An abundance of legal technologies have emerged in recent years, from document management and discovery tools sold to law firms, to regulatory compliance software sold to companies, to legal research tools attempting to make law accessible to individuals. Many of these legal technologies fundamentally reimagine the way law will be practiced in the future.

At the same time, the realities of being a “legal tech startup” are difficult. Sales cycles into law firms and to other legal players are long and arduous; financing for the vertical is especially difficult to obtain; and exit opportunities are seen as modest.

The following paper reflects interviews with a variety of practitioners in the legal market, from innovation teams, lawyers, and legal technology departments inside law firms, to conversations with legal technology founders and online research. It provides an overview of the landscape of “legal technology startups,” key barriers to adoption, as well as areas of future potential.

The Legal Tech Landscape

“Legal technology” comprises both “legacy” providers of technology sold to legal practitioners, in addition to a wave of legal technology startups, which comprise a broad variety of services to individuals, law firms, and in-house legal departments. While different entities define “legal tech” verticals differently, the following non- comprehensive list is reflective of the various flavors of legal technology startups on the market.

Legal innovations serving primarily the individual

    • Legal marketplaces, such as Avvo, LawDingo, and, attempt to improve individual access to lawyers.
    • Document automation tools, such as LegalZoom and Docracy, offer “do-it-yourself” contract help for individuals.

Legal innovations serving law firms and in-house legal departments

  • Specialized services, such as Everplans, focused on wills and estate planning, Wevorce, focused on divorce, and Bridge US, focused on immigration services, provide a specific area of expertise and information for individuals who need legal help.
  • Document Management systems, while dominated by legacy players such as iManage, Worldox, NetDocuments, and OpenText, also include newer services such as Contract Express, widely used to customize contracts.
  • Case Management and E-Discovery, while also dominated by large players such as Relativity, include some new entrants blending e-discovery tools with intake, litigation, and practice management. Examples include Everlaw, Allegory Law and AgileLaw.
  • Contract Management also includes a variety of legacy providers including Determine and Total Contracts, in addition to new services such as Concord,
    (providing cloud-based contract management) or eBrevia (providing contract analysis and review).
  • IP Management, dominated by legacy providers such as Lecorpio, includes new entrants such as Traklight (to more easily manage company IP) and more specialized companies such as Clearstone IP (specializing in patent analysis).
  • Legal Research is dominated by Westlaw and LexisNexis, yet tools such as Ravel, Ross and Casetext have emerged, employing data analytics and AI to enhance legal research.
  • Legal Networks include forums for lawyers to connect with each other, including Lawpolis and Foxwordy.
  • Billing is also dominated by legacy providers such as Tymetrix, TeamConnect,and Serengeti Law, but new entrants include Viewabill and SimpleLegal.
  • Recruiting & staffing have seen innovation as well; startups such as Hire an Esquire and Lawyer IQ have attempted to solve staffing issues for both law firms and in-house counsel.
  • Online dispute resolution is an emerging field and includes services such as ArbiClaims and Modria.
  • Compliance tools, such as Jurispect, attempt to make it easier to keep track of changing regulations.

Adoption Challenges: Law Firms

Legal technology adoption faces the conundrum that, because it is particularly difficult to sell to legal players and scale quickly, it is difficult to raise venture capital funding. Furthermore, the difficulty in finding venture capital funding makes it challenging to grow a sales force quickly to accelerate adoption.

Adoption difficulties are particularly acute for law firms.  There is a rising awareness in the market that “legal tech” is important, that the legal market is going to change, and that law firms which adopt will have a competitive advantage over others.

According to the Altman Weil 2015 “Law Firms in Transition” Flash Survey, law firms that have changed their approach to staffing, service delivery, and pricing are consistently likely to see improved gross revenue, revenue per lawyer, and profits per equity partner. In talking to a variety of legal tech startups, it became evident that the primary challenge was not getting access to technology officers within law firms for demonstrations, but rather getting from the initial pitch to a sale.

The major impediment was the structure of the law firm itself; the billable hour mentality, the partnership model, enhanced security concerns, and the lack of infrastructure for rapid testing and development make it difficult to introduce innovations. The “risk averse” lawyer stereotype can come into play as well, creating a bias toward incumbents and legacy providers.

Read the rest at Stanford University Law School.