Legal technology companies are entering the market at a growing pace. What’s driving this new interest in the legal market?
Legal technology has been around for a long time. But the last three years saw a major uptick in new legal tech companies. While not a perfect storm, several factors are driving this growth. We examine these here in brief.
Follow the Money. The total available market for technology sales to law firms is estimated at $9.4B, with an additional $6.5B available for sales to corporate legal departments. Actual spend is around $3B, less than 20% penetration. 1 That leaves a huge untapped portion of the market for providers with a compelling value proposition.
A Shiny New Object. Technology providers have been targeting financial services for some time, and insurance more recently. While the fintech market is maturing, legal services are still ripe for change and an attractive space for investment. Through the first three quarters of 2017, investors deployed $226M across 74 legal tech deals, a 43% increase over 2016.2
It’s Easier. Cloud hosting, open source software, and social media marketing have made it easier to launch a new tech company. With a credit card, you can now tap into world-class, highly-secure, scalable computing power. A modest investment can now launch the next “killer app”. That could explain why there were nearly 700 legal tech startups by the end of 2017.3
Tech-Enabled Business Models. In response to market demands, new tech-enabled legal service providers are emerging. In 2016, 82% of law firms said “competition from non-traditional service providers” is a permanent change to the legal service market, up from 70% in 2011.4
With all these new products entering the market, where are they landing? Stay tuned for our next installment where we will examine the uptake of legal technology and the applications that are capturing the greatest interest.
About Michael Sauber
Michael Sauber leads the marketing program for Korbitec, producer of Automated Civil Litigation Software (ACL). He has worked with document production technologies and professional services for over 30 years and is a frequent blogger on these topics.
1 Mahoney, Kirk. Legal Tech Market Overview. Catalyst Investors. November 29, 2017.
2 Legal Tech Startup Financings Take Off As Automation Hits White-Collar Industries. CB Insights. October 13, 2017.
3 Ambrogi, Robert. 21 Additions to My List of Legal Startups. LawSites Blog. September 7, 2017.
4 Law Firms in Transition Survey. Altman Weil. 2016.