Almost half of the chief executives of lawtech start-ups in the UK are former lawyers, more than twice as many as from business and over three times those from a software background, according to a report.
Produced jointly by legal publishing giant, Thomson Reuters, and start-up community Legal Geek, the report analysed the 64 lawtech companies currently appearing on Legal Geek’s visual map of the start-up scene.
While 45% of all the start-up chief executives were previously lawyers, 18% had a business and finance background and 12% had software development experience.
Co-author, Legal Geek founder Jimmy Vestbirk, said: “It’s a difficult market to sell into if you are not a lawyer.”
However, a legal background was not essential to success, the report noted. The founders of artificial intelligence (AI) specialist RAVN Systems – which in May was acquired by US document management company iManage – were all from a technology background.
The report found that 46% of legal start-ups – defined as companies under seven years old – were targeting law firms, almost double the next target, corporations, at 24%. Consumers were third at 13%, followed by SMEs (12%).
The business model most favoured by start-ups was subscription – by 57% – followed by revenue share or a fixed fee for a referred lead (21%).
Just over 15% of the start-ups on the map were led by women chief executives. These included major companies such as Luminance, a transactional due diligence tool used by magic circle law firm Slaughter & May, headed by Emily Foges.
Three market segments dominated the focus of start-up activity, between them pre-occupying more than three quarters of companies. They were: practice management (28% of the total), marketplace (27%) – that is, platforms aiming to facilitate the connection of lawyers with clients or employees – and contracts (22%).
Other subjects targeted were risk and compliance (12%), analytics and research (6%), and law for good – improving access justice – (5%).
The report observed that the UK lawtech market was at an “early stage of its life cycle, and there are fewer and smaller start-ups than you might expect given the value of the legal services market”.
Co-author Samantha Steer, Thomson Reuters’ director of large and medium law strategy, said: “The sales cycle can be slow and this can act as a barrier to entry both for start-ups and investors hungry for quick returns.
“Tech budgets remain comparatively low, though they are growing… Start-ups are often reliant on capturing the imagination of one or two forward-thinking [general counsel] or partners in the early years.”
The report concluded: “Albeit relatively small, and slow in emerging, the market is diverse and dynamic, and, crucially, starting to produce success stories.
“Increased efficiency and cost reduction are the two key market drivers that continue to intensify.”
Meanwhile, SME and start-up-focused lawyer-matching service, Linkilaw, has acquired rival comparison site Lawyerfair, which was launched in 2013.
In what it claimed was a market first, Linkilaw announced it was working on AI-backed solutions to improve its matching abilities.
It said: “The technology enables Linkilaw to match clients to specific company legal practitioners according to service requirement, available budget and, critically, on fixed-rate terms.”
In other news, global law firm Baker McKenzie has rolled out machine learning technology underpinning its Relativity e-disclosure platform to almost 50 of its offices worldwide. The technology is now located in every region where the firm has a presence.
Bryant Isbell, director of Baker McKenzie’s global practice support, said: “We are leading the legal industry in the use of new technology for e-discovery, providing clients a common worldwide platform and support infrastructure.”
The firm recently opened Toronto-based ‘Whitespace Legal Collab’, which it described as “the world’s first multidisciplinary legal ‘lab’”.
It explained: “Allowing for face-to-face collaboration between attorneys and leaders in business, government, academia and not-for-profits, the Collab will address complex global challenges at the intersection of business, law and technology.”