Investors sharpen focus on legal services
Avvo plans to expand its domestic presence, take a hard look internationally and broaden its product line. Clio hopes to add to its customer base as well, with overseas expansion definitely on the agenda, while bolstering its mobile presence. Rocket Lawyer has updated all its mobile apps and added mobile-ready functionality across its online platform, as well as an electronic signature service.
All three legal services companies are expanding due to respective eight-figure investments during the past two years that reflect an increasing interest in the legal services market, venture capitalists and legal services firms say.
“On the positive side, legal is a big market,” says Clint Korver, co-founder and partner at Ulu Ventures, as well as chief operating officer at Novo Ed. “From that point of view, it’s an attractive market for investors.” But, he adds, “on the challenging side, there have been very few success stories.”
That’s partly because law firms bill by the hour, which makes selling into them a challenge because “that’s a business model that makes it difficult to purchase technology,” says Korver, who believes the specialized nature of the marketplace also makes venture capitalists leery.
Companies like Avvo and Rocket Lawyer are entering the legal market via the consumer, and then “on the backside, you start attaching lawyers to it,” Korver says. “The consumer area is the easier place to build a business because you don’t have to deal with the purchasing process inside law firms.”
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Avvo, which received $37.5 million from the Coatue Management hedge fund in April, already has 160,000 lawyers who use its marketing platform, 5 million entries in its Q-and-A section and a 99 percent response rate, CEO Mark Britton says. He adds, “We have a number of products that are in production,” although the company is not yet ready to talk publicly about most of them.
Clio, which received $20 million in March from Bessemer Venture Partners, has more than 30,000 customers for its cloud-based practice management system. The company opened an office in Dublin and has gotten “good traction” in Europe and Australia, co-founder and CEO Jack Newton says.
Rocket Lawyer, which has more than 10 million users in all 50 states and the United Kingdom and more than 32,000 transactions per day, received $15 million in May 2013 from an unnamed investor. Among the company’s moves since then is the Attorney Task Board, which organizes and prioritizes attorneys’ workflow in responding to customer questions, says Charley Moore, founder and chairman.
This article originally appeared in the September 2014 issue of the ABA Journal with this headline: “Boom in Interest: Investors sharpen focus on legal services.”
