The Legal Industry’s Latest Disruptor

Jack Newton is the chief executive officer and co-founder of legal cloud computing company Clio. Recently, investors poured $250 million into the company, and observers are interested in how Clio is going to put this money to use. Jack shared how he came to work with lawyers. and where he sees the legal industry headed.

 

 

Micah Buchdahl (MB): How did you become interested in working with lawyers and law firms?

Jack Newton (JN): My co-founder Rian and I have known each other since grade school. Before founding Clio, he was working in the IT department for a large firm in Vancouver, and that’s how we began to discover the technology needs of legal professionals. It was through lunch with a friend at the Law Society of British Columbia that we learned that solo lawyers and small firms were having a hard time. We quickly recognized that legal technology was typically cumbersome, expensive and riddled with operational downtime. The only practice management solutions available were outdated, on-premise products that were costly to purchase and manage—typically requiring extensive hardware and IT support. These problems were especially acute for small firms—who make up 80% of the legal industry and lack the resources to implement these outdated technologies.

MB: Why is the legal industry so ripe for disruption and change?

JN: We see the legal industry as one of the last major industries to be fundamentally transformed by technology. While many are frustrated by this lack of adoption, we see it as a huge opportunity to drive transformation and change in a hugely important profession.

Across many service industries, you see a shift to providing more instant, accessible and client-centered experiences by way of cloud technology. Historically, we first started seeing this trend in many non-essential service-based industries (entertainment, transportation, music), but we are now seeing it take hold in essential service industries not dissimilar to legal (such as banking, medical and insurance).

All of these alternative business models use technology to provide experiences where the consumer is central to the business model, putting them in control and allowing them to engage with the services from the comfort of their home or directly from their phone.

Combine this trend with the fact that 77% of legal problems went without legal aid in 2017, according to the World Justice Project, and we find ourselves in an industry ripe for transformation; clients are primed and ready for change, and there is a market for growth.

Cloud-based technology creates new entry points to legal support, while also allowing lawyers to keep overhead costs and tedious administrative work down. They can then pass the cost savings on to the client and create effortless, faster experiences for them. This then leads to more repeat business, referrals, and positive word of mouth.

MB: How can law firms use technology to grow, better manage their practices and provide better client experience?

JN: Law firms can use technology in a number of ways to grow and better manage their practices, which ultimately creates better client experiences from intake to invoice. For example, automating time-consuming tasks, such as client intake, saves legal professionals time while making the whole experience smoother for new clients. By offering an easy payment solution, such as credit cards, your clients don’t have to look for their checkbook or go to the bank—helping lawyers get paid faster.

Technology can also improve the client experience by easing the type of interactions that lawyers don’t want to spend their time on—things like providing quick status updates on a case, sharing case documents and information, collecting payments, or scheduling a meeting. Simplifying this type of work helps everyone focus more on getting the best possible outcomes for the matters at hand—which is what clients really want.

MB: What could lawyers look at in a new way that would benefit their clients?

JN: Lawyers are often hesitant to think of legal services as a product, and of law firms as businesses. If they did, they’d see a product-market fit issue in the legal industry. It’s an experience-driven world, and clients are demanding better service and effortless experiences from every industry. Consciously or unconsciously, they think of their experience as part and parcel of the product they’re buying. When firms think of clients at the center of their business, and validate solutions against what’s better for the firm AND the client, they’ll be more efficient and get more reviews, referrals, and new clients—turning a flywheel of success that will help their firms succeed in the experience-driven age.

MB: Other than Clio’s innovations, what is the most exciting development you have seen recently in the practice of law?

JN: The recent investments we have seen in legal technology illustrate a market prime for a major transformation. Legal tech set an investment record in 2018 with 713% growth, and now we have secured one of the largest growth-stage investments in legal technology, and the largest in Canadian history. This is so important and exciting because together as an industry we are bridging the gap to legal service and making justice more accessible to all through a belief in and adoption of cloud-based technology.

When we look at the latent legal market—the 77% of issues that went unserved by lawyers, coupled with the fact that the existing spend on legal services is over $300 billion per year in the US alone, it suggests that a multi-hundred-billion dollar opportunity is for the taking. This presents a once-in-a-lifetime opportunity for the companies and law firms that innovate together to tap into that opportunity. The fact that “legal tech” is officially on the radar of VCs and other investors in a big way will help drive more innovation, which will ultimately increase the total market for legal services while increasing access to justice. That’s pretty exciting.

About the Author

Micah Buchdahl is the founder and principal of HTMLawyers, a law marketing consulting firm. He is the associate editor of Law Practice Today and a former chair of the Law Practice Management Section of the ABA. Contact him on Twitter @mbuchdahl.

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