This started here, if you want the TLDR:
It’s been a crazy month for legaltech, with a number of big and well funded players, like Atrium and UpCounsel bowing out or pivoting to a new narrative, with rumblings of more to come. Right now everyone is focused on the efforts that didn’t work, but also recall that before this wave, Clio raised a $250 Million Series D after 11 years of operation. Naturally, all of these headlines come with a rush of hot takes, “legaltech is dead” and “legaltech is saturated” among them. They’re all right, and they’re all wrong, because technology is weird and paradigm shifts are hard.
First, some context: Clio started in 2008, UpCounsel in 2012, Atrium in 2017. We started Juris in 2018, but I’ve been watching from other sectors of tech since 2004. I went to law school in 2013 solely to have the time and academic space to look at what’s happening here, and I started Juris to get building. We’re talking about it because we believe the only way to solve the real problems is collaboration, so everyone should understand the playing field we’re seeing.
Next, I’m not here to talk about the market size, that’s stupid, the market is insanely huge. It’s even bigger than the “$250 Million Opportunity” about which I believe Jack Newton is right on. Clio is still just selling software to lawyers, who in turn help people. Clio is successful because of their focus on this fact of life as a lawyer: you are supposed to be there to help people. But Clio’s customers are still essentially, businesses: lawyers and law firms.
Juris is here to ask: “What happens if we go directly to the people?”
But that demand tho?
Okay, fine, we’ll talk about market size a little, but only because the market is made up of people. The opportunity Clio talks about exists because there is demand for help from lawyers. Lawyers want to build businesses by providing that help, and there is a $250 Million opportunity in giving them the tools to thrive. But, right now, in the United States, 78% of people are unable to access these services, that’s ~200 Million Americans. You don’t need a degree in statistics to see that a gap this wide isn’t simply the result of inefficient lawyers.
Of course, this is what each of these companies, Juris included, talks about up and down as we try to raise money to keep plugging. “This is not a saturated market.” But of course I would say that. So, why is Clio cruising while others are shut down? Because the “technology for lawyers” market is pretty packed. But the “helping people” market is wide open. Clio has kept their eye on that ball, and used it to capture the market for tools for lawyers.
Meeting the demand that is left in the “helping people” market is going to take a drastically new solution. The answer is not going to look much like “lawyering up.” It’s going to look weird. This is why paradigm shifts are hard.
Build products not services.
The market we’re talking about here is literally called “legal services.” It’s a “service” market model. You provide a service, I pay you for your time. Sometimes this is a flat fee, sometimes this is per hour. Supply and demand determine pricing. Lawyers tend to charge per hour, and they tend to be expensive. This is fair. It takes a lot of time and money just to become a lawyer.
When we think “product” we tend to think more of consumables. Stuff you can get off the shelf in a store somewhere. Because of digital tools these worlds are merging. You can product-ify weird things. And the arc of technology merged with capitalism seems to bend toward making more and more things into products, and toward making those products as cheap as possible.
Understanding this distinction is key to navigating the shift that is afoot, especially if we care at all about filling the “access to justice” gap. There are a lot of things that used to be services, and they are being turned into products. This is happening because people want and need them, and because that’s how you make them cheap enough that everyone can get them. Turn them into commodities. Not everyone in the US can get access to a lawyer in the current system, but most people can get access to shoes.
If we ever want to fill that ~200 Million person gap, we have to think about products, not services. The good news is this: the product that lawyers provide is knowledge. And if there’s one thing tech has proven, from cave paintings to books to Wikipedia, it is the fact that it is really good at turning knowledge into products.
And Wikipedia is a really good place to start if we want to look at this even deeper, because it will help us see why billable hours can’t come along for this ride.
Billable hours don’t scale.
Wikipedia is free, and it is the greatest reference library ever created, serving up 18 billion page views a month. Wikipedia doesn’t sell ads. They collect $91 Million a year in contributions to support the project. So, that’s it, the race to the bottom is already lost when it comes to charging for knowledge. Free to the people, supported by the few. But, Wikipedia is pretty broad knowledge, and so what we end up with is a spectrum of products, and price points when it comes to digitally provided knowledge. Wikipedia is just details about stuff, but there are tools like WikiHow. It’s a different thing, to be sure, but it is a knowledge repository about how to do stuff. They do sell ads, and so they make money, but on some level this also means that the race to the bottom on knowing how to do stuff is also already lost.
It’s totally fair if you’re just sorta confused at this point. The things we are talking about are new tools that live between “product” and “service”. We call them “knowledge products.” AI people call them “expert layers.” Knowledge products behave differently, so you get things like Wikipedia. But they are products nonetheless. They will trend toward commodity pricing, and sometimes that means $0.
But don’t fret, the scale builds from $0, and you start to have knowledge products that actually make money that isn’t from donations. Tools like Stack Overflow, where programmers go when they need help with code, hosts the answers to 18 million questions. And they’re good answers, ask any programmer. There, knowledgeable professionals are helping other people with very technical answers, providing explanations that might take hours to type. This volume of output wasn’t reached by billing by the hour. That just doesn’t scale.
So we think legal knowledge products are not going to look like billable hours. To start to think about what they might look like, I want to talk about shoes.
Direct to consumer, or “how shoes are kinda like lawyers.”
In the business world we call stuff being sold directly to people “direct to consumer.” It’s not a new thing, but the Internet is allowing it to take hold at massive scale. Before the web, we had to go to stores to get stuff, or we had to order it from a catalogue. Stores still exist, but anything we’d rather not shop for, we get online, probably from Amazon.
Shoes being sold at “direct to consumer” scale is revolutionary, both for upstarts like Allbirds, and incumbents like Nike. And I like to start from shoes because it’s easy to imagine how a mechanical manufacturing process works, and how it ramps up to millions of shoes flying all around the planet all day. The US footwear market is a ~$15 Billion industry. Even when they were just using stores they were doing great, and with DTC sales the market only grows. It’s big money to scale manufacturing and delivery.
I also like to start with shoes because that’s probably about what a lawyer should cost. By which I mean, that’s probably about what legal help should cost. First, the demand is visceral. Shoes are a big deal if you want to exist in the modern world, and, you know, go in a 7-Eleven. You probably have some pairs you like, you use them regularly until you discard them, occasionally you have to replace a pair. You’d rather they didn’t wear out, but they do. That’s probably the cycle.
Let’s look at how legal help lines up. The demand is pretty visceral. We’re literally fighting with another party, and the law is involved. We’d rather not need it, but we do. And ideally the solutions last forever. Dispute resolved. Decision made. Contract prepared. Whatever. But, they don’t last forever, new disputes arise, because that’s how the world works. And those disputes pop up, what, a few times a year for a non-business owner?
So, maybe we’re shoes. The average price of a pair of sneakers in the US is $58. The average expenditure on shoes in the US is ~$375 per person, per year. We think this is kind of a reasonable average price point for a whole swath of stuff currently handled by lawyers, from which you could get, on average, no more than 1.5 hours of work from for that same ~$375.
If the plan to commoditize and scale legal services is going to work, we think it is going to take direct to consumer knowledge products, that probably cost about the same as shoes. Some will be nice and expensive, some will be cheap and reliable, some will be clown shoes. They are going to look weird to lawyers. Things like chatbots, and A.I. facilitated negotiation. But, they are going to scale, and they are going to unlock an insanely large market, and help hundreds of millions of people.
Want to see what I’m talking about? Check out Juris DepositLetter. It’s like shoes, but built to get security deposits back from landlords who are wrongfully withholding them from former tenants. It’s affordable, it works, and you’ll probably only need it every couple of years.