A Digital Flywheel for Solos and Small Law Firms: A Cautionary Tale
In 2009, I started a company called DirectLaw.com, that provided client-centered technologies to solos and small law firms.
Full Disclosure: the company still exists today but I sold my interest in 2017.
At about the same time other other cloud-based practice management companies started up, such as Clio, RocketMatter, and MyCase that targeted the automation of the back-office operations of the law firms such as matter and client management, calendaring, timekeeping, invoicing, and accounting. Many of these companies evolved and are successful today by several different measures..
DirectLaw was created to provide client-facing technologies that would complement these back-office applications, and we made sure to integrate DirectLaw with these practice management solutions.
I thought that DirectLaw was going to be the sweet spot because it would facilitate the online delivery of legal services and provide tools to solos and small law firms to enable them to compete against then-emerging companies like LegalZoom. We envisioned creating new streams of revenue for these law firms based on acquisition of clients who were looking for an online experience.
At the time, I believed that what solos and small law firms needed were more clients, and a client-centered approach would be attractive to law firms seeking to provide legal services online. By providing a cloud architecture at a low cost we could enable a solo or small law firm to offer a secure client portal where client-facing unbundled legal services, powered by a web-enabled document automation application, would result in affordable legal services.
These client-facing technologies would make possible the delivery of reasonably priced fixed-fee legal services online could result in expanding the market for legal services.
Initially, the concept was successful. Even though cloud computing for law firms was a new thing in 2009 several hundred law firms quickly subscribed to our service. I had visions of thousands of law firms subscribing to DirectLaw. I was naive.
My vision was not to be, as we soon discovered that almost all of law firm subscribers expected to get rich quick by just announcing on their website that they had this new online capability. After a time, many of these subscribers gave up and dropped out.
What was missing for most of our law firm subscribers was the skills and knowledge of how to market their law firms online, how to capture and nurture leads, how to develop an online client base, how to rank high in the search engines, and the other skills necessary for online success. Law firm staffed were not properly trained on how to handle or communicate with online clients.
For client prospects the idea of working with a law firm online was a new one, and we discovered that many were reluctant to go down this path. We were too early. The addressable market was much smaller than we projected.
Ten years later, there is a new cohort of clients that seems to prefer a purely online experience and a new cohort of web-savvy young lawyers who are interested in this approach. DirectLaw’s subscriber base is increasing again.
A "digital "flywheel" describes all the marketing you can do online, which attracts people to your store plus the automation of every system that can be automated. For Starbucks the digital flywheel concept means automating in the cloud the rewards system, the personalization system, the payment system, and the ordering system. Starbucks built a click and mortar experience where the digital flywheel drives customers to its stores, builds loyalties, provides payment solutions, and also manages the production and inventory process within each store.
Open Table does this for independent restaurants, by not only driving traffic to the restaurant but helping the restaurant managing their inventory of seats. For many restaurants Open Table is the operating system that manages the restaurant;s business.
What solos and small law firms need today, is a digital flywheel that not only drives traffic to their web site but also manages the engagement and client process end to end resulting in a memorable client experience that delights. A law firm experience that is seamless, convenient, and affordable will attract new clients and keep them forever.
Companies that serve cloud-based legal application services to large law firms have the luxury of access to capital and the ability to charge high prices for their applications. Solos and small law firms are under-capitalized, and as a result this entire segment of the legal profession operates as tiny business entities without the scale necessary to develop systems for client acquisition and engagement and legal services delivery .
A developing industry of small legal software companies provides tools for lawyers to use in their practice, but what is missing are cloud-based client-centered applications that provide a complete online experience. Client-centered applications enable the client to be a co-producer of legal services which keeps costs down.
The company that can provide this digital flywheel to solos and small law firms will be able to create for itself a long term revenue stream while also expanding the market for legal services to millions of consumers who have concluded that lawyers are too expensive for their needs.
One company that can fill this need for solos and small law firms to acquire client-centered applications is CLIO which has just raised $250 million in venture capital -- perhaps the largest capital raise in the history of the legal technology industry.
CLIO already dominates the cloud-based practice management space and has mastered the automation of a law firm’s back-office functions. It is perfectly positioned to take the take step and automate the front-end of a law practice and the automation of legal services.
The promise of closing the access to justice gap by creating millions of new clients for law firms that now go without legal services because of cost and the other obstacles to buying is a goal worth pursuing.