Pioneering law firm, Mishcon de Reya, has invested in legal and proptech startup, Thirdfort, for an undisclosed sum. The company has developed a platform that could revolutionise the sale of property in the UK.
The founders of Thirdfort, Olly Thornton-Berry and Jack Bidgood (pictured above), who had recently been part of the firm’s MDR Lab startup incubator 2018 programme, told Artificial Lawyer: ‘The investment decision is a huge affirmation that they not only back us as individuals, but that they see the huge potential of our technology.’
Mishcon has also previously invested in other MDR Lab members, time/billing system Ping and litigation management platform Everchron.
The move by Mishcon, which is trialling the conveyancing platform, follows an October £400,000 pre-seed funding led by the founder of Zoopla, Alex Chesterman and also Lawyer Checker, a legal anti-fraud specialist.
The company has created a new and secure platform for buying and selling property, which allows lawyers to avoid the need to hold money in escrow – which then becomes a fraud risk. It has also recently gained regulatory approval from the FCA, an essential step if it was going to hold money for other parties.
The system also uses the latest ID-checking technology to speed up KYC steps in property sales. The idea is that lawyers work through the platform, removing the need to handle what remains a very slow and risk-prone sales process entirely by themselves.
Artificial Lawyer asked if being part of MDR Lab has had an impact on their success so far?
‘First and foremost, MDR Lab has significantly sped up our journey to understanding, in intricate detail, the challenges property lawyers face with first onboarding their clients and then processing their money. This has given us enormous insight to shape our technology in these early stages,’ said Thornton-Berry.
‘Secondly, the firm has provided ongoing feedback as we test our product – as well as the residential real estate department, Nick West (CTO) and Nick Kirby (Managing Associate – real estate) in particular have been incredibly supportive, offering invaluable mentoring and guidance,’ he added.
Meanwhile, West said: ‘We created MDR LAB so that we could work with, develop and learn from businesses like Thirdfort to identify the gaps and opportunities in the legal market and use technology to address them.’
‘As our investment indicates, we believe it has the potential to revolutionise the conveyancing process and we are very excited to have helped shape this product at such an early stage,’ he concluded.
The investment is all the more impressive given that as of right now Thirdfort is still very much at an early stage in terms of generating revenue. However, given that conveyancing – the sale of property – is one of the biggest parts of the UK legal market the platform has huge potential in terms of total adoption. As Thornton-Berry explained, the goal now is to ‘get the product into users’ hands‘.
‘We have several early adopter firms, including MDR, wanting to begin using our technology to onboard and transact with their clients. We’ve just released version 1.0 for the pilots we have arranged, then we are making necessary changes and using our strategic partners, such as Lawyer Checker, to help distribute Thirdfort to the wider market,’ he added.
Good luck to them! Although, one challenge that remains is whether some law firms will want to lose control of escrow funds, as for some smaller firms this is seen as a means of gaining additional revenue from interest payments. However, if other parts of the property market such as banks and large real estate agencies demand lawyers use this system then any such barriers will quickly be overcome. Larger law firms may also not see escrow interest payments as that important.
The move also provides additional validation for the law firm tech incubator model. Not only has Mishcon benefited from having a proptech company of this type inside the firm – as it handles property transactions and has been hit in the past by significant conveyancing frauds – it now will own part of the solution.
Is “if other parts of the property market such as banks and large real estate agencies demand lawyers use this system” recognition that those recommending legal services could be liable if they do not ensure that firms they send clients to use appropriate technology?
This is not new. I saw another service present recently and they are already live.