For all the talk of innovation in Silicon Valley, there is one industry that has remained largely untouched by technology. The few entrepreneurs ushering the law into the 21st century say the discipline is on the brink of major disruption.
“We’re all going at it from a different perspective,” said Ari Hershowitz, founder of Tabulaw, a startup that aims to make legal information more accessible to lawyers and the public, starting with the multi-billion dollar tax compliance industry. Hershowitz is one of the few entrepreneurs that are using technology to push the boundaries of legal practice.
“If any of us succeeds, we’re all better off,” he said.
By “we,” Hershowitz is referring to his fellow legal technology trailblazers who contend with a unique set of challenges (old-fashioned regulations, constant push back from their target market, a perpetual lack of funding, etc.) and the general public, who are grossly overpaying for legal services.
“If the lawyer is not spending 50 percent of her time copying and rearranging citations, which a computer can do, she can charge less and take on clients who are less wealthy,” said Hershowitz, a Georgetown-educated attorney.
At Stanford’s Center for Legal Informatics (CodeX), some of the brightest legal and technical minds are taking on the most complex aspects of the justice system. Roland Vogl, executive director and lecturer in law at Stanford University, said he intends to bring the law into the millennial age.
The mission? “Creating legal technology that empowers all parties in the legal system,” he said.
Vogl said he has witnessed a slow growth in startup activity. Code Is Law, run by LawGives co-founder Pieter Gunst, is a CodeX-sponsored meetup of law students and coders who meet every week in the basement of the Stanford Law School to hack legal technology projects.
“Beautiful code is like beautiful law: the simpler the better. Human-computer collaboration is the future, and it will make things better,” said Gunst.
For legal tech entrepreneurs, one major obstacle remains: Barriers to entry are high. To build a legal taxonomy, it’s necessary to have some degree of training. Founders are usually lawyers-turned-coders (Itai Gurari, founder of TraceLaw and chief executive officer of legal startup, Amicus Labs, is an engineering whiz) or they are software engineers with a deep appreciation for the intricacies of the law, like Amicus Labs’ co-founder, Adam Hahn.
Chris Farmer, Venture Partner at General Catalyst Partners, said these technologies are still in the nascent stages. While he sees “enormous potential,” Farmer has yet to encounter a legal startup with a scalable business model. The target market is not prepared to dish out vast sums of money to support new research tools.
Farmer said he has received pitches from about fifteen legal technology startups but has not funded any of them.
“Lawyers are fundamentally risk-averse and do things the way they’ve always been done,” Hershowitz explained. “But the introduction of information technologies that have disrupted other fields are coming to law, and lawyers better prepare for it.”
Consumer-facing legal startups have received the lion’s share of attention from investors. Apoorva Metha, co-founder of LegalReach, which aims to be a LinkedIn for attorneys, said recent shifts in the industry are inviting creating new opportunities for entrepreneurs. Restructuring of the large, conservative, white-shoe law firms and the growth of solo practitioners and small firms has driven lawyers to be more transparent.
This newfound openness inspired three entrepreneurs to create a search engine for comparing the rates of thousands of lawyers. They were slapped with three lawsuits before they even launched. “That’s how we knew we were doing something right,” said Richard Komaiko, product lead for angel-funded startup AttorneyFee.
“Pissing off every lawyer in America isn’t a good way to start any company,” said Komaiko. “But let me be clear. This is a $20 billion industry that tech hasn’t touched yet. If you can increase access to justice and bring down costs, you are helping real Americans with real problems. It’s not about posting pictures to your friends’ news feeds; this is the difference between getting kicked out of your home or not.”
In 2009, the Legal Services Corporation reported that one in five of the legal issues experienced by low-income people are not addressed by a private or legal-aid lawyer.
LawGives, a startup founded by three international lawyers, is developing an online platform to improve legal access for people in need. Co-founder Tony Lai said a new generation of “transformation lawyers” is willing to provide cheap or free services in order to gain experience.
“There is so much need and just so much to gain by working together,” he said.
Lai points to some harrowing statistics released by the Center for American Progress: The average hourly billing rate for attorneys in the U.S. is $284; meanwhile, for every one attorney willing to provide pro-bono legal services, there are 6,415 unopened cases.
Franny Lee, associate director of the CodeX project Stanford Intellectual Property Exchange (SIPX), said lawyers have no reason to fear these changes. A common misconception is that lawyers will eventually be replaced computers. Legal informatics can be used for mundane tasks like information retrieval, she explained, so lawyers’ time can be freed up for pro-bono activities and “higher-level thinking.”
In April, SIPX deployed a new copyright clearance mechanism for students. By automating copyright law processes, the results showed that Stanford students paid between 25 percent to 78 percent less for their course materials. This is just one example of how legal technology can relieve the financial burden for average Americans.
A few standout successes include online legal document services LegalZoom and Rocket Lawyer, which raised $66 million and $18.5 million respectively, to provide citizens with the right documentation to tackle some of the most common legal problems.
The movement is nascent, so don’t expect a drastic reduction in attorney fees anytime soon. LegalZoom has experienced slow growth, and promising upstarts like LegalReach have had to adopt out-of-the-box tactics to build up a critical mass of lawyers.
Visionaries say that in the next decade legal technology will simplify the law, or at least, create more automated processes to provide ordinary people with a better understanding of their rights.
“We’re doing real good in the world,” said Komaiko. “And we’re not afraid to raise a few eyebrows along the way.”
Christina Farr is a Bay Area-based writer with a graduate degree from the Stanford School of Journalism. She covers entrepreneurship, technology, and investment trends. Christina works for, but does not speak for, Eastwick, an agency in Silicon Valley.