Much has been said about the potential for Legal Tech to drive change. While technology has been rapidly changing industries such as financial services and traditional retail, technology's impact on the legal industry to date seems more limited.
However, we see that this is beginning to shift; more and more startups are emerging. There are two main reasons why the next generation of Legal Tech startups are now poised to deliver on the promise to transform the legal profession.
First, startup fever has hit law, just as it has hit other industries and a new wave of lawyer-entrepreneurs have entered the space. More and more, we’re seeing lawyers leave their traditional career path and take greater risk, either by joining an early-stage startup as in-house counsel or by starting their own company, with a view to solving a pain point they have experienced directly themselves.
Secondly, while for many years corporate legal departments were not expected to function as typical business units would, more recently, legal operations, a function to improve the delivery of legal services, have become entrenched in many businesses. According to the LawGeex 2018 In-House Counsel Legal Tech Buyer’s Guide, 56% of corporate legal departments now have a dedicated legal operations function. Excitingly, on the law firm side, a number of the world’s leading law firms now have directors of innovation (or similar) in place.
The result is that legal services today are being delivered and consumed in more efficient ways than ever before. Many legal operations tools provide automation as a key feature. This can dramatically increase the efficiency of in-house counsel and law firms, to the benefit of both.
Increased efficiency is particularly important for legal services given the cost pressures many corporate general counsels are currently facing. In the 2017 CLOC State of the Industry Survey, cost pressures to improve efficiency are cited by 69% of GCs as a driving force in their daily roles. Of course, businesses want to pay less for legal services but that does not mean that they expect to be reducing the amount of legal work they will be doing. CLOC’s 2017 report also finds that 82% of corporate legal departments expect their legal needs to increase in the next year. Against this backdrop, the scene is set for an exciting next chapter in LegalTech.
As investors, we've long been excited about Legal Tech’s potential and so we are delighted to announce we are leading Apperio’s series A round. We believe that Apperio, which provides law firms and corporates with legal spend management software, is perfectly placed to capitalise on the key trends driving the growing legal operations market. While we've been really impressed by what the team at Apperio are building, in particular, we find their understanding of this market compelling. The team is led by Nino, a former lawyer, who understands that legal spend management software is about more than simply reducing the cost of legal services. It's about enabling efficiencies at the law firm level to improve margins, automating repetitive tasks, such as providing client billing updates, eliminating surprise bills and providing general counsels with a user-friendly dashboard showing a single view of their real-time legal spend across all matters.
At Draper Esprit, we’re excited about the potential of LegalTech and are delighted to be partnering with Apperio to deliver on that promise. Welcome to the #Draperclan.