Here come the disruptors

Lawyers used to have the Midas Touch: whatever we did, however we did it, we were profitable, because no one else could do it (and no one else was allowed to try). From now on, lawyers’ and law firms’ profitability hinges completely on what we choose to do and how we choose to do it. That’s what I want to spend the next two days talking about.

Tomorrow, I’ll look at what’s happening inside the legal profession. Today, I want to talk about what’s happening outside it, starting with last week’s most dramatic news: $18.5 million in venture capital announced by online legal service Rocket Lawyer.

Rocket Lawyer, if you’re not familiar with it, provides legal forms that online users can fill out, store and share on the Web. For $20 a month, reports Forbes, consumers can also have their documents reviewed by a real lawyer and even get legal advice at no additional cost. It boasts $10M in annual revenue and 70,000 visitors a day. The $18.5M figure, by itself, is less significant — rival LegalZoom recently announced a $66 million VC infusion — than the identity of the secondary investor in Rocket Lawyer, Google Ventures.

It’s important to note that this is not Google Inc. we’re talking about — Google Ventures invests in (it does not acquire) companies independent of Google, and it supports a range of startups that develop things like carbon-neutral fuels and yeast-based antibody discovery platforms. No one is suggesting that Google Inc. will take over Rocket Lawyer, make its forms free and sell ads on the content — although you know what, that’s more than merely plausible. But note what Google Ventures’ Wesley Chan says in Rocket Lawyer’s press release:

We see a large market opportunity for legal solutions that are easily accessible and affordable to users. Rocket Lawyer’s combination of an intuitive user-driven front-end with a strong technology-based platform uniquely positions the company to scale and deliver the type of “wow” user experience that online customers love.

Note the drawing cards for GV: ease, accessibility, affordability, user-driven, user experience. They have nothing to do with the intelligence of the lawyer or the quality of the legal offering and everything to do with the manner in which clients find and access legal services. As I’ve said before, convenience is the new battleground, a fight for which law firms still haven’t even shown up.

Those same features are what drew Google Ventures to its first foray into the legal sphere: Law Pivot, a legal Q&A website that allows companies (especially startups) to confidentially (or, as of yesterday, publicly) receive low-priced, crowd-sourced legal answers from a roster of private lawyers. Similar to Rocket Lawyer, LawPivot gives lawyers a platform to market their legal services by sharing advice and engaging in discussions (the company’s personalized search algorithm provide users with relevant lawyers to provide answers to their specific legal questions). Again, note the words of Wesley Chan in the announcement:

There are inefficiencies in the delivery of legal services, and there is a huge opportunity for a technology-driven disruption in the legal industry. The LawPivot team has created an intelligent online solution that connects companies to the legal answers they need.

Those are the two key terms we need to focus on: inefficiencies and disruption. Those of us who scan this marketplace have been warning for years that the legal profession’s backward business model is in the gunsights of aggressive entrepreneurs that want to exploit those inefficiencies and push lawyers out of the driver’s seat. Well, Les voila.

Because here’s the thing: neither Rocket Lawyer nor Law Pivot are doing anything that even an average law firm couldn’t have done already. The former has created a client-facing document assembly system that provides channels to licensed lawyers who can review the completed documents and answer more complex questions. The latter offers lawyers the opportunity to engage directly with potential clients and demonstrate their expertise through the dissemination of their real-world knowledge. Law firms have had the capacity to create these services for years, but they’ve been unwilling or unable to risk changing the nature of their business.

Both Rocket Lawyer and Law Pivot (and LegalZoom and Epoq and many others both present and future) have recognized that the production of legal documents and the provision of legal insight have become so systematized, routinized or borderline-commoditized that their market value has fallen below law firms’ profitability thresholds. So they have converted the legal advice process and legal document assembly system into marketing and business development opportunities for lawyers. And they have one simple goal in mind: to replace the law firm as the primary platform by which clients find and engage with lawyers. That is a realistic goal, and both their ideas and their execution have been good enough to interest Google Ventures and other investors.

I guarantee you will see more of these deals financing more of these operations in future, and when the UK finally launches Alternative Business Structures, watch the stream turn into a flood. But the fundamental trend to understand here is the legal marketplace finally recognizing and responding to the inefficiencies lawyers have created in the delivery of legal services. The result will be disruption for lawyers and upheaval for law firms. Tomorrow, I’ll talk about what that’s going to look like.

Jordan Furlong delivers dynamic and thought-provoking presentations to law firms and legal organizations throughout North America on how to survive and profit from the extraordinary changes underway in the legal services marketplace. He is a partner with Edge International and a senior consultant with Stem Legal Web Enterprises.


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