Never before has a single legal tech company received so much direct financial support from Big Law firms, nor has one company gained a position where it could potentially dominate a large part of the legal tech market as a gatekeeper.
First it was Clifford Chance and Latham & Watkins, now it’s Orrick that has put money into ‘legal app store’ Reynen Court (see below), in a move that cements the platform’s position in the world of Big Law.
But, more importantly it sends a message to the software market that says: ‘We, Big Law, want to consume our legal tech products through a platform – not via one-to-one buyer/seller relationships with a variety of SaaS point solutions. And, that platform’s name is Reynen Court.’
Let’s just step back for a moment and consider what the change means.
Put simply Reynen Court allows you to use a collection of SaaS applications via its platform, which handles issues such as data security guarantees. And, as the US-based company puts it: ‘The platform enables firms to manage software subscriptions and provides usage monitoring and advanced application-specific metrics to aid in better predictability of IT software and infrastructure maintenance and expenditure.’
On one level you could say this is not a big deal, Reynen Court is just the wrapper, as it were, not the end product. But, then consider this point – we could get to a scenario where many of the world’s largest law firms are consuming a big chunk of the SaaS legal tech market via an intermediary.
I.e. Reynen Court could become, in effect, the gatekeeper of legal tech. And that is quite a position to hold.
Look at it this way, Big Law – as seen with Orrick and others – gets fully behind Reynen, the firms’ CTOs and CIOs become used to this relationship and perhaps even start to feel uneasy about using any SaaS software that’s not running through Reynen.
In that scenario the platform would have a position of considerable power, unrivalled and never seen before in the legal tech market.
Let’s say you’re a tech company and you choose not to go onto the Reynen platform, what then? Do you eventually get shut out of the Big Law buyer’s club?
What if for some reason your tech company falls out with Reynen Court, what then? Or, your company has its application rejected? If most Big Law firms only use point solutions via this platform, then you’d be out in the cold, exiled from the market. Perhaps even to a point where your business loses so many large customers that your viability is threatened?
In short, whether it’s planned or not, Reynen could eventually end up in a controlling position in the market – and Artificial Lawyer has to say, that’s not a healthy scenario for a free market to have.
What started out innocently enough as a way to help lawyers more easily use software point solutions, could evolve into legal tech’s self-appointed gatekeeper. Moreover, a gatekeeper backed by some of the world’s largest firms, which makes it even harder for any tech companies that don’t like the idea from speaking out – as they’d likely not want to criticise potential clients.
All in all, while helping to improve access to applications should be applauded, a situation where the legal tech market was effectively dominated by one platform would be a bad thing for a free market.
We are not there yet. As it stands today, most law firms have one-to-one relationships with the many SaaS companies they use. And, Reynen Court, has only today fully launched on a commercial basis (Jan 31), so it is still at a very early stage.
But, just in case, here’s a few ideas to avoid one company getting into a dominant gatekeeper position:
- Another group of law firms creates a rival platform of the same style, which would give the SaaS companies at least some choice of which platform to jump onto.
- A group of SaaS companies get together and create their own intermediary platform – maybe for tech that was complementary; or maybe even competitors would come together in the name of mutual interest? (And of course, we’ve seen several larger companies try to build their own all-in-one platforms.)
- The legal tech companies agree on some universal standards, especially around security (and perhaps on pricing?), and make it as easy as possible for law firms to use their software, which in turn would make the potential for a dominating gatekeeper less likely.
The Orrick investment
As noted the US firm has joined Clifford Chance and Latham & Watkins in investing in Reynen Court. This is what everyone had to say:
Don Keller, Orrick’s Tech & Innovation Sector Leader, said: ‘When we launched our legal tech focused corporate venture investment fund, it was with exactly this kind of investment in mind.Andy and his team have made great strides over the past year, and we are excited to continue to support their efforts.’
Wendy Butler Curtis, Chief Innovation Officer and Chair of eDiscovery & Information Governance Group at Orrick, said: ‘We hear from our clients again and again that the adoption of legal technology is hindered by the resources needed to vet, pilot and contract for a new solution. The Reynen Court platform simplifies these steps, accelerating our clients’ ability to leverage new technology – which is a win for all of us.’
And, Andrew Klein, Founder and CEO of Reynen Court, concluded: ‘As a member of our Consortium and one of the five Beta firms, [Orrick] have played an instrumental role in helping us refine our priorities and test drive our application. We look forward to expanding the relationship and working even more closely with their global teams as we head into our commercial launch.’