A primer on innovating in the legal industry
Last Saturday, I had the honor to be one of the keynote speakers at the ‘HackJustice: An Access to Justice Hackathon’ organised by the Moldova community. All of my interactions with the local ecosystem over the past couple of years have been nothing but spectacular as I’ve witnessed and enthusiasm and interest to all that is happening in state-of-the-art technology far superior that what I sometimes see in Romania.
As a result, I thought it to be the perfect ground for sharing some ideas on how the legal industry and system in general deals with innovation, from an insider’s perspective. After reflecting a bit, here are the three aspects I see as most relevant based on my own experience so far.
Legal professionals are resistant to change
In the midst of a once-in-a-century event such as the COVID-19 pandemic, it’s easy to get caught in the mirage brought by countless studies and articles saying the technology adoption in the legal space is accelerating. But the industry has been traditionally slow to embrace innovation, as a result of a at least a couple of factors:
- the long-standing tradition of some legal professions such as lawyers and judges, that implicitly requires them to maintain some kind of aura and formalism as part of their activity, makes it difficult to embrace new ways of doing things that could lead to a dent in that aura (the phrase “it’s been done like this forever” may have very well been probably coined by a legal professional…);
- private practices do not usually employ experts in tech acquisition, that follow the market trends and new solutions closely to understand what would be useful to augment their employers' activity. Most tech adoption, when made, is whimsical, not data-driven and made by a senior partner in that practice. Big Law or Magic Circle companies, which have IT departments and have started to spin out venture arms that either create or invest in legal solutions, are the exception - but those represent only a fraction of all the practicing professionals in the legal industry.
When we started Digital 2 Law, we wanted to make innovation central to what we do, just because so few do it in the legal industry. This reflects in most areas, from pricing building for legal consultancy (we only used fixed budgets and are yearly re-iterating our pricing algorithm), to the types of clients we decided to work with in order to make our sales process easier (tech and digital companies that are used to working with an external distributed team in other areas of their job).
If you aim to build something in or for this industry, you need to embrace this resistance as the (still) status-quo. But the other side of the coin is that the more resistance you encounter when pitching a law firm, a public authority or a compliance solutions provider, the more chances you have that you are on the right track of significantly improving an aspect of how the industry works.
Focus on the end-client
Since legal professionals are hard-to-sway due to the structural issues discussed above, if you want to sell to legal professionals, chances are you will end up with a very small target-market that wants to buy your product, made up of the big players. By being able to sell only to them, you are effectively ignoring a large part of the end-market that works with solo, small or medium-sized practices. This is an opportunity to switch your perspective and think about what products you could sell to increase access to justice and legal solutions for the under-served.
Embrace the paradox that, for every lawyer that is unimpressed about your product, there may be a list of end-clients with whom that lawyer has worked that would have wanted more from the services they received, BUT THE LAWYER IS UNAWARE OF THAT. The legal industry rarely focuses on NPS, customer interviews or debriefing with clients to understand how to improve their services, but that does not mean the clients do not have a list of things they would like to see improved. So selling directly to people and businesses that need to solve legal issues might shorten your sales cycle exponentially.
At Digital 2 Law, we took this approach and are focusing on two areas of end-clients: tech companies that seek legal advice for their operations (over 95% of our law firm’s clients are entrepreneurs, startups and scaleups building proprietary technology), and SMEs that look for products augmented by legal expertise to solve their internal issues (StartGDPR is the first publicly available product that we contributed on, with more in the pipeline). The sales cycles are shorter, the lifetime value of a client increases, and the size of clients forces us to not focus on a handful of key accounts that bring would otherwise bring us the majority of our revenue.
Regulations and rule-making serve as the basis of our society, and will probably do so for the foreseeable future. You can see this happening with emerging technologies, such as blockchain and AI, that make us think hard about software-enabled decision-making or liability of robots. The legal industry is and will undoubtedly be impacted by all these changes - but laws and regulations will still form the basis of the new ways we think about societies at their core.
Those who understand this will see that bringing innovation to the legal industry - be it public or private - is one of the surest ways to make an impact on a societal and even generational scale. If you get at the core of all the main issues that we face in this century and the following ones - climate change, unequal distribution of resources, partisanship and the widening gap between social classes -, their solutions stand on changing the way we act upon them, and one way to do that is by using better regulation, better norms that shape the way we deal with these issues.
But there’s a catch: you need to be able to see beyond a fast exit for the company you’re building. Better yet, think more about your organisation than about a singular product you are selling, and how that organisation can endure in time - even long after you have lost your direct interest in it.
At Digital 2 Law, it took us about 5 years to understand we are building an organisation that needs to address multiple issues, from improving client-to-lawyer interactions, to allowing predictability for our clients or sharing our best-practices with other lawyers that are looking to achieve sustainability in their solo or small practices. Between all of those things and more, we have work on our hands for decades to come. We have embraced this and, as a result, are relieved to take our foot off the pedal to build things in a slow, methodical but constant pace.
I am hopeful that we will see more organisations that tackle problems that the legal industry and the legal system in general faces, and I am eager to give a helping hand to anyone who is looking towards the future by building it day by day.