Legal Tech and the Challenge of Social Proof

How many lawyers actively want to buy legal tech products? The answer is: very few. One path through this ‘lack of demand barrier’ is to show how the software will make life easier, another is to provide social proof.

What is Social Proof?

In its simplest form, social proof is the idea that in the absence of any other meaningful information, (and what is meaningful is always in the eye of the beholder), then a person will look to the group for prompts and guidance on what to do.

This connects to the reality that humans are a fundamentally social species and that over millennia we have learnt to seek social proof in moments of uncertainty. It links to a whole range of behaviours: why people respond to brands; why we follow fashion and respect the power of ‘influencers’; how crowds of people react in a crisis; changing behaviour due to a sense of societal or environmental responsibility; and simply doing whatever your neighbour does.

The field was pioneered by the American marketing expert Professor Robert Cialdini, who has spent a lifetime studying how other people influence our decisions.

This impacts legal tech in several ways:

• ‘If everyone else is buying X then we should as well, because that is the way the group is heading and we don’t want to be out of step with our peers and clients’.
• ‘I don’t know which X to buy, but I have heard of that brand, so in the absence of any other meaningful information that really matters to me (i.e. the ROI stats sound nice but perhaps don’t really resonate), then I will choose that brand over the others to at least have a look at first.’
• ‘I really respect Y person at Z law firm, and if they say that product is great, then I will probably at least give that one a try.’

Social Proof and Legal Tech

But, for legal tech it’s not a walk in the park. One could argue that the default social proof for legal tech is that it should not be bought because most of the group, in this case law firms and inhouse teams across the world, are not buying it – if we look at raw numbers.

I.e. there are millions of lawyers on this planet, there are 100,000s of law firms globally, and there are of course millions of companies that perhaps have one or more lawyers inside them. Of these millions globally, only a small percentage are using anything that one would could distinctively label as ‘legal tech’, i.e. software designed to actually improve the way a lawyer works (i.e. not just billing software and the like).

E.g. in the UK there are about 10,000 ‘law firms’, of which only 100 or so have revenues of more than £30m. Not that many firms below that size will really focus on legal tech tools that change how the lawyers operate. So, 100 out of 10,000 = 1%.

If someone told you that only 1% of the firms in a particular profession were really interested in something you’d probably assume it was not a big deal. Moreover, within that ‘Top 100’ you are often looking at the largest 30 or 50 in terms of being early adopters / experimenters with new legal tech products. So, an even smaller group sometimes when it comes to what startups are offering.

The reality is that very few legal tech products and the companies that provide them have significant populations of buyers to provide the social proof generally needed by people. Legal research tools centred on case law, and provided by giants such as Thomson Reuters and LexisNexis, are one of the few areas where a mass of lawyers are buyers. No doubt this is because every law firm had a law library of case law and these giants provided the digital equivalent. I.e. these purchases have proven to be essential to many, many law firms.

As to which one to choose, buyers can see a mass of other law firms that have made choices in this area, providing loads of social proof. The mass appeal also means the brands are well-known, at least in legal circles.

But, most legal tech products are not in this position. Here are some key challenges that relate to social proof in this sector:

• Small buyer populations – for outside observers of this sector one thing that always surprises them is how small the buyer groups are for so many legal tech companies. There are startups, or scale-ups, that have been going for more than five years that don’t have more than about 50 customers. Now, those customers may include some of the largest law firms in the world, and each of those firms may be (or may not be…) paying for multiple ‘seats’ for a piece of software, but still…….this is not a massive group. Instinctively and unconsciously, the social proof is telling us not to buy that thing because the group evidence suggests it’s not what everyone wants.
• Small buyer populations and hierarchies – however, the legal market is hierarchical, the top commercial law firms look to each other, their group is going to therefore always be small. Clifford Chance, for example, will look at Linklaters and Freshfields, or Shearman & Sterling and Latham & Watkins. This upper tier of very large commercial firms is in reality just a few dozen-strong, even on a global basis. Amid this group there can be a strong sense of social proof for a product, if the product is viewed by the group as software made for that group. So, a ‘refined social proof’ can be created in these circumstances, although how far it will travel across the wider group is uncertain.
• Hierarchies work both ways – ironically – and it’s something I’ve definitely witnessed when in the consulting world – hierarchies work both ways, i.e. law firms that don’t identify with a certain group may feel that they do not need to follow their behaviours and buying decisions. So, the fact that an elite New York firm has bought your software may not impress a 20-person law firm in the Shetlands. And the opposite is also true, in fact because of the inherent snobbism of the legal world, that would be doubly so, i.e. if you sell in that part of the market then we don’t want what you are selling.
• Your part of the market – the point above is a challenge for startups especially, as they have to start somewhere and usually whichever firms will buy their product first is where they then focus. There is a social network aspect to this. If you, for example, get your first clients in the world of medium-size and boutique law firms, then others in the group will see this and will be more likely to buy from you. You will make sure your marketing fits this group and so too your pricing, soon enough you will be socially proven to be a supplier to this group. It may be possible to get into other segments, but there will be unconscious barriers there, as the social proof tells buyers what part of the market you serve.
• A lack of buyer influencers – influencers have always been important and today are all the more so. They are a distillation of social proof, one might say. The challenge here is that very few law firms, or inhouse teams, will openly say: ‘We really love X product and it’s better than Y and Z products, which we also tried.’ You might get the law firm to allow you to put their logo on your website, which is a good start, but not every firm’s head of innovation wants to go on record saying that they love your product. Many of the ‘influencers’ in the legal market are – (more irony) – not buyers of legal tech. They are often consultants, or in the media, or perhaps respected law professors, or even the founders of other legal tech companies. But, as noted, they are not the ones actually buying the stuff – so their social proof value is limited. If the managing partner of a global elite law firm stood up and said: ‘Product X is amazing, I insist our lawyers use it because our clients love it when we use it!’ that would be the kind of endorsement to die for. That is a Kim Kardashian level endorsement (…at least for buyers who identify with the elite law firm segment.)
• That said, you do sometimes see comments from buyers on the inhouse side, although because of the vast number of companies out there, many people may not have heard of them….unless, once again, they are at a massive brand. E.g. the GC of Google says X legal tech product is amazing and you should all buy it (that will never happen….) vs a medium size brewing company few have heard of whose GC is quite excited about a new CLM product and is happy to be quoted in a press release. Almost instinctively many readers just ignore the comment by the GC from a company they’ve never heard of. Why? Because on the social proof scale of credibility their view, especially in isolation, just doesn’t really resonate.
• Use levels are unclear – another factor with legal tech is use levels. X company says they have a large group of clients. But when you look at their revenues you can see that use levels must be very low for most of them. Even if you don’t have that data, the lack of transparency, the lack of evidence that firm X is really using a product also undermines social proof here. E.g. firm X has a licence for an AI doc review system, but we as buyers have no idea if they really use it much. As firm X doesn’t want to talk about such things then we are in a grey area. There is the brand halo you get from working with a big law firm, but that is then undermined because we don’t know if they really use it more than a few times a year. With Kim Kardashian you can at least see a photo of her wearing the thing that she is promoting.
• Reviews can be random – Extensive reviews of legal tech products can help – and Artificial Lawyer did this for Kira and Luminance, approaching dozens of customers of those brands to find out what they thought. But, even with a serious effort like this to collect a large sample it still seemed – in hindsight and after hearing additional info on the grapevine afterwards – that important information about the products had not been passed on by the law firms – and this was even in an anonymous review process. Again the challenge here is the small populations of users. If you had 100,000 customers and 1,000 provided reviews, then you can start to build a truly empirical picture and will likely uncover all the nooks and crannies of the product. But small customer populations with small review samples tend to undermine the purpose of social proof.

Conclusion

Social proof can be very powerful. It’s also hard to come by. It’s especially hard for legal tech because of the reasons given above.

But can the challenges be overcome and can legal tech companies wield social proof? The answer is yes. However, to do that well they will need to truly delight a sufficient number of customers so that the message starts to resonsate throughout ‘the group’.

Making life easier for lawyers is definitely up there as a goal, and hopefully, if you can achieve that then social proof should follow as more and more buyers communicate positive feedback within the group.

In short, when it comes to selling legal tech stick to the human attributes and seek to build social proof. Because what the group thinks really matters when it comes to buying decisions.

By Richard Tromans, Founder, Artificial Lawyer, August 2022

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