information that exists in all the filings and briefs that lawyers create. Lawyers work with and create data every day. Currently, the vast majority of this data sits idle, untapped and unused. What resides in this data is the potential for creating products that predict outcomes in cases, quantify and qualify lawyer performance, and create transparency within the legal process itself. For some examples, see LexMachina,( https://lexmachina.com/)  a company putting analytics to work in the IP realm. Also www.Trademarken.co.uk and UK & Ireland companies House information for free at www.duedil.com

There is an abundance of technology available, but it’s the reluctance of the sector to use it.

3. There is a definite supply and talent problem. Whilst roughly 15,000-20,000 students  will graduate with a law degree every year (this may be declining in coming years), in England and Wales approximately 6,000 will go on to seek a training contract with a firm, in Scotland there will be approximately 600 doing the same.  A law degree is only the starting point to becoming a lawyer. Graduates still need to gain a one-year Diploma place and then a traineeship.

Those lucky enough to gain employment with a law firm must rely on the firm to train them to actually be of any use in a commercial environment; a practice that yields anything but consistent and comprehensive training.  Outside of firms, these new graduates will need to find alternate paths to becoming competent , and their choices are severely limited. This creates a unique over-supply, limited-talent phenomenon where the available lawyers are not adequately trained to actually be lawyers. Start-up opportunity here lies within edtech and scalable instruction. Is there a Khan Academy or Udemy model for new lawyers?

4. Access to lawyers is historically a problematic and costly effort. UK individuals who actually need lawyers still tend to try and avoid lawyers because they don’t want to pay high fees, nor do they really know how to find a reputable and trustworthy lawyer. Many legal needs are going unmet due to this phenomenon. By lowering cost structures, lawyers would be able to serve this immense market. Through a combination of technology, tools, and processes, platforms are being built to do just that. But the market is in its infancy. Even though http://www.wigster.com/  or http://www.justanswer.co.uk/ or https://www.rocketlawyer.co.uk/   and  in the US http://www.legalzoom.com/ have a head start, they have only scratched the surface.

5. Lawyers used to be the gateways to protected information and knowledge. They were the conduit through which clients accessed legal information and guidance. With the advent of technology, this information is now more accessible than ever before. The general public is able to locate relevant and helpful information without the assistance of lawyers (or at least without paying fees to lawyers). There are still many resources that lawyers do have control over, but these are diminishing greatly. PlainSite and LawGives are two recent plays in this space.

6. Finally, and most importantly, the world is getting more complex, not simpler. Corporations are burdened with greater oversight and compliance obligations. Some companies even use the legal process (and all its costs and distractions) as a way to punish or hurt competitors (see patent trolls).

Consumers and the public are also more aware of their legal rights and obligations. In our “lawsuit happy” nation, neighbours and friends will sue each other in an effort to gain – rightfully or not. Creating alternate paths to litigation, or avoiding problems altogether, are huge opportunities. There are ways to bypass lawyers and the court system entirely. For example, a former executive at eBay has built Modria as a platform for dispute resolution that involves no lawyers at all.

There are many other facts and reasons why the legal industry represents real and significant opportunity for start-ups.  For a profession and industry that literally impacts every single person in dozens of ways, it would seem that the need and urge to innovate would be palpable. Start-ups need to stop looking at lawyers as a pain, and see them as an opportunity. If you cannot avoid them, disrupt them.





This article was in turn inspired by a great article at: http://tech.co/legal-industry-startup-invasion-2013-03
Mostly about the US legal market. This has been updated and changed to reflect the UK legal market


Great book to read: Mitch Kowalski ; Avoiding Extinction; Re-imagining Legal Services for the 21st Century














4 Comments

Standing Still Gets You Run Over.

21/9/2011

6 Comments

 
Recently I’ve been having discussions with some very senior players in the legal marketplace about creating new style law firms to get ready for what’s going to become (or already HAS become) a bit of a gold rush.

I call it a gold rush, simply because one of the new style of legal models will outsell the others, then, through viral marketing, it will start to capture a huge chunk of the legal marketplace and a disproportionately high chunk of the profit, and clearly, that’s the one to get involved in.


But like a gold rush, whilst we know that there’s gold “out there” we just don’t know exactly where it is and by that I mean, it’s not yet clear what legal model will outsell  and out-profit the others.

But as the legal marketplace  is now the next target of opportunity for Venture Capital (VC) funds (regardless of the social cost or the cost to small firms and sole practitioners) it now really IS time to take stock of where you are and more importantly, where you are going.

But just in case you don’t really buy in to all the dust on the UK legal horizon, let me mix my metaphors and tell you that the light at the end of the tunnel really IS an oncoming train.

If you’ve not yet read Richard Susskind’s book “The End of Lawyers?” then first of all, you should, but in it he writes about “disruptive technologies”.  

VC investment into the legal sector will also be disruptive, but let’s look at what “disruptive” means;  


On the one hand, disruption means changing the way things operate by making them more efficient.  

On the other hand, it means sucking the value from an industry in favour of the disrupter.  If VC’s invest in something, it’s because they want to divert all the value (and money) from that sector into the business that they invest in.

Consider these recent examples in other industries; Apple changed the music industry, Amazon permanently sucked the value out of retail bookstores and Vision Express has almost wiped out High Street Sole Trader opticians.


Here’s what’s been happening in the new legal world in the last few months:
  • Rocket Lawyer has received investment from Google Ventures to the tune of £11.4million. Rocket Lawyer which was founded by a US lawyer Charley Moore, provides a template of legal documents for consumers. It has a network of over 6,000 practising lawyers in the USA on hand to review (for free) forms created by Rocket Lawyer’s documentation system . It’s not a law firm and the lawyers involved are part of a referral network. Rocket Lawyer plans to enter the UK online legal market in 2012 because “the UK market is getting more receptive to new ways of consuming legal services”. They expect 20m people to use their service this year.
  • LegalZoom, one of the best known legal brands in the USA, also founded by lawyers, has had $66 million injected into the business in the last few months by the Kleiner Bell Group. Again, not a law firm, LegalZoom provides legal documents created via its own documentation system and checks are made by its Hollywood based customer care team, who amend errors such as spelling mistakes, capitalisation and so on. LegalZoom also plans to enter the UK online legal market in 2012.
  • Aderant acquired Client Services and CompuLaw for an undisclosed sum. Aderant, a software vendor used by law firms for billing, content management, and practice management is now the legal technology field’s largest independent software provider and its newly expanded applications catalogue is similar to that of LexisNexis, but without content and research services.
  • Legal365 is a venture between serial Entrepreneur Ajaz Ahmed -the founder of Freeserve -and Last Cawthra Feather, a Yorkshire law firm.  Legal365, will be driven by Epoq Legal – a desktop lawyer service already established in the UK . Legal365, is an online venture providing automated document assembly where lawyers will be on hand to help fill-out fixed fee legal documents the customer has purchased online and plans to roll-out a UK national network of city centre law shops. Mr Ahmed hinted that Legal365 could even become a franchise and even take over some empty high street shops.
  • LawCloud an Edinburgh based offering from Lawware has seen a big increase in take-up since launching earlier this year.
  • Face2face Solicitors is a new UK national franchise for solicitors that offers a harbour in the storm for sole practitioners who want to branch out on their own.
  • LawPivot .  As with RocketLawyer, is also partly funded by Google ventures, provides Crowdsourced legal advice for businesses in the US.
  • QualitySolicitors, founded by UK lawyer, Craig Holt, is already up and running with its business model, but now even includes concession stands in WH Smith known as Legal Access Points (LAP’s). Aims to create a "Quality Mark" for legal firms.
  • Lawyers2You  an offering from Blakemores Solicitors are increasingly active in shopping centres in the English Midlands and pulling in the business without lawyers.
  • HighStreetLawyer an offering in England & Wales only, also aiming to create a "quality mark" so that consumers get to know and trust a brand.
  • Wigsters a legal price comparison website which also allows you to comment on and rate solicitors.
  • Legal Spring, like Wigsters, provides and online review of online legal service providers in the US.

I could go on and on, as there are many other examples of both large and small new legal firm offerings making an impact in the local or national marketplace. But the bottom line really is this; if you are in a law firm of 15 partners or less then it really is time to decide where you want to be in the next 5 years.

And as you can see, doing nothing is not an option.

6 Comments

    Author

    After many years paying lawyers,I became one in 2005 Just in time for the largest upheaval in the law since records began. Brilliant. Exiting times ahead.

    Disclaimer.  The thoughts, ideas and comments on this Blawg ("Blawg - a legal Blog) are my own and not to be confused (unless otherwise stated) with anyone else and certainly not of anyone in the Firm where I used to work and they are not the views of the firm where I used to work.

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