The U.S. legal market is estimated to be greater than $400 billion annually, of which law firms and in-house legal departments currently account for more than 99 percent. But alternative legal service providers and legal technology companies have been capitalizing on the massive opportunity for growth in the legal industry—both by supporting and supplanting traditional providers. Attorneys have a unique opportunity to join that wave by transitioning from the practice of law to the business of law.
Law is unquestionably a profession: It requires years of study, passing the bar examination, and approval by a state’s bar association. But, ultimately, clients care more about the cost and end result of their brushes with the legal system than they do about the practice of the law. Law too often fails as a business. For large corporations, legal spending is seen as a waste of resources: millions of dollars poured into an opaque, uncertain and inefficient process. Individuals also prefer to avoid the legal system entirely, and, by the time they find they cannot, finding the right legal resource is like throwing darts, with no way to evaluate their options or the budget being proposed.
In the failures of the legal system as a business come opportunities both for young business-minded attorneys and those already advanced in their careers looking for a transition. The business of law needs attorneys willing to rethink and re-imagine legal services across the entire spectrum of clients in order to help the profession of law continue to thrive.
The Alternative Legal Ecosystem
The alternative legal ecosystem can be loosely defined as those businesses and roles that sit outside the traditional provision of legal services by solo practitioners, law firms and in-house counsel. This ranges from pure legal tech innovations to blended alternative legal service providers that leverage technology and human capital. This ecosystem can be broadly categorized into two areas: (1) businesses that increase the efficiency of corporate law firms and in-house legal departments and provide for the more efficient delivery of legal services to their corporate clients; and (2) businesses that provide easier, greater and more cost-effective access to legal services for individuals, small businesses and others who are currently underserved by the legal profession.
Here are a few examples of the range of innovative companies helping to redefine the business of law:
Big Law Business
- Riverview Law: This alternative legal service provider that had been funded by DLA Piper was recently acquired by Ernst & Young. The Big Four have shown a keen interest in the legal market and the acquisition marks the continuation of that trend. Riverview, like other large alternative service providers, including Thomson Reuters’ Pangea3, uses a combination of cutting-edge technology and attorneys, paralegals, project managers and other personnel to manage and run large-scale corporate legal projects such as document review and contract management.
- Ping: Aimed at solving one of the most annoying (but ingrained) aspects of law firm life—timekeeping—and one that can be a drag on a firm’s bottom line if not done timely and correctly, Ping seeks to automate the process of timekeeping through software that monitors an attorney’s activity to generate a time sheet. In a pilot program, one firm using Ping saw a 13 percent revenue increase based on more accurate timekeeping.
- Ironclad: A user-friendly contract management application that aims to simplify the process of contract approval and provide ongoing tracking and management of contracts. The product also integrates with a wide range of other existing applications such as Dropbox, Salesforce and DocuSign.
- Priori Legal: Serves as a matchmaking service to help small- to medium-sized companies find outside counsel to help with specific projects and day-to-day needs. Users submit RFPs and receive a list of potential matches; they can then use the Priori platform to deal with billing and other aspects of the relationship.
Individuals and Small Businesses
- LegalZoom: The behemoth of legal disrupters for the individual and small business market, LegalZoom provides an array of simple legal documents that users can fill out themselves—such as wills, trusts, corporate formation and copyrights—and has been increasingly building out its referral network of attorneys.
- Winit: One of several applications that provides users with an easy method to fight their parking tickets (currently focused solely on New York City).
- Wevorce: An online service that aims to make the process of a divorce more simple and less costly for its users both through providing online tools and professional guidance, as well as referrals to affiliated attorneys.
- Atrium: A full-stack outside law firm for smaller startups that provides legal advice, business operations and engineering expertise to help startup companies address legal and related operational problems. The company leverages its engineering expertise to automate key filings and reduce paperwork.
Why Move Toward the Business of Law?
The best reason for moving into the alternative legal ecosystem is not to run from the practice of law but rather to run toward the desire to help build or create something or help solve a problem. While escaping the unpredictable hours and demands of client service or the adversarial nature of litigation can be valid reasons to consider a job change, ideally an attorney contemplating a move into the alternative legal system should still have an interest in the law, even if practice itself no longer holds an appeal. Without some affinity for the law there is little reason to build a career in the business side of the profession, as opposed to simply changing careers into something more personally fulfilling.
For attorneys seeking a bridge into a business-side role—whether in law or another industry—the business of law can prove ripe for opportunity. Many in the industry’s business side focus their hiring on attorneys because it can be difficult for a nonlawyer to understand and meet the needs of in-house legal departments or law firms and, in turn, help lawyers to meet the needs of their corporate clients. Former attorneys have a significant leg up in working toward the provision of legal services in a more efficient manner. They will understand what has and has not worked and what can be done to improve. Lawyers have a distinct advantage in creating new solutions to enhance the availability of legal services for individuals and small businesses. While nonlawyers may be able to identify areas where legal services are too costly, too difficult, or essentially unavailable, it often will take an attorney with knowledge of the legal system to understand how that gap can be addressed and to help craft a solution.
This does not mean, of course, that nonlawyers should avoid the business of law; to the contrary, perhaps one of the most appealing aspects of the business of law is that an attorney seeking such a transition does not need to work exclusively with attorneys, and that individuals with other types of expertise will have an opportunity to aid in addressing the current shortcomings of the legal profession. But attorneys have a distinct advantage in this area and there is a need for those with legal training to help on the business side.
How to Evaluate a Potential Move
Attorneys, particularly those at Big Law firms, have a wealth of information, such as The American Lawyer law firm rankings and Vault evaluations, to draw on when considering joining a law firm. Law firms typically have a public and lengthy track record. The same likely will not be true for a business in the alternative legal services ecosystem. How, then, to evaluate a potential move?
If you are considering a more established company in the legal services world—for example, a business owned by the Big Four, Thomson Reuters or LexisNexis—there should be ample information to draw on. These businesses likely will have a clearer path in terms of the company’s future plans and the opportunities for growth and advancement of employees, and an attorney interested in joining can discuss the move with current and former employees.
The smaller and newer a company is, however, the more difficult it will be to evaluate. A startup has a limited track record, unclear prospects, and can pivot with little advanced warning. Consider whether you believe that the problem the startup seeks to address is real and that success is a question of execution. One person at a startup can make the difference between success and failure, and you can be the person to execute that idea. Beyond that, the process of evaluation will largely be about whether you like and trust the team in place and whether you believe they are positioned for success, as with most positions. In any startup, longevity is not guaranteed, so consider for yourself and your family the risk/reward profile. Many helpful resources and people in the startup community can also help to evaluate whether a particular startup has promise based on factors such as the track record of its founders, its financial backers and competitors in the space.
Of course, one of the main considerations in deciding whether to leave the practice of law for the business of law will be monetary. There may be an immediate financial hit for those leaving Big Law or other firms that pay market or near-market rates to associates, and pay will likely be less (perhaps significantly less) than one might expect for partnership at these firms. Those venturing to larger, more established companies will find that with increased job security often comes somewhat limited upside, although in a sales role compensation may be more open and dependent on performance.
For those considering a smaller company or startup where equity will be part of the equation, the upside may be more significant and might eclipse the compensation of a law firm partner, but not without a significant amount of risk. Compensation in the business side of law does not need to be a step down from a law firm, and depending on your risk/reward profile can either offer significantly more upside or a better and more predictable lifestyle for a potentially reduced salary.
The views expressed here are personal to the authors and do not represent the opinions of their employers.
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