Future of Law Friday: Is Today’s Legal Technology Solving Yesterday’s Problems?
Click image above -Fast Forward to the 3rd Segment of the episode
Last Friday, the founder of Fixed – an app that enables users to upload and contest a parking ticket, and part of the Tiny Law Revolution appeared on Shark Tank to pitch for investment in his company. Given that most legal tech products are greeted either with knee-jerk naysaying or uncritical rah-rah’ing even for things that can’t turn a profit plain don’t work , I looked forward to feedback from the sharks, savvy investors who put their money where their mouth is when they believe in a product or its investor.
For starters, most of the sharks weren’t particularly impressed by Fixed’s financial business model – something discussed extensively in 2 minutes than I’ve ever seen for most of the legal tech products that have emerged during the past 2 years. As background, Fixed doesn’t charge for its service upfront. Instead, for tickets that Fixed “fixes,” customers pay a success fee – essentially a percentage of what they saved as a result of not having to pay the ticket. But Fixed doesn’t keep that entire amount since once its software detects an error, Fixed has to hire an attorney to contest the ticket. So at the end of the day, Fixed makes about $5-$6 per transaction (this explains why many lawyers don’t handle parking tickets – without huge volume, it’s difficult to turn a profit). At the same time, Fixed spends around $5 to acquire a customer – generally through low-tech measures like putting its flyers on cars. Still, Fixed generated $80,000 in profits over the past year which was enough — along with talk of moving into other areas like speeding tickets — to pique the sharks’ interest and win a $700,000 investment from Mark Cuban.
Fixed offers two interesting insights into the state of today’s legal technology. First, it’s worth noting, that Fixed is an utterly classic example of The Innovator’s Dilemma. Right now, with its focus on parking tickets, Fixed isn’t much of a threat to lawyers because the margins are way too low. Not a big deal now. But as Fixed perfects its error-identifying technology and moves into speeding tickets or even drunk driving cases, it will start to cut into lawyers’ space. Sure, Fixed still needs to hire lawyers to defend customers – but it can negotiate bulk discount rates based on volume.
But the most interesting comment came from venture capitalist Chris Sacca who’s also a lawyer. Sacca declined to invest in Fixed because he viewed it as investing in the past. An early Uber investor, Sacca observed that the market is moving away from car ownership towards ride sharing and driverless cars, which will potentially make the problem of parking and the pain of parking tickets a thing of the past.
Sacca’s comments made me wonder: how much of today’s legal technology is solving yesterday’s problems? Take Willing, a cloud-based product that endeavors to make funeral arrangements and will creation easier, reports Tech Crunch. Naturally, Willing prepares consumer wills at no costs – presumably as a loss leader for other services, including finding a lawyer. But there’s nothing new here. Wills have always been a loss leader for lawyers – and Willing’s product, while elegant, doesn’t address any matters that consumers couldn’t figure out from the hundreds of other free forms and templates online.
Moreover, Willing’s template, like most, doesn’t include a place for users to pass on digital assets — a significant issue given that the majority of today’s population has an online presence on at least one site. A product geared for 21st century problems would be far more beneficial for users than a cookie cutter form. And while it’s still unclear as to how social media platforms and other online accounts would treat requests by users’ heirs or trustees to transfer or close accounts, Willing could leverage its standing in the tech world to put uniform policies in place – much as Uber worked towards changing regulations on ride-sharing. In fact, it’s Uber’s willingness to redefine or change regulations that sets it apart from most of today’s legal tech companies much as they wish to see themselves as Uber descendants: Uber didn’t solve yesterday’s problem – i.e., making it easier to pay for or hail a cab – but it created an entirely new market. All that most of today’s “disruptive” legal tech does is make it faster, cheaper and easier for consumers and lawyers to plod through last century’s legal formalities and entrenching them further, instead of asking whether we really need to have all of these requirements in place at all.
As for Fixed, I suspect that Chris Sacca’s vision of the future remains a long way off – so still lots of profit for Mark Cuban and other investors to squeeze out of the company. Meanwhile, as we evaluate legal tech tools, we ought to ask whether they merely provide new way to comply with outdated requirements, or help create a more cost-effective, efficient and accessible system.