Technology

alt.legal: The Legal Innovation Community Is NOT An Echo Chamber?

If it's an echo chamber, it's an awfully big chamber.

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Alex Nwaka (Photo by Sara Jordan Photography)

As we finish another Legalweek, Twitter is abuzz with warnings (many from my friends) to “BEWARE THE LEGALTECH ECHO CHAMBER!” Scary!

In my humble opinion, rumors of the legal tech (or “legal innovation” as I prefer to call it) echo chamber have been greatly exaggerated. Law robots are not coming for our jobs just yet, but innovation is genuinely creeping into everything from legal education, to Biglaw practice, to pro bono/access to justice issues.

Today, let’s define “echo chamber” and provide some evidence, anecdotes and social proof that weighs against applying the (slightly derogatory) phrase to the legal innovation community.

What is an Echo Chamber?

What do people mean when they say “X is an echo chamber”?

Well, Urban Dictionary (obviously the best dictionary for learning what people ACTUALLY MEAN when they say something), defines an echo chamber as:

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an insular communication space where everyone agrees with the information and no outside input is allowed

In other words, it’s a group of similarly-delusional people preaching to the lonely choir of each other. So essentially there are two necessary elements: (1) a community talking back-and-forth to one another (the “echo”), and (2) the “chamber” which prevents new ideas (or new participants) from getting in or getting out.

First let’s concede element one: there is certainly a group of enthusiasts (myself included) that talk to one another (online and IRL) a lot. I mean, even ex-lawyers love talking! So the “echo” is real.

But the “chamber” is a myth. Over the following paragraphs I hope to show that (1) the community is growing faster and faster; (2) the message IS loudly breaching the walls of the so-called-chamber, attracting capital and clients, while changing minds and hearts, and (3) the innovators are going mainstream (i.e., winning).

The Legal Innovation Community Is Growing

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Commentators have gotten around the growing “chamber” element with a neat trick. As the legal innovation community grows (and grows), the blogosphere will just label whomever is in the community at the point of publication, the “echo chamber,” as if it’s a static group.

This reminds me of a funny definition of Artificial Intelligence: AI is whatever computers can’t do yet. Winning in chess? That’s just math, not real intelligence. Driving a car? A bunch of algorithms. Winning at Jeopardy? Just statistical guess work! The definition will continue to creep as AI continues to outperform us lowly humans at more and more complicated, tasks (i.e., until the law robots come for our jobs).

The same definition creep is happening to the “legal innovation community,” creating the illusion of a static echo chamber.

Biglaw? Of course THEY want to innovate! Law is their core business. Corporations? They need to cut costs. Start up accelerators? They are just putting their toe in the water. Silicon Valley VC? They haven’t had a Facebook style win yet. Top law schools? It’s just Stanford . . . and Georgetown . . . and Northwestern.

Over time, I’ve seen more and more formerly traditional legal constituencies and mainstream tech players contribute their insights to the legal innovation conversation. If it’s a chamber, it’s a big and growing one.

To The Victor Goes the Spoils

Next, let’s query America’s ultimate arbiter of everything . . . the free market.

Are the legal innovation enthusiasts speaking into an “echo chamber,” or is the broader world hearing their message loud and clear (and voting with their wallets)?

Well, last year, for the first time ever, legal tech investment hit $1BN dollars. And this isn’t the dumb money. These are the best VCs, the best incubators, and famous non-lawyer entrepreneurs who have proven themselves and could do anything they wanted.

We covered extensively in these pages how Andreessen Horowitz, and other leaders in Silicon Valley put $65M in cash into tech/law firm Atrium. Its CEO, Justin Kan is not a lawyer, but an already wealthy serial entrepreneur. Justin had several successful startups under his belt before launching Atrium, including Twitch, which sold to Amazon for nearly a billion dollars.

Justin is an outsider who never needed to come into the alt.legal world. I asked him for his view on the “echo chamber” and he replied:

Legal innovation started off as mostly ex-lawyer entrepreneurs trying to sell software back into their old firms. But as every large enterprise has ended up building their own internal law firm (at huge operational cost), corporations now have a big vested interest in better legal software to streamline their operations. You’ve seen companies like Kira, Ironclad and Atrium break out into the mainstream, which has resulted in Silicon Valley (and top investors like Andreessen Horowitz, Y Combinator and Sequoia) finally paying attention to the legal tech space.

Justin’s mention of Y Combinator (or YC) is telling. YC is an incubator famous for launching blockbuster companies such as Dropbox, Airbnb, and Reddit.

Today, it is regularly incubating legal tech companies. YC has produced success stories like Ironclad (covered in by alt.legal here), which just raised another massive round, and Upsolve, which is a killer non-profit designed to automate bankruptcy filings for underprivileged people.

Finally, I reached out to Wharton-educated Alex Nwaka. Nwaka is a senior associate at Touchdown Ventures, a unique VC firm that partners with leading corporations to manage their venture capital programs. Nwaka was their first full-time hire, and he focuses primarily on legal tech.

In his view:

As a vertical, legal services has historically adopted technology reluctantly. As a result, this has deprived legal tech of the venture outcomes that attract the best and brightest technologists and entrepreneurs. We see that trend changing.

The participants in what we’d broadly term as “legal innovation” now include Big Law, the Big 4, general counsels and a growing cohort of legal industry outsiders who bring a completely new perspective to legal services. This suggests a more exciting next ten years in legal tech than the last twenty.

As an investor, what I find most interesting are companies and founders that are attacking the structural inefficiencies of the status quo, and that are delivering better products, services and outcomes as a result. When viewed through this lens, I believe that legal has incredible potential.

A non-lawyer investor seeing interest from “a growing cohort of legal industry outsiders” and “incredible potential” in legal innovation brings a huge smile to my face! It also signals strongly that the enthusiasts are being heard.

Finally, I’ll just add that we are seeing investment, new clients and new startups in my sector of the legal industry too: law companies or alternative legal service providers (“ALSP”).

Thomson Reuters, alongside Oxford and Georgetown Law conducted new research into ALSP’s and found that growth was near 13%. Could it be growing faster? Sure, (and projections show that will be the case) but it sure seems that the NEW ideas are outpacing the growth of the traditional ones.

None of this is reflective of an echo chamber to me.

Fine . . . Technologists, Investors, Business People and Traditional Lawyers are In the Game, But is Anyone Winning?

If legal innovation is an echo chamber, then the broader market must not be hearing the message, and the failure rates of alt.legal companies must be insanely high. I mean, if a tree falls in the forest and no one is there to hear it, does it make a sound?

For this article, I took a look back on the articles I’ve written about legal entrepreneurs for the pages of Above the Law over the past 5 years. What I found was that MOST of the companies (and entrepreneurs) I have covered have seen some success (and some had tremendous success).

This clearly isn’t a scientific survey and I will acknowledge that we have yet to see a legal-Uber or legal-Facebook. Still, we are certainly seeing higher-than-average success rates.

A few examples:

Maybe I just have a great eye for high-potential legal companies (hear that Touchdown Ventures?). But, it’s far more likely that the legal world is hearing the messages of these enthusiasts loud and clear! Myth . . . busted.

Joe Borstein Joseph BorsteinJoe Borstein is a Global Director with Thomson Reuters Legal Managed Services, delivering Pangea3 award-winning legal outsourcing services and employing over 1800 full-time legal, compliance, and technology professionals across the globe. He and his co-author Ed Sohn each spent over half a decade as associates in BigLaw and were classmates at Penn Law. (The views expressed in their columns are their own.)

 

 

 

 

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