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The LegalTech Fund industry briefing April 2020

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A few thoughts from The LegalTech Fund on the changing legal tech world. These were pulled from a few closed-door briefing sessions. These are for informational purposes only.

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The LegalTech Fund industry briefing April 2020

  1. 1. CONFIDENTIAL APRIL 2020 Briefing
  2. 2. CONFIDENTIAL THE LEGALTECH FUND "There are decades where nothing happens, and weeks where decades happen." – TYLER COWEN, AMERICAN ECONOMIST
  3. 3. CONFIDENTIAL legaltech.com The New Normal 1
  4. 4. CONFIDENTIAL legaltech.com Theme: Accelerating to the future ● Everything moves online ● Interactions with the law go digital ● Work from home is here to stay ● Business moves to devices ● From W2 to 1099 ● Software & structured data disrupt law ● GCs tighten budgets and turn to software ● Policy changes bring new innovation ● Freemium will drive adoption in legal ● Great experience drives customer growth ● Change is coming to legal services and creating the court of the future
  5. 5. CONFIDENTIAL legaltech.com 60% of organizations significantly increasing their use of virtual classroom training because of the COVID-19 coronavirus pandemic. In-person trainings are canceled Sources: Institute for Corporate Productivity (i4cp), Chief Learning Officer
  6. 6. CONFIDENTIAL legaltech.com Education 65% of parents worried about children falling behind as schools go online Worldwide university closures impact 1.57 billion students Massachusetts may offer bar exam online Learning is changing and moving online Sources: App Annie, EdTrust, MarketWatch, WeForum WEEKLY iOS / ANDROID USERS
  7. 7. CONFIDENTIAL legaltech.com +50X Work 📈 20X+ demand for online meeting software and similar services Work has become a series of video calls Sources: App Annie, Legaler, MarketWatch +200% +50% GLOBAL DAILY USERS 1/13 3/20 4/20 UNIQUE LAW FIRM SIGN UPS
  8. 8. CONFIDENTIAL legaltech.com Online delivery of home goods 7X growth in downloads Ordering food has become an on-demand service Sources: App Annie NEW USERS AND APP DOWNLOADS 8,000,000 6,000,000 4,000,000 2,000,000 800,000 200,000 4/19 4/20 600,000 400,000
  9. 9. CONFIDENTIAL legaltech.com 70%+ traffic growth to online notaries in March as consumers seek online alternatives Interactactions with the law move online too Sources: SimilarWeb, Google U.S. TRAFFIC GROWTH +400% +71% 2/20 3/20 200k 100k +76% 110,000 190,000
  10. 10. CONFIDENTIAL legaltech.com 125% increase in mediation and coaching sessions 90% of sessions are Corona-related co parenting issues Responded to crisis by building network of retired judges to offer free remote mediation to families with Corona-related co parenting issues Family mediation has become digitally-enabled Sources: Company provided information
  11. 11. CONFIDENTIAL legaltech.com 74% of companies Will have > 5% of workforce remain permanently remote - Gartner, April, 2020 Work from Home is here to stay Sources: Gartner, Northeastern University, Privva Up to 19 times REMOTE / TELEWORK LEGAL APPLICATIONS LAW FIRMS (BY CLIENTS) SMART DEVICES TURNED ON ACCIDENTALLY PER DAY +600% +37% SECURITY REVIEWS RELATED TO LAW FIRMS: JAN FEB vs. MAR APR
  12. 12. CONFIDENTIAL legaltech.com Legal Software Several companies reporting ⬆ 20%+ in the last 30 days Where attorneys are getting work done Sources: Docusign, Zero TRAFFIC INCREASE IN APRIL + 28% + 22% INCREASE IN PIPELINE ACTIVITY IN MARCH
  13. 13. CONFIDENTIAL legaltech.com Business Apps Gain Share Business Apps represent five of the top twenty apps in April 2020 vs. zero of the top twenty for calendar 2019 And our personal devices are turning into work devices Sources: App Annie TOP BUSINESS APPS IN APRIL
  14. 14. CONFIDENTIAL legaltech.com Moving away from Ages & Stages We are seeing a shift from W2 to 1099 across the economy Education Work Retirement Education Exploration TRADITIONAL MODEL MULTI-STAGE MODEL Traditional employment Self- employment Portfolio of work Retirement Education Sources: MIT Sloan School of Management
  15. 15. CONFIDENTIAL legaltech.com Corporates embrace freelance As freelance population explodes, growing to 90M by 2028 This trend is in its early innings Sources: Intuit, Statista +80% 90M 57M 2017 2028 MAJOR CORPORATIONS INCORPORATING ON-DEMAND TALENT BY 2030 FREELANCE POPULATION GROWTH
  16. 16. CONFIDENTIAL legaltech.com +77% Enables quick pivots based on circumstances And empowers firms to change legal strategies easily Sources: Hire an Esquire March/April revenue relative to 2019 JOB POSTING INCREASES JOB POSTING DATA MARCH / APRIL 2020 20% +40% -30% Bankruptcy Labor & Unemployment Commercial & Corporate
  17. 17. CONFIDENTIAL legaltech.com Legal less affected with hiring down only ~2% in March and up ~4% in April. Legal is faring better than other industries Sources: Vox LEGAL INDUSTRY HIRING IN APRIL
  18. 18. CONFIDENTIAL legaltech.com But software can replace basic lawyering tasks
  19. 19. CONFIDENTIAL legaltech.com “We are saving our clients weeks of time on Co-Tenancy Clauses alone.” – Gabriel Safar, CEO LeasePilot Legal needs in every industry are met with tech solutions Clayton Christensen’s Theory of “Disruptive Innovation” Sources: Harvard Business Review
  20. 20. CONFIDENTIAL legaltech.com “90%of participants said controlling outside counsel costs was a high priority” “...leveraging technology and data enables legal teams to work smarter, to better measure exposure, and to predict where problems might emerge, and this will enable managers to deploy their resources in optimal ways.” 62% of companies Expect cuts to SG&A in the upcoming fiscal year We think shrinking GC budgets = ⬆ reliance on tech Sources: Gartner, Thomson Reuters 1 out of 4 CFOs plan to cut legal spend by 10%+ in 2020
  21. 21. CONFIDENTIAL legaltech.com Move to cloud Nearly 9 out of 10 IT professionals anticipate moving to cloud systems from on-prem. Decreasing budgets = ⬆ cloud usage (vs on-premise) “This is the event that will force any law firms not adapted to remote, universal work to move to the cloud.” – LARRY PORT, ROCKET MATTER Sources: Gartner, INAP
  22. 22. CONFIDENTIAL legaltech.com Including software to shrink outside counsel spend Sources: Company websites Additional scrutiny on outside counsel spend Firms drive down outside legal spend via RFPs
  23. 23. CONFIDENTIAL legaltech.com Policy is also changing...rapidly Sources: CNN, The Washington Post, CNBC, The Baltimore Sun, Axios 39 states + PR have statewide orders urging or mandating virtual hearings.
  24. 24. CONFIDENTIAL legaltech.com Sources: Company websites But policy is leading to new tech companies and products Distance depositions, courts, and more
  25. 25. CONFIDENTIAL legaltech.com “Free” models will quickly get software into the hands of the end users 30% ??% LegalTech ARPU CONVERSION RATES 4.0% 4.1% 0.5% CONVERSION RATES BY FREEMIUM TOOL Sources: Company websites, Dejan Gajsek
  26. 26. CONFIDENTIAL legaltech.com Great experiences will keep customers & unit economics that work Sources: Profitwell, Struto CAC PAYBACK MODEL LTV CAC CAC Payback SUCCESSFUL MODEL LTV CAC
  27. 27. CONFIDENTIAL legaltech.com Legal industry #1 in online discussion about change. So we think change is coming Sources: Above the Law, LinkedIn COVID-19 POSTS BY INDUSTRY COVID-19 crisis has “reframed legal services,” and in the course of that, “technology has become a lifeline.” – ROBERT AMBROGI & JOANNA GOODMAN
  28. 28. CONFIDENTIAL legaltech.com Coordinate with multiple agencies Esign pleadings Schedules hearings with text reminders Share critical information Criminal chatbot integration Online court attendance via Efficient case management The courtroom of the future? Total cost < $5k a year Judge Scott Schlegel, 24th Judicial Court Jefferson Parish, State of Louisiana Learn more at Courtonline.us *Not an endorsement of any specific company
  29. 29. CONFIDENTIAL legaltech.com But forget us… check out what the entrepreneurs are saying!
  30. 30. CONFIDENTIAL legaltech.com Thanks! Drop us a line: Legaltech.com/contact

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