Recently I was part of a group of legaltech entrepreneurs discussing the long sales cycle into the legal industry and the glacial pace of technology adoption. After spending the few years working with more than a thousand legal professionals, a few theories emerged. I posed the two following questions online to learn more about the near paralysis of change in the legal industry.
Question 1: Former, practicing attorneys now within the legal tech industry: What is the number one barrier to law firm adoption of your technology? Question 2: Practicing attorney who is a legal tech adopter: What was the number one factor in your decision to adopt the technology?
Below are a few of my theories:
a. Everyone resists change; attorneys are no different. b. Legal tech companies will do better if the founders are former or current attorneys, because that creates a built-in incubator for the product. c. Too many solutions or legal tech products (not necessarily companies) can create inefficiencies—unless there is seamless integration.
After attending several legaltech events in the fall of 2015, I’ve become convinced that it’s more about change than the actual technology or integration. We can toil away on effective technology implementation, apply lean and six sigma principles, and use key performance indicators to measure firm success, but it is fundamental change management that will push wholesale adoption over the line.
In the early 1990s, when I led change management projects as a consultant, this inertia was the biggest challenge I faced. Interesting that everyone clings to the status quo, even when many legal technologies have been proven to both improve client experience and increase revenue.
Robbie Friedman, who left a corporate attorney position with Akin Gump to found ViewaBill, explains, “generally, law firms don't want to lead change; they want to be exactly in line with their peers. It's the reason innovation happens so slowly and that any innovation has had to be client-driven.”
Some argue that the unauthorized practice of law (UPL) is a major reason to steer clear of technology. Some investors find that lawyers are not innovative enough to disrupt an industry, so lawyers then seek out tech disrupters with legal industry knowledge (a hard find) to solve their problems. But then no prospective customer wants to be the first to buy the product. It’s a bit of a daunting situation, one that I believe calls for a refocus and collaboration between legal tech entrepreneurs and attorneys to met the collective clients’ needs.
The impact on sales from the professions’ resistance to change comes from the “who are your current law firm customers?” phenomenon described by Jonathan Perle, founder of Privileged Communications. “The first question I often get is ‘who else is using it?’ I have a list of firms—all of whom have indicated that they like our concept—that have said straightforwardly ‘we will not be the first or second firm, but you should definitely call us when you have five or six other firms using your technology.’”
This ultra-conservative approach becomes a bit of a chicken-and-egg situation. This is why I think the “built-in incubator” approach of having a test-bed within your own law firm, or previous firm, as a legal tech entrepreneur can help you overcome the dilemma of change and the customer issues. The choice to change is simply good business and your firm is a business.
My personal opinion is that founders with legal experience have an advantage. However, I have since refined my original theory: It does not matter for the product as much as it matters for sales into the legal market.
Legal tech startups are no different than regular startups in terms of needing to solve a pain point. If there’s no pain, then there’s no solution required. And all companies will fail if they do not have customers. Knowing your audience and their pain point is sales 101. When asked what his primary reason was for adopting technology, Chicago-based attorney Andrew Greene, President of Business Law Network said, “It either [will] get us additional business or increase profitability on existing business.”
For example, the founders of both Valcu and eBrevia include former attorneys. In fact, Valcu’s Mark Oblad is both an attorney and a coder—a rare but valuable combination, because it allows you to be both the issuer spotter and the problem solver. Then, if you have good relationships with your former firm, you have built-in incubators or first clients. This echoes the model used by many large companies: create an innovation or skunkworks lab within your firm to nurture legal technology. Given that lawyers define their buying process in a similar fashion to other industries, it’s still puzzling why the sales cycle is so long. For example, Meaghan Petetti Londegan of Freeman Mathis & Gary discussed the rationale to use Hire an Esquire for contract legal staffing, “ The decision to adopt any technology is driven by the user’s needs, the technology’s ease of use and its price.”
Former practicing attorney Michael Sander the founder of Docket Alarm shared his perspective: “I empathize with many attorney's aversion to being early adopters. When I was a Big Law associate and was shown some useful tech but with a horrible interface, I would inwardly grown because I knew it would take time to learn - time I could not bill. A challenge for us in legal tech is that we provide relatively advanced services, but must do so with an interface that requires little to no training.”
Too many solutions or legal tech products (not necessarily companies) can create inefficiencies—unless there is seamless integration. Attorneys want simple solutions, which means not having to log into multiple systems. Something like Clio’s fifty integrations with add-on technology can provide simplicity. Building technology without the capability to integrate with other systems is not wise for new legal technology founders.
Phoenix attorney and legal tech company founder Mark E. Lassiter summed it up well: “Last century’s lawyers saw legal technology as something that aided the practice of law, but this century’s emerging lawyers realize that legal technology is the practice of law.” I’m always happy to chat about this topic online. Tweet me at @maryjuetten and follow me at @traklight and @evolvelawnow.