There will be winners and losers in this next chapter for legal services and the youthful legaltech segment that is vying for attention. We know this. There is clear precedent for it. So what do we see in our crystal ball:
- Appetite. You can’t mistake the appetite of established players for innovation. Yes, they’re not known for it and there are plenty of jokes about places tech goes to die. But that would be to see the wind and miss the tide. There’s a movement growing – a cadre of larger industry players circling the legaltech space like never before. With good reason. If you accept the premise that early-stage is hard but innovation is critical to future growth and sustainability, this is the time you buy into legaltech. Let founders take the pain (they deserve it?) and buy what they build at sensible prices while you can.
- Agility (Revenue). We were struck by the sense of agility in the exhibit hall at both CLOC in Vegas and the NY Tech Show in my hometown, New York. Fresh, agile, and often inexpensive tech solutions are emerging that threaten the existence of legacy deployments. There is a direct parallel to our lives as consumers where gone are the days we bought software in boxes or 5 year deals. Instead we rent it in nice monthly increments that silently deduct from our credit card. It’s less intrusive and, yes, it seems to work better in an increasingly mobile world. Bottom line, this is where the revenue is going to be – the model is shifting.
- Acquisition. We’ve seen a few examples of this already but we expect to see much more. Appetite + Agility (Revenue) = Acquisition. Consider the successful acquisition of CliXLEX (now KIM, part of Riverview) and Lex Machina (now, LexisNexis). Neither are the largest deals in the world by west coast or mainstream tech standards – but both provide their new parents with acute relevance and a path to strong revenue in this new tech-driven landscape.
Which brings me to the following proposition – that whether exit is early and inexpensive – or later stage, the greatest failing in this space would be to aim too low. That is, to aim for incremental when the opportunity is exponential. It’s curious to note legaltech’s historic deference to lawyers as clients – shying from the thought of upsetting anyone. Well that’s like Ford’s comment about clients wanting faster horses – he knew he had to build something far different and far better. For Ford, no doubt, the goal was big, hairy and scary. It is for law also.
We can build cars – or train faster horses. Which will it be?