Nik Reed (left) and Daniel Lewis of Ravel Law.
Nik Reed (left) and Daniel Lewis of Ravel Law. (Photo by Eric Millette)

Few segments of the legal industry are poised for disruption quite like research—a market long dominated by Thomson Reuters Corporation’s Westlaw and Reed Elsevier Group plc’s LexisNexis. Even though Lexis and Westlaw bills can run into the millions of dollars at large law firms, the big two have had few viable down-market challengers. The barriers to entry in the field are high. New companies serving the legal sector have to be prepared for a market that changes incrementally and expects comprehensiveness and quality, says David Perla, a venture capitalist at 1991 Ventures. “More than any other profession, lawyers can’t be wrong,” he says.

The challenges of developing a new research product haven’t kept out all newcomers, though. One company that’s anted up is Fastcase, a legal research service that since 1999 has built a web-based library of primary legal materials: state and federal statutes and cases. Founders Ed Walters and Phil Rosenthal came up with the idea when they were associates at Covington & Burling in the late 1990s. A Fortune 5 client asked them to find which cases were available for free on the Internet. “‘We don’t pay to put the books on your shelves,’ Walters recalls the client saying. “‘That’s your overhead. Why are we paying for Lexis and Westlaw?’” (The sentiment is even stronger today: According to the The American Lawyer’s most recent Law Librarian Survey, 72 percent of respondents said this year they’re recouping fewer online research costs than they were a year earlier ["Beyond Recovery," July 2014].

Even at that time, the amount of material publicly and freely available surprised Walters and Rosenthal. The pair left the firm to create a new resource stripped of the secondary material—legal treatises, law review articles, and editorial content—that contribute to the cost of Lexis and Westlaw.

Since Fastcase’s foundincoincided with the dot-com crash, it took time to find funding. But since its product launched in 2003, Fastcase has expanded from serving fewer than 1,000 users to more than 800,000. The vast majority—nearly 500,000—have signed on since late 2007.

Although the service costs $995 per year for an individual subscriber, most Fastcase users gain access via state bar associations. Twenty-eight state bars offer Fastcase access as part of membership. But with a quarter of Am Law 100 firms now using Fastcase, large law firms are the company’s fastest growing market segment.

“The mortgage crisis was really a catalyst for the biggest firms in the country to change their approach to research,” Walters says.

Scott Bailey, the director of research services at Squire Patton Boggs, says that legacy firm Squire Sanders has used Fastcase for about two years. The firm’s research staff has access, as well as the pro bono practice headed up by of counsel George Kendall.

“If you’re really just looking at case law, there’s no reason not to use Fastcase primarily,” Bailey says. “Having Fastcase as an alternative helps the firm’s bottom line. More importantly it helps the bottom line of our clients.”

Disrupters aren’t immune from disruption, though. Fastcase has upstart competition of its own. Ravel Law, a legal research startup founded by Stanford Law School graduates Daniel Lewis and Nik Reed, raised $8.1 million in venture capital funding in February.

Both Ravel Law founders spent a summer working as an associate in tech-focused law firms: Lewis at Cooley and Reed at Gunderson Dettmer Stough Villeneuve Franklin & Hachigian. But rather than practice law, the pair opted to found a startup focused on serving the legal market. They developed the first version of Ravel Law (pronounced RAV-ul, meant to suggest the detangling of law) as part of the Launchpad course at Stanford’s Institute of Design, a multidisciplinary class meant to help students pursuing ideas for startup businesses. (Notable alumni include the founders of the Pulse newsreader app which was purchased by LinkedIn for about $90 million in stock and case in April 2013.)

Lewis was surprised during his summer at Cooley to see that the legal research tools he had at his disposal were similar to those he remembered seeing in his dad’s law office decades earlier. What Ravel’s 14-person team has built is essentially a visual version of a legal search engine.

After plugging in keywords, a user is presented with a visual representation of 75 cases that Ravel Law’s algorithm finds most relevant. Those cases are represented by circles plotted along a timeline, with larger circles representing the cases cited most often. Citations are represented by lines connecting circles, with the thickness of the lines indicating the depth of each citation. Scrolling over the circles allows the user to bring up the text of an individual case. Once a case’s page is open, a sidebar shows text from citing cases.

Individual Ravel Law subscriptions are priced around $100 per month. Lewis estimates that lawyers at one-third of Am Law 100 firms are using Ravel.

Robert Taylor, an intellectual property consultant in San Francisco who was previously senior counsel at Arnold & Porter, vetted the service for New Enterprise Associates, one of its primary funders. Taylor says the service could be particularly attractive to the latest generation of associates, who have grown up with computers. “They’re able to use a computer the same way that we used a pencil,” Taylor says. “This is how they think of the world.”