The Business of Legal Tech

The level of investment in legal technology continues to march forward. For Q1 2022, an estimated $225 million was invested in various legal technology companies by venture capital organizations. Activity continued in April and May and of course the combination of MyCase and LawPay announced earlier this week is important. But why? Why is so much money being invested and why does consolidation continue? Well, we have some ideas.

Big Untapped Market

There are so many estimates out there in terms of the number of law firms using legal technology. Some estimates are below 20%. Others say 40%. The reality is the devil is in the details. It's all about how you define technology. Sure, not many law firms are using a typewriter anymore. Or at least we hope not. Does using an online word processor count as legal technology? Depends on who you ask.

Suffice it to say that the majority of law firms (over 50%) are not using technology purpose built for the law. And that's the lead reason for the big investment and consolidation. There is a perspective, which we can debate, that more established law firms aren't interested in adopting new technology. Less experienced attorneys, or at least younger, are far more open to it. So getting ahead of the curve is key. 

Expansion of Products

I continue to be fascinated by how many options are out there. There are so many great ideas for technology to make practicing law more efficient, giving the client the visibility they desire, and generally streamling the mundane. The continued creativity is truly impressive. 

Think of the smartphone. No one knew they needed one. Then we all got one and how the world changed. I'm continuously floored by the number of people I see walking down the street looking at their phones. But I digress. The right new products drive demand that was truly not visible prior to the product. As new options are introduced, the appetite for technology will grow. 

Competitive Landscape

Law firms, in general, are doing ok. Some are doing better than others, as always. But the divide is growing and the reason why? Technology. Firms that use technology purpose built for law firms that drive efficiency can handle more cases. The more efficient the firm, the more matters they can accept. We've said it here many times before. Clients want transparency. They are used to logging in to an appropriately secure website to see everything from the electric bill to their health history. They are ready to use technology for law, too. And so the circle goes. Firms that use tech have happier clients, in general. Happier clients give firms glowing online reviews and enthusiastic referrals. And on and on.

Firms who have not yet adopted some sort of client-accessible portal must reconsider. 

Attracting Staff

Law firm graduates who are closing in on becoming attorneys are used to tech. They see the benefit of it all. In fact, we here at SimpleLaw work with a few law schools and give students and various groups access to our software for their use and testing. Suffice it to say, the groups we interact with don't understand how or why a law firm would not use purpose-built software.

Attorneys, or soon-to-be attorneys, want to actually practice law. Sure, there are administrative requirements for every job, whether in law or not. But the more time individuals can actually practice law, work on and resolve legal issues for people, the happier they will be. And they will choose those firms to join. Or start their own.

We certainly expect to see continued investment and consolidation in legal technology. But that's not what gets us super excited. From our perspective, it's all about helping attorneys enjoy their jobs more, stress less, and maybe, just maybe, have a better quality of life. For clients, easing their stress and giving them online access to their issue is awesome. We are founded by attorneys and know how fulfilling the entire process can be. That's why we are here and excited about legal technology.