Legal Tech Startups Have A Short History And A Bright Future

Editor’s note: Basha Rubin is co-founder and CEO of Priori Legal

Legal technology is booming, with companies attempting to disrupt the legal space at every level and from every angle. And with good reason. Some estimates value the market size at as much as $400 billion. While legal still hasn’t caught up with other industries — either in terms of funding or widespread adoption, the future is bright and coming at us fast.

Legal has been a tough nut to crack because there is significant non-uniform regulation and risk-averse, disaggregated stakeholders. These factors have slowed disruption. But change is nigh: consumers are demanding more efficient, transparent and affordable legal services, and lawyers are looking for cutting-edge ways to compete in an oversaturated market.

There are three areas in the legal space on the precipice of major disruption in 2015. Here are the trends to watch. 

DIY Legal Will Hit Its Stride

With an increasing number of thinkers and more prevalent mobile technology in the DIY space, we can expect to see a clearer division between transactions appropriate for DIY and others that likely require the services of a lawyer. Also, DIY will be applied to “microtransactions” that previously were behind the reach of legal, thus creating a whole new market for pseudo legal services. DIY will never displace lawyers, but when executed thoughtfully are essential to addressing an important and substantial part of the market.

LegalZoom is the most familiar legal tech company for most consumers. Founded in 2001, it offers deep discounts on standardized legal documents as an alternative to hiring a lawyer. While LegalZoom, and later RocketLawyer (similar to LegalZoom), give many individuals and small businesses ways to access minimal and affordable legal protection, critics have pointed out that DIY services can create even greater legal costs down the road.

In many ways, these companies might have gone too far too fast: While it might not make sense to hire a lawyer to execute rote tasks, often a lawyer’s advice is critical in understanding and deciding between different strategic alternatives.

There are ways that lawyers and DIY can be symbiotic — with lawyers providing advice on how to proceed, but leaving the rote execution to clients. Most of these DIY companies either have or are rolling out ways to get advice from real, live lawyers as well, and this trend shows every sign of expansion.

Moreover, relatively newer companies like Shake Law, a free mobile app that allows you to create, sign and legally send contracts in minutes, have expanded the reach of DIY further– outside the reach of where lawyers have traditionally been used. Last year, for example, Shake’s CEO Abe Geiger coined the term “tiny law,” to describe the microtransactions in the freelance, mobile and sharing economies that DIY enables (and which otherwise have been priced out of legal services entirely).

For DIY, mobile technology is a game changer because it creates legal relationships and structures in interactions where previously there was a mere handshake (i.e. a quick loan between friends at a bar, a friend of a friend fixing your roof or a your cousin’s 19-year-old babysitting for the night). When these contracts are drafted in a smart way, they provide a clear value where it otherwise would never have been worth it to hire a lawyer. 

The Rise (and Coming Dominance) of the Legal Marketplace

Like the other vertical marketplaces that are gaining traction across industries as a result of consumer demand, legal marketplaces will experience rapid growth and become the go-to way we find lawyers (like home help, doctors and dates before). Fast forward and the law firm of the future is a marketplace: thousands of lawyers connected through lean backend infrastructure that handles administrative functions, driving pricing down and productivity up.

From ZocDoc and TaskRabbit to Tinder, we find all manner of goods and services online. Now, consumer demand is driving big changes in the way we find lawyers. In the past, businesses and individuals found lawyers through personal connections (with the occasional billboard or search through the Yellow Pages). Personal referrals can be as inefficient in law as in any other industry — your network might not know the right type of lawyer for you, your proof of quality is limited to one point of reference and there is little transparency about price and value.

Priori has one view of the space: It offers a network of lawyers available at a discount off their market rates, with a full-service billing platform. Other legal marketplaces experiencing success include UpCounsel, which allows consumers to compare legal bids for their projects; LawDingo, which instantly (and I do mean, instantly) connects consumers with lawyers in states across the country; and Hire an Esquire, which connects law firms with flexible and scalable legal staffing.

High-Tech Tools

Legal research, billing, document review, document assembly and project management had not evolved from much older methods until the past couple of years. All of these tasks take lawyers time, and since lawyers are still (mostly) using hourly billing, that time costs clients money.

Recently, we have seen a veritable explosion of tools enhancing the way lawyers run their practices. In legal research (which, until recently, was particularly antiquated and inefficient), CaseTextJudicata and RavelLaw are making waves by democratizing and streamlining processes.

Document review (also antiquated and inefficient, but most notably, until very recently conducted largely by extremely costly human labor) is being disrupted by machine learning tools like Diligence Engine and Ebrevia. I can clearly see both the ample opportunity for tools to enable lawyers to run their practices more efficiently and pass those cost-savings onto clients.

A number of startups have come on the scene focused on streamlining interactions between lawyers and their clients.  And this is great news because it will drive legal costs down. Early leaders in the space include LawPal (project management tools), ViewABill (transparent billing management that is quite popular with clients) and PlainLegal (document automation). In an industry where time is often, quite literally, money, we will see more innovation that minimizes friction in lawyer-client interactions.

Legal technology is finally having its moment in the spotlight, and we are only at the beginning of the boom. My bet is that every single one of the three areas I mentioned will evolve dramatically in the next year and almost unrecognizably in the next five. DIY, marketplace economies and process-based tools will all make lawyers more accessible and affordable. I can’t wait.