Dilara Devin explores the growth of legal technology subsidiaries as law firms are developing their own technology to increase efficiency within the legal sector.
Legal tech companies targeting law firms as their main customers has been in the headlines for a few years now. It is no surprise that there has been an upstream of investment within the legal tech industry. However, there seems to be a new, eager rival, slowly making its presence known. Indeed, law firms are slowly entering the realms of building and selling tech products themselves! The aim has been to utilise their tech subsidiaries for their own purposes, providing their clients with technology-driven solutions whilst targeting their clients as potential customers who may want to utilise this tech for themselves within their own in-house legal departments.
Reed Smith launched GravityStack in 2018. In 2019, Wilson Sonsini Goodrich & Rosati launched ‘SixFifty’ and Chicago-based law firm, Actuate Law, launched ‘Quointec’. Perhaps one huge advantage of law firms being so involved lies in Bryon Bratcher, managing director of Gravity Stack’s, statement: “Lawyers can see the trends in the industries in which they work” and that “[they] know [their clients’] business better than a tech company does”. Moreover, GravityStack claims that its products are always initially used by Reed Smith lawyers before being released to clients.
One example in GravityStack’s product list is ‘Diligence’, an AI contract management platform. It maximises contract management efficiency by organising contracts and making them more comprehensive and structured, even before the contract review process begins. It also conducts a clause risk analysis, ultimately aiming to ensure the most favourable deal outcome for clients whilst also filtering out the main issues for lawyers to focus, bypassing the tedious manual review process.
SixFifty has developed a category for pro bono services. Some examples include ‘Hello Landlord’, a free tool which helps tenants write to their landlord and ‘Hello Lender’, another free tool to help with writing to a loan provider. For instance, the letter to the landlord may specify issues such as where a tenant may be struggling financially, thus, unable to pay rent. Meanwhile, the letter to the loan provider may be utilised to defer mortgage payments.
Reed Smith claims that before launching GravityStack, such products were already being built due to specific client demand. Gaps in the industry were being filled. However, clients then became interested in whether these technologies could be licences for their own internal use. In turn, new clients who had not previously engaged in a business relationship with Reed Smith also became interested. Consequently, via GravityStack, clients who had not previously been represented by Reed Smith were targeted.
The key difference perhaps with this business model versus alternative providers is that law firms already have the legal expertise, their law firm reputation and trusted client base at their disposal, not having to start completely from scratch.
Some considerations for the future may include the importance of standardising interfaces and data representation, configuring for different jurisdictions and integrating into existing technologies, such as Office 365, in order to be able to cross-sell these products. Another significant factor, with its inherent risks and opportunities, would be major IT players, such as Microsoft and Apple, entering the legal tech market and taking over the sector.
~ Dilara Devin, The Student Lawyer