No man is an island; neither is any corporate person.
If your intention is to build a high-revenue legal technology software company, which it should be — if it’s not, just go farm beets, or something — you’re gonna need help. You’ll need internal help (cofounders, employees), but, you’ll also need external help. You’ll need people outside of your organization to become invested in your mission as well. There will be a number of people who will be involved in the forward movement of your software company, some formally, most informally; but, you can nevertheless be sure that they’ll all be motivated by the same thing: straight cash, homie. People want to gets paid. It’s why they become involved in business in the first place.
So, when you’re looking for any kind of partnership arrangement, just follow the money. And this includes industry partnerships that you develop. Maybe there is a company that will pay you to develop a white-labeled version of your product for them. Maybe you enter into a revenue share arrangement instead. Perhaps it’s a reseller agreement. Perhaps it’s an integration partnership. There might even be a combination of revenue models I haven’t even thought of. In either direction, a business partnership has to make financial sense, in the legal industry just like any others.
When you look for vendor partnerships, there are certain factors you should consider, in addition to the main question of whether it makes sense for both parties financially:
Does the other company do something you don’t? If you’ve built a document automation company, you’re not going to work with another document automation company. You ARE the document automation company. Maybe you merge, maybe you get bought out – but you don’t work with your competitors otherwise. Aside from that obvious notion, there are certainly shades of features for software products, and the challenge is more about figuring out whether you are indirectly competitive. For example, in terms of law firm client intake: Is your virtual receptionist service competitive with your intake form provider, or can the two processes be reconciled (including potentially resulting in subscriptions for both products for a single law firm)? Figuring out whether somebody’s gonna helps you buy your lunch or whether somebody’s gonna eat your lunch might not be as easy as you presume. And, especially if you are a new entrant to the legal market, it may take you some time to determine who the players are, and who the players aren’t.
Does the other company actually have traction? It’s also difficult to figure out, sometimes, just how viable your potential partner is. No one is stamping their financials or usership numbers across their foreheads, and blustering is a common trait among entrepreneurs, in part because it’s a necessary skill of the genre. Not that you need to be a Svengali – but you should have some sense of how much traction your potential partner has in the market, because it will help you to determine how much effort you should put into managing the relationship and also how much revenue you can reasonably expect from an arrangement.
Does the other company even want to work with you? There are several factors in place that could make a relationship with an industry partner difficult or impossible. And you should be aware of those potential issues before embarking on this course. With respect to working with another software company, you should inquire as to whether that software company regularly works with other software companies, whether they commit to integration partnerships at all, or only on an irregular basis with strict requirements for doing so. Also, keep in mind that just because you see a fit, that might not be a mutual vision. Maybe your potential partner doesn’t have the same understanding about how your software could work with theirs. If you’re looking a potential reseller, it may be that their vision for sales does not align with your own. Fit is not a given and even plans with tremendous potential don’t always come to fruition. Lastly, as a start-up, you’ve continually got to prove yourself. Most startups fail, and no one (not even you) truly knows whether you’ll be around in six months. So, a potential partner taking the (legitimate) position that you’re too much of a risk to take on is a fact of business life for startups.
As a new business, the world is very much your oyster; but, paring down opportunities into viable partnerships is one of the hardest tasks you might not have expected to have.
