SILICON VALLEY ENTREPRENEURS and venture capitalists have deployed digital tech to change the ways we live, eat, and shop. They’ve aggressively moved into crucial industries like healthcare and finance. But the practice of law is one area of expertise that has remained stubbornly resistant to disruption.
That is slowly changing. Recently, Andreessen Horowitz led an investment round of more than $8 million in Everlaw, a startup that helps lawyers sort through documents, emails, and other evidence with the cloud-based service ahead of trials. It was the venture firm’s first investment in legal tech. Other startups such as Clio, Judicata, and RocketLawyer have cropped up in recent years seeking to make the practice of law more efficient and less expensive. And several angel investors, at least, have started to take notice.“We’re really at the beginning of a phase where technology is going to begin coming, where’s it’s really having a significant impact,” says Justin Hectus, the director of information at Keesal, Young, & Logan, a full-service law firm based on the West Coast.
Yet to understand how legal tech could have a significant impact on the venerable practice of law, it’s important to see why the sector has, in many ways, been a challenge for entrepreneurs. The legal industry, for one, is much smaller than say the financial services one, and, like healthcare, it requires a high degree of expertise. But most crucially, the lawyering business itself is set up in a way that resists efforts to move fast and break things—even though, and perhaps because, such innovations could help make the law more accessible for everyone.
The Way Things Work
The legal sector is largely driven by law firms—and law firms function differently than hospitals, banks, or individual consumers do.
“The primary delivery of law is through a law firm,” says Daniel Martin Katz, an associate professor of law at Illinois Tech at the Chicago Kent College of Law. But law firms can’t raise capital and they’re not allowed to share the profits of their firms with non-lawyers—which means lawyering itself is not conducive to investment.