Legal tech is meant to improve the lives of lawyers and their clients. Meanwhile the legal world is growing steadily and is so vast now it’s almost a trillion-dollar industry. Selling legal tech products should be easy. But it isn’t.
The Reasons Why
The number one reason has to be this: lawyers simply don’t really, really want to buy legal technology. They just don’t. Selling into a market that is relatively happy as it is will always be a tough job. It’s like selling life insurance.
Many commercial lawyers want to win new clients, win cases, successfully complete deals, excel professionally, get accolades from their clients, and advance in their careers. Most do not lie awake at night dreaming of incrementally improving a particularly laborious process that constitutes one part of their work. Some do – and perhaps an increasing number do – but obsessing about efficiency is still a rare phenomenon.
But why? The simple answer is that incrementally increasing efficiency in a pyramid labour model, where time taken by said labour increases profits, just doesn’t feel like an overpowering driver for change. Arguably it’s a turn-off.
Moreover, the inhouse teams come from this private practice world, and are not – despite reports on the very process end of their field – under massive pressure to fundamentally change how they work either.
How do you sell technology – which is implicitly all about efficiency – when the buyers are not really that excited about those benefits, (at least beyond the utilities such as Word, email, a basic doc management system, a digital case law library, maybe a practice management/project management system, and some billing/accounting software)?
Compare this to, for example, a dentist who does teeth whitening. You come up with a new technology that gets the patients’ teeth whitened twice as fast with the same, and perhaps even better, results. As most dentists charge fixed prices and there is a transparent market filled with accessible information, this tech is all upside for all involved. The patients get the same or better treatment, but much faster, which suits their needs. The dentists now get to have twice as many people sitting in the chair as they did before, while charging the same (and maybe more because it’s faster..?) The tech sells like hot cakes and within a few years the founders are billionaires.
In the world of legal tech there are startups, now scaleups, that have been going for more than five years, selling really useful software that drives up efficiency, but which have revenues that are lower than the remuneration of a single equity partner at some law firms.
I.e. a team of dozens of skilled people offering cutting edge tech, which really helps the target market, and which after five years of hard work and millions spent in investor capital, still generates less income as a business than just one person at a top commercial law firm.
OK. What else?
Most legal tech tools are not ‘plug and play’, even if they say they are. This is because anything that changes how a lawyer works is not that simple. If you are intervening in a workflow that may have existed for decades then it will always be a complex matter.
Then there is security. Law firms understandably take security really seriously. That is always a checkpoint.
Who are you actually selling to? That is another challenge. A partner may have seen your tech at a conference, but they won’t be the one signing the contract. And maybe you know an IT person at a firm. But, then they won’t be the one who builds the business case inside the firm for changing how work happens and why the firm needs this new piece of tech.
Some firms have innovation groups that focus specifically on exploring the market and looking at new tools. They have processes in place for listening to internal and client needs, finding tools that fit that need, testing the tech out, and then finding the right way to integrate it. And thank the Maker for that. But, these – on a global scale – are a small minority of firms.
That said, even then, you may still need to go through a bake-off versus other providers. There may then be a proof-of-concept try-out. And only then do you get the blessed contract – which of course does not have to be renewed.
Moreover, if your product has a ‘pay for what you use’ model, e.g. for the more data-heavy products, then even that contract is no guarantee the firm will use the tech at scale and generate money for you.
Inhouse tech is even harder. Try sending emails to a GC of a large company asking to pitch them a new tech tool and see how much time they are happy to give you. Contact the central tech team of that company and they may wonder what this ‘legal tech’ thing is that you are selling.
There may be millions of companies, but few are set up to ingest legal tech products. Luckily, legal ops teams have really helped here, and they are growing. But, as with innovation teams in law firms, they remain a small number in the vast sea of the global legal market.
There’s more, but let’s end on one last bit that connects to the ‘whose problem is this?’ question. Even if you can get a firm interested, get through the sales process, the onboarding hurdles and security checks, there then remains one last challenge: who owns this product once it’s arrived and what additional human input is needed to get value from it?
As explored in the piece about legal tech orphans, without product owners the newly onboarded tool will languish.
Just as a practice group in a law firm needs people to push it along to help it to grow, so too a legal tech tool needs advocates to encourage its use. And that does not always happen. You cannot just ‘fire and forget’ with legal tech. Well, you can, but don’t expect to get a renewal if there are no internal product owners.
And the final aspect is the team of people who will be using it. Has the firm considered that? If your tool needs training e.g. as with NLP, or maybe needs regular updating e.g. as with doc automation, then who is doing this? Has this been worked into the firm’s or business’s resource planning? Again if not, then you will have a legal tech orphan.
The Good News
If you think of all the things you can try and sell in this world that people really, really want, then selling legal tech is certainly not an easy job.
However, it must be very rewarding knowing that you’re helping a huge industry to steadily change and to help your company grow. It must also be satisfying to succeed in a market that is much harder than many others.
Yet, over the long-term, the demand for legal tech will only increase, meaning sales will keep going up, it’s just not going to suddenly become any easier.
From what this site has seen, selling legal tech is a slow and consultative process, but when it works it really works. It’s also as much about compelling ideas and inspiring concepts, as it is about the tech itself. And it’s about a global pillar of our society slowly, but surely, evolving in ways that are important to millions of people and businesses around the world. That’s something to be excited about.
So, here’s a big thanks to all the legal tech sales people out there. It’s a tough job, but you are doing it.
By Richard Tromans, Founder, Artificial Lawyer, Feb 2022.
You’re very welcome ha ha
Great article and a dose of reality, for which thanks. On the buy side I think change will come from two ways: enlightened visionaries – but you do not encounter many of those in the commercial legal space – or from commercial pressure – do this or we die type approach. AI seems to be a way in here. There are signs that CEOs are anxious about a) actually having an AI strategy; and b) failing to chose the right one. Legal teams could get ahead of that curve, get themselves versed in the realities and the practicalities, strategise some theoretical scenrios and prepare the ground to make the decision easier for the C-Suite.
Great article Richard, I recently spent half an hour explaining exactly this to a couple of VCs.
‘Yes the argument for most Legal Tech is compelling and yes the potential benefits really are that significant but no Law Firms will not jump at the opportunity and quickly adopt new technology.’
As you rightly say, it’s a slow and consultative process, as it has been for at least the past 15 years.
Thanks for the big thanks, we’re just doing our bit to help.
Great article, thanks Richard.
A very good analysis, but could I add that in the case of law firms (and other professional communities) the investment is coming from (in effect) the personal income of the partners. Their bonuses come from the net income after investment in a whole range of products, services and employees and their focus tends to be on optimizing the performance of their own practice areas. The bonus factor also tends to focus partners in on short term rather than long term payback
Another aspect hurting widespread adoption is us small firms being left behind as the ROI/unit costs are still prohibitively high for some platforms and other platforms are not offering their product toblaw firms or small law firms yet. Its been a pain trying to get vendors to talk as a small firm.
This reminds me of the word “disruption.” Early-stage investors and entrepreneurs love to say they are “disturbing” an industry, but no one with the mood or pockets to make a purchase wants to be disrupted. The messages around disruption may be suitable for other target audiences – but it’s not one likely to one that motivates a potential customer.
Thanks Richard. Another great article. My big takeaways from this that I think are absolutely on the money are: 1) most lawyers are not incentivised to use legal tech as they are largely satisfied with the status quo i.e if they are in-house, they are needed and know their job – they often don’t have the time or inclination to adopt complex legal tech. If they are in private practice, legal tech can be a threat to that lucrative billable hour and erodes profit; 2) the tech is hard is use, however “plug and play” it is! Here technologists need to design better user journeys, most tech is trying to do too much and takes too much training time – it is not intuitive; and 3) a lot of legal tech is focused on efficiency, which is a good thing, but it is not embraced by those whose livelihood may be affected! My vote is for more focus from technologists on developing AI to allow lawyers to more intelligently use the data within their contracting processes that affect risk and future outcomes. There are still masses of unused data in every company’s contracting lifecycle. Find better ways of harnessing it and analysing it using intuitive “plug and play” tools and I think we’re done!
Time an effort in identifying a champion and training people as well as systems is the key to success.
Each point resonates as a legal tech provider.
Interesting. I wonder: if Legal Tech enables e-billing which in turn puts the squeeze on law firm revenues, won’t law firms need to reinvent efficiency to deliver quality service at a reduced cost…..and e-billing is taking off.