A closer Look: Inside the Legal Tech Vertical

I’m always interested in the perspectives – and assumptions – technology vendors bring when they approach the legal tech market. Two recent conferences dealing with legal technology reminded me of some of these odd touchstones. I thought I’d jot some of them down, as a helper for others contemplating technology solutions for lawyers. These summarize the sorts of answers I feel like I give when asked.

Lawyers Aren’t a Thing

First, let’s start with lawyers. We’re pretty individual cusses. On top of that, the vast majority – between 2/3ds and 3/4ths of lawyers in Canada and the United States – are sole practitioners or in small law firms. They are practicing on their own, perhaps with support staff or not, or with a handful of colleagues.

This means that, if you’re selling enterprise technology or even typical SMB business technology, most law firms are at the very smallest end of the “small-medium” business market. Mid size firms tend to be fewer than 100 lawyers and perhaps another 100 support staff (see this Thomson Reuters report that most firms have, at best, 1:1 lawyer/staff ratios). This market segmentation – the big law firms, employing 10% of the profession, who can afford enterprise technology, and the rest, who probably can’t – is just one of the things you should consider in positioning your technology. Your market isn’t 100% of lawyers, no matter what you sell unless, perversely, you’re not in the legal vertical. Microsoft, Fujitsu, Google, and other general business technology vendors have a lot of lawyer consumers, even though their software and hardware aren’t law practice-specific.

Lawyers Aren’t Technophobes

“I can’t believe lawyers aren’t using X”! Really? The best lawyers are using the technologies they need to serve their clients. Whether it’s the cloud, or messaging apps, or keeping technology that seems outdated, lawyers get a bad rap because they are treated as having universal technology attributes.

During one of the two conferences I was attending, there was a 5 minute diatribe on lawyers and fax machines. Like many of the claims around lawyer use of technology, this was unsubstantiated. <sarcasm>If you’re selling into the legal profession, remember that we prefer stories and not data, that there is data in anecdotal</sarcasm>. But why would lawyers STILL use fax machines? Could it be:

  • that some lawyers’ clients still use them;
  • that some other people lawyers interact with use them (courts, vendors);
  • that lots and lots of other business users still participate in the multi-million device fax market;
  • maybe it’s a redundant backup

Let alone that the ability to send and receive faxes doesn’t, in fact, require a fax machine. You could use fax software, locally or over the internet, or a multi-function printer that faxes. If you’re interested in selling technology to lawyers, you should take a look at the ABA’s legal technology survey reports. For one thing, it’s annual, so you can compare some data across more than a decade. Here’s what their 2015 survey said about faxing to clients and non-clients: not a lot of lawyers still regularly use faxes.

Question from the 2015 ABA Legal Technology Survey report on lawyers faxing clients.

Question from the 2015 ABA Legal Technology Survey report on lawyers faxing non-clients.

The thing about faxes is that having a technology doesn’t mean that lawyers have it exclusively. Just because lawyers use the cloud, for example, doesn’t mean they are only either 100% in it or 100% out of it. That’s not the way it works for most businesses and it’s not the way it works for all lawyers.

So perhaps faxmageddon isn’t a real thing. I think technology vendors who are interested in selling to lawyers need to understand that lawyers will use technology that helps them to practice. If they don’t use yours, maybe it’s your product.

Look for the need. In-house counsel can have different needs and expectations than standalone law firms. I once heard a general counsel exclaim in surprise that no-one else in the room used e-mail encryption. But no-one else in the room had end-to-end communications with their clients, and so encryption is a far more difficult option, using e-mail, for them. While many lawyers are involved with business-to-business work, and perhaps can assume a higher degree of technology savvy, supporting individuals with personal problems means working with people who have a variety, and dearth, of technology.

Don’t Ask the Regulators

Lawyers are professionals and are regulated. There are 50+ U.S. bar associations (some states have more than one) and 14 Canadian regulators. The American Bar Association is a membership association, not a regulator. So although what they do impacts the professional rules state bars adopt, the ABA itself isn’t where the rubber hits the road.

Most of the professional rules in North America do not specifically discuss technology. If you are hoping that your product will gain traction because of some mandatory requirement – encryption is the one I hear about the most – you are barking up the wrong tree. As with everything else in the profession, each lawyer or law firm will have different requirements, including:

  • having clients that prohibit storage of data outside of the law firm’s country;
  • having corporate concerns about transmitting data across borders, as well as storing it elsewhere;
  • having corporate concerns about maintaining ethical walls to keep internal users, lawyers and staff, from accessing information they shouldn’t

There’s no question that the modern lawyer uses technology heavily, and that using it can help comply with professional obligations. But your technology will need to align with a need, rather than some specification. Firms focused on ISO 27001, Sarbanes Oxley, HIPAA or FIPPA or any other sort of acronym, are doing it for purposes related to their clients. You may have something that helps those firms, but that isn’t going to be a profession-wide need.

Don’t Just Read the Press

A few years ago, when I wrote about practicing law in the cloud, that was the big thing. Not any more. You’ll see people swooing over artificial intelligence now. It’s actually a really good example that, if we want to discuss how technology will impact (a) large law firms and, particularly, (b) those dealing with documents and contracts, you’d do well to read the AI legal press. For the rest of the profession? Not so much.

There is technology – and I think AI is one of them – that will impact most lawyers from the outside in. It’s not technology they will be using in their own practices, unlike the cloud. Those technologies will be used by those outside the legal profession (although they may be providing legal services, if you can wrap your head around our lack of definition of what that means) and will almost certainly impact what a lawyer does and who a lawyer serves. As Frankie “Four Fingers” says, just because it’s written, doesn’t make it so.

We Don’t Have a Lot of Data

But the legal vertical is a business vertical, and underneath it all, there are over a million lawyers in North America who are either running their own or part of a larger business. They have a document-centric, communication-dependent, time-driven work life. We don’t really know how many are entirely litigators and how many never step foot in a courtroom, so called transactional lawyers.

Other than surveys from the ABA or the International Legal Technology Association, it can be tough to drill down to figure out who your market is. If you’ve got a product that is already successful in another vertical, it may work in the legal vertical as well. But it will require some solid footwork to determine whether the assumptions you have about your product and the legal profession are actually verifiable in any way.

Do the research, though. Lawyers do use technology, they use it just like other business people (including Microsoft Office), and their needs aren’t dramatic. If there’s a technology wave, I would expect most lawyers to be riding safely behind the crest with the rest of the business world. They’re no better or worse at investing in new technology, patching and upgrading current technology, and dropping technology that is really past its usefulness.

This article was also published on LinkedIn by David Whelan and is re-published here with the permission of the author. The information and views set out in this article are those of the author alone.