In what well could be the most optimistic article I’ve ever seen about the prospects for growing use of technology in the practice of law, USA Today’s “Tech firms cash in as lawyers plug in” paints a rosy picture for several companies in key legal technology areas.
While the article at times reads like a PR piece for some of the companies mentioned (not a bad thing at all for them), it’s most interesting for some of the statistics it provides:
“That’s a marketing bonanza for tech companies trying to boost revenue after the two-year tech-spending bust. Among law firms and other business service providers, 69% expect to spend more on tech this year than last, vs. 43% of all industries, new IDC research says.
Investors are taking notice. Venture-capital firms pumped $112 million into 11 tech start-ups aimed at the legal industry from 2000 to last year, MoneyTree Survey says.”
I don’t want to throw cold water on this article (I’ll let others do that, if they wish) because I think that anything that gets lawyers moving toward better use of technology is a good thing. However, I will caution any vendors (and VCs) looking longingly at the legal market to be highly careful about accepting the assumptions of this article at face value.
I’ve regularly talked with companies wanting to enter the “legal vertical,” as they commonly refer to it, over the past few years, and they’ll all tell you that I’ve given them a lot of things to think about, especially about the underlying business models and the common assumptions vendors like to make about how lawyers and law firms work. I used to do that for free, but now that I’m on my own, I offer that kind of analysis and advice as a service. Whether you talk to me or someone else, don’t dive into the legal market on the basis of what you might like to conclude from this article.
That said, the article does provide a good update of trends and what is happening. One of the most important trends is mentioned in passing – the reference to LexisNexis buying Applied Discovery. You don’t have to be too sharp of an observer to notice that LexisNexis and WestLaw have been buying up quite a few legal tech/service providers in the last couple of years. Where are they going? In what may one day be looked back on as one of the key milestones of legal tech in the early 21st century, the leaders of Lexis and WestLaw will sketch out their visions of the future in a special joint keynote presentation at ABA TechShow in two weeks in Chicago. There are also many other reasons to attend TechShow and I hope to see you there.