Legal Technology Websites and Startups in Last PlaceAs anyone in legal technology knows, launching a successful website or app is hard.  Very hard.  But apparently, it ranks as the hardest, according to TechCrunch, a leading blog on technology, websites, and startups.  Yesterday, TechCrunch posted an article – “Getting Rich By The Numbers, A CrunchBased How-To” – wherein the author analyzed data from CrunchBase to determine how various categories of tech companies / startups have fared.  If you are unfamiliar, CrunchBase is a database of technology company, people, and investors.  Now, the results are far from scientific and even note a survivor bias (those startups that fail are likely not in the database), but it’s definitely an interesting analysis.

The author looked at the following data for 19 different categories of tech companies: # started, # funded, amount of money raised, Techcrunch coverage, acquisitions and IPOs.  Let me first say that I think there are many more metrics relevant to determining the success or failure of a company.  Further, it only analyzed companies in CrunchBase.   Nonetheless, as someone that founded a legal technology company, and very closely follows the industry, I am not surprised by these results.  The legal category  had 306 companies started with 23 funded, 2 acquisitions, and and 0 IPOs.  (LegalZoom recently filed for an IPO).  ”Dire statistics.”  Indeed.

However, these results got me thinking about legal technology all day.  I just don’t think they paint an accurate picture of our industry.  Here is why:

1)  We are not playing the same game.  Lawyers are subject to ethics rules that aren’t in most other industries.  If you have the latest and greatest idea for a picture sharing app or restaurant discovery service, you can hack together a website in no time and go.  Not true for lawyers.  Rules govern referrals, solicitation, confidentiality, privilege, etc., etc.  Add on top the fact that ethics rules are continually changing to keep up with new technology (or not).  It simply takes more planning, more research, and more time to get a compliant legal app out there.

2)  It takes an intimate knowledge of the legal industry.  You need to know first-hand how the industry functions, how work is done, how business is developed, how lawyers think, etc.  Launching a legal startup with little or no experience practicing law can make success very difficult.  On the other hand, it is hard for lawyers to leave a successful practice to focus on a website or app.  Maybe call it a lack of founders, but it could be leading to less companies and lower success.

3)  Some of the most useful legal websites and apps are not “legal” at all.  Examples include WordPress, LinkedIn, DropBox, Evernote.  Indeed, these non-legal apps are changing the legal industry and the way law is practiced.

4)  Despite fewer players, there are, in fact, many great companies doing tremendous things in the legal space.  A few examples include Lexblog re legal publishing, several law practice management platforms,  fastcase re legal research, Avvo re ratings, LawPivot re questions and answers.  Quality over quantity, and I am excited about what these companies are doing and where they are going.

As a closing thought, if anything, I think this data shows that there is tremendous opportunity in legal technology, and we have just started to scratch the surface on where innovators can take the legal industry.

Ryan Bowers

Founder of and author of the RFPattorney Blog. Over 8 years of experience practicing law, including past experience at an international law firm, a national law firm, and a small firm. Currently GC and VP Operations for large mechanical construction company. Midwesterner, home renovator, golden retriever wrangler, new dad, Wolverine, & avid hockey fan.

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