Updated: Dec, 2015

In my previous post I wondered: If the increased demand for legal services is shifting away from law firms, where is it heading?

Some believe it’s mostly heading back to corporate counsels and law departments. But that’s basically rebuilding a law firm within a company. Moreover, it seems wasteful to me to produce expensive legal solutions for a single company and not reuse it for others. There may be another option and I’m curious to see if it could replace Law Firms?

Legal Startups

Venture Capitalist are rolling dice in a global casino in search for unicorns, centaurs and sacrificing dinosaurs. I listen to them explain why incumbent businesses will go extinct and be replaced by startups. So I went charting the landscape of legal startups and across databases such as CrunchBase, Kickstarter and Wefunder. I even checked out Dutch crowd funders such as Symbid to see if I could find a category “Legal”. While CrunchBase seems to have the largest database (2,191), it also includes DLA Piper which I hardly consider a startup. So I settle on Angel.co [icon name=”angellist” class=””] and thus began a journey with unexpected turns but rewarding discoveries*.

Numbers

The question which initially fired my legal Producthunt (22) was: Did the 2009 crash or any other event influenced legal startup activity? I’m undecided, but it has been a steady growth of new startups on Angel.co from 2010 (2) through 2014 (337).

[chart id=”1935″]

There are approximately 900+ registered startups and in the last couple of months we’re averaging one startup every day. The most popular month is February (Average: 27) and but if the chart below is any indication, we have a nice streak (July, August, September) ahead of us.

[chart id=”712″]

Note that Angel.co has two categories: Legal  and a newer one: Legal Tech. Startups can register multiple tags so there was overlap between the two categories. In the above chart, both categories are included.

I questioned if this division of tech vs traditional is normal or unique among ‘dinosaurs’ such as finance. It seems the 80/20 rule is more pervasive than we think. [update: June 15, 2015]

[chart id=”1513″][chart id=”1510″]

Since Legal Tech is the freshest category I was curious to see if growth would be more dramatic but it looks too early to judge.

[chart id=”1533″]

Observations

I’ve been reading weekly alerts ever since I registered with Angel.co and here are a couple of observations:

• Compared to other industries, it seems the Legal Startup scene is still in its infancy with 900+
• Specifically, Legal Tech is just 150+ compared to Fin Tech 1500+ and growth seems slow.
• The sheer volume may not be enough to produce unicorns and thus attract high rollers.
• The most popular models seem to be Management (149) and Marketplace (72) e.g. Legalzoom
• I was hoping for more Compliance (40) e.g. Lawbot.co or Access to Justice (20)  startups like Modria. Models which replace not support legal processes.
• This leads me to believe that the majority of legal startups don’t chase markets that can not afford legal services. Not even the ones that can afford, but mainly the ones that benefit from the complexity of legal services.

2/1 What is #Robolaw? @orgoodenough explains: Law = Computation ?? http://t.co/Y76l1hErhq pic.twitter.com/QhGyJW5ewG

— LegaLCompleX (@legalcomplex) June 1, 2015

Back to my initial question: Will startups beat law firms? I did not spot a unicorn…yet. I believe the numbers need to go up to attract more Bondrew’s and investments. I wish the legal startup scene would stop chasing its tail and finds its tennis ball.  That’s why I applaud any initiatives that stir passion and reignite the practice of law.  So while I’m certain disruption is imminent, it may not go as fast.

*This was a labor of love over the last 4 months. Along the way, I learned to use API’s, understand JSON and even getting JSON feeds into Google Spreadsheet. But my proudest achievement was born out of a simple desire to display the numbers above in interactive charts [icon name=”bar-chart” class=””]. I thought I could only do that by controlling the platform so I needed to build my own site.  I was probably wrong to think I could not do it any other way, but I’m glad I was [icon name=”child” class=””].