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Notes From A Legal Binge (Part II)

Legal technology has gone from something that no one cared about to one of the industry's most important sectors -- and the conversation continues to mature.

Last month, I released Part I of my Notes From A Legal Industry Binge, my key takeaways from an October spent attending legal industry events and meeting with insiders and industry leaders. Because my takeaways take about two weeks to form, I found myself putting the final touches on Binge Part I while sitting on the tarmac ready to embark on my November pilgrimage to Park City, Utah, for the NetDocuments annual user conference ndElevate (disclosure: NetDocuments covered my travel costs and put me up in the super-posh Stein Eriksen Lodge). That conference, along with an early December trip to meet with GCs and law firm folks in the tri-state area, turned out to be just as binge-worthy. Binge Part II is best read start to finish, but here are the highlights in order of appearance, just in case you prefer to skip around:

  1. Making the case that 2018 was indeed the year that Biglaw struck back;
  2. A quick rant about the myth of the law firms sales cycles;
  3. A clearer picture of the new alliances between incumbents and contract review technology companies; and
  4. The trends I will be covering in 2019.

2018: The Year Biglaw Struck Back

One of my biggest pet peeves is media prognosticators who love to Skip-Bayless-style remind us that their predictions from 10 months ago came true. So it is with a great sense of both trepidation and irony that I now point to yet another one of my predictions coming true (see e.g., eDiscovery and Contract Review). Earlier this year, I predicted that 2018 would be the year that Biglaw strikes back and begin getting creatively opportunistic with technology. Not only has that absolutely been the case, but recently an author over at Bloomberg Law actually wrote an article entitled, “Biglaw Strikes Back, which highlighted firms like Hogan Lovells and Dentons forming technology and consulting units to stave off the Big Four. To be honest, my prediction wasn’t all that risky — every single industry that has been disrupted by a new challenger ultimately faces the wrath of the incumbents (see e.g., Netflix losing streaming rights to your favorite shows and movies).

But for those keeping score, since my prediction, Reed Smith launched their technology subsidiary Gravity Stack which has already built and licensed several products (disclosure: I advised Gravity Stack on the development of eDiscovery tracking tool Periscope); Keesal Young & Logan launched Keesal Propulsion Labs in partnership with Mitratech; Latham and Clifford Chance invested serious capital into Reynen Court; and Chapman Cutler sold their transaction management software Deal Rooms to NetDocuments — and this is just the beginning. Reed Smith and Chapman Cutler have definitely entered into uncharted waters, but the truth is that law firms have, for years now, had teams internally — Fish & Richardson, Troutman Sanders eMerge, and Cognicion LLC come to mind — that have been building and selling technology, although typically packaged as a value add or a managed service. There is precedent for corporate legal originating products as well. IP docketing tech company Anaqua was actually started by British American Tobacco and Ford Motor Company’s legal departments before it was launched as an independent company.

For those wondering, I’m bullish on Biglaw (and incumbents more broadly) striking back again in 2019.

The Myth of Prolonged Law Firm Sales Cycles

And, while we’re in the topic of law firms, allow me a quick rant.

I’m growing tired of all this talk (and a lot of it comes from startups and Silicon Valley funds) about the dreaded, prolonged law firm sales cycle. The ever more tired trope goes something like this, “Law firms are impossible to sell to because they don’t care about efficiency, but some corporate legal departments do,” or what Jae Um has termed “because lawyers.”  In my conversations with NetDocuments CTO Alvin Tedjamulia and others in the company’s sales and marketing teams, I heard repeatedly that law firms are some of NetDocuments’ best customers and are easier to sell to than corporate legal departments. Know why this is the case? Because law firms really, really need a document management system; DMS is not a nice to have, it’s oxygen. When a law firm — or any organization for that matter — really, really needs something, the sales cycles has this way of magically shortening. Message to 90 percent of startups (even those with some traction): it’s not surprising that law firms take 12 months to decide on your product — what is surprising is that they ever say yes. So, before kvetching “because lawyers,” ask yourself the following question: is your product oxygen or hot cocoa? (End Rant)

Alliances and Exits for Large Scale Contract Review Technology Companies (LSCRTs)

Large-scale contract review technology is a mouthful, not to mention a branding train-wreck, but ANYTHING is better than using the word AI to refer to companies like Kira, Heretik, Diligen, eBrevia, and Luminance (for more ranting against AI, check out the aforementioned Binge Part I). So, until I come up with something catchier, I’ll be using LSCRT because, unlike AI *cringe*, it actually describes what these companies make: technology designed for reviewing a whole mess of agreements. As 2018 comes to a close, more and more LSCRTs are forming strategic alliances with incumbents. At ndElevate, I sat on a panel moderated by Peter Buck in which he and Diligen CEO Laura van Wyngaarden announced the new strategic partnership between NetDocuments and Diligen. Following the panel, Buck told me that, “The goal of the AI marketplace, is to make it easy for CIOs to consume relevant AI solutions from trusted platform companies,” but also noted that “Kira and eBrevia [writer’s note: both available in the NetDocuments marketplace] will need a bit more NetDocuments engineering support to achieve the integration that Diligen delivers.” Diligen is not the only LSCRT forming alliances, and, in fact iManage (NetDocuments’ primary competitor) acquired RAVN in May of 2017. It’s not just DMS either — Heretik has an investment from and is built on top of Relativity (disclosure: Relativity was a 2017 and 2018 ReplyAll sponsor), which has accelerated Heretik’s onboarding of Relativity channel partners.

Quick tangent before I get back to LSCRTs. Earlier this summer, Fastcase CEO Ed Walters told me that Dan Katz is the best speaker in legal tech (and Ed ain’t too shabby himself). So, having never heard Dan, I was excited to attend his talk at ndElevate and then pick his brain over lunch. Not only did Dan and each of his 50,000 slides not disappoint, but I discovered that, in addition to his academic role, he is the also CEO of LexPredict, itself an LSCRT. And, not to be outdone on the alliance front, LexPredict sold to Elevate just days later (next time give me the scoop, Dan!). Elevate is known for assembling a roster of “thought leaders” and Dan fits the bill for sure, but after speaking with Elevate co-founder Pratik Patel, it is clear to me that Elevate wanted their own tool that they could sandbox and configure to their use cases. And then, not to be outdone by the not-to-be-outdoners, just before Christmas, Donnelley Financial Solutions announced that it was acquiring eBrevia for $19,500,000, with performance incentives that could add another $4,000,000 to the purchase price.

So just to summarize, the two biggest document management systems, the biggest eDiscovery platform, an industry leading tech enabled services provider and a publicly traded deal technology platform have created alliances, in some cases involving investments and/or acquisitions, with LSCRTs. There is much more to unpack here, but it is worth noting that Kira is noticeably absent from this list. To be fair, not having alliances is not necessarily a bad thing and, given Kira’s recent valuation, one might even argue it is a good thing. Plus, Kira is used by several service providers — most notably Axiom — who pair Kira with Relativity, IS available in the NetDocuments AI marketplace, and has partnered with Intralinks. But, these are integrations and partnerships, not alliances; and it will be interesting to monitor how the new alliances affect companies like Elevate, Relativity and NetDocuments, who have relationships with Kira.

The Three Legal Industry Trends I Will be Covering in 2019

To be clear, I’m not stating that these are the most important trends or the hottest trends or even the pipingest, reddest, hottest trends — they are simply the trends that I will be covering next year.

  1. Litigation finance and legal capital (for more on “legal capital” see Binge Part I);
  2. Law firms, law departments, and service providers that build and sell technology; and
  3. “Platformization” or “Why becoming the Force.com of legal has become the new holy grail of legal tech.”

If you or your organization are doing something promising in one of these spaces, my email is plastered all over the Internet, so feel free to get in touch. If you enjoyed Binge Part II, you might enjoy the conversations I publish with legal industry insiders; if you’d like, you can drop your email in below and get notified each time a new ReplyAll conversation gets published.


Zach Abramowitz is a former Biglaw associate and currently CEO and co-founder of ReplyAll. You can follow Zach on Twitter (@zachabramowitz) or reach him by email at zach@replyall.me.