The “Uberisation” of legal services – how technology has been reshaping the legal industry

Although the legal profession has been slow to embrace technology, more and more law firms are now starting to invest in AI, blockchain, and other solutions powered by technology. One of the reasons law firms do this is to gain a competitive advantage over their competition

Martí Manent
Photo: elabogado.com
Martí Manent

Legal practitioners are now using technology more than ever before, and it is clear that the legal sector will look much different five years from now. For instance, there may appear a number of websites and online platforms that will provide legal services in a way similar to Uber. As the topic of the possible “uberisation” of legal services might be interesting to many of us, Almas Serikuly invited to his program entitled “LIFT” (Law, Innovation, Finance, and Technology) as a guest speaker Mr. Martí Manent, one of the Legal Tech gurus.

Mr. Martí Manent is the Founder and CEO of Derecho.com, a Legal Tech company that serves over 300 000 customers; founder and CEO of elAbogado.com, a legal marketplace that helps individuals and businesses find the relevant lawyers; as well as Director of the Legal Bridge to Silicon Valley Executive Program, and Professor at IE Law School, Spain.  During the interview, he discussed the current trends and impact of technology on the legal sector, shared his advice about setting up a successful startup company, and gave his prediction about the future of the legal industry.

Mr. Manent, you are a serial entrepreneur in the LegalTech area who incorporated more than 10 companies and invested in over 10 projects. Would you please tell us what drives you to be an entrepreneur?

- I have been creating and investing in companies for the last 20 years. When I was in high school, I set up my first company. It was not a legal company; it was just a business that I established with one of my partners. After that, I realized that it would be interesting for doing business to know about the law because, at that time, I was thinking about going to a business school. From my point of view, universities cannot teach you anything about doing business; you just do business. However, what I did not know was law and how the rules work in the world. And that is why I decided to study and become a lawyer. After that, I had practiced as a lawyer for two years at Arthur Andersen in Spain. Then I left the company, and I started working on my own at my company Derecho.com. I did not plan to be a serial entrepreneur; it just happened.

As I know, you created your personal website in 1997 and then you were emailed by a foreign government to help with the acquisition in your country. Did you realise at that time that technology would change the way we do business?

- Yes, and it is amazing because here we are talking about things that happened in 1997, the last century. I created my first webpage, and it was in the property of Yahoo that gave its users free space to create their website. So, I created my webpage just saying that I am a lawyer and providing some interesting information about the law and legal resources. Then, I received an email from the government of Kuwait from the Kuwait Investment Office asking me to provide services to them regarding an M&A transaction. I was stunned, and that was amazing for me because I was a student, but they reached me and wanted to make a contract with me. They did not know me, and I had just a computer and a website. At that time, I realized that technology is going to change everything, and the legal services are going to change very quickly.

Almas Serikuly
Almas Serikuly

You set up Derecho.com, the largest legal online service in Spain and one of the most successful LegalTech projects in Europe, that provides services to more than 300 000 customers in Spain, Portugal, and Ireland. Could you please tell us more about this project?

- Based on my experience, I think that it is essential when you are starting a business to test your idea as soon as possible to know if there is anyone on the market who wants your product or service. One of the first mistakes that I made was that we did not conduct market research. In fact, people were asking for another service, not the one we were working hard on. So, we decided to leave the product what we were initially working and to focus on what the market was demanding, and this was the changing point when we started to grow. This is my recommendation to all the entrepreneurs and all the people who want to set up a new business. In short, if you have an idea, you need to check it as soon as possible. If you realize that that it does not work, leave it and try another one. Try to listen to your customers or the users of what they are asking.

Is it true that you did not have a business plan?

- Yes, that is true. I only made once a business plan when we could have a big investor. From my point of view, developing a comprehensive business plan is not a good idea because you do not know what it is going to happen in the future. What I recommend is just to make some numbers, and that is not the business plan. It just gives an idea of how much money you need, how you are going to spend that money, and how you are going to get money from the customers. And you can do that with a simple paper, napkin, spreadsheet, or whatever. Personally, I do not do a business plan or business research. I met a lot of people who told me that they had spent much time preparing a business plan, and after all, they did not have energy or money to start a business. Now, it is mainstream to be an entrepreneur, but the hard thing is to start a business and find the first customer. Some people only plan and do not get out of their comfort zone to face reality.

What is the main challenge LegalTech entrepreneurs currently face? Are they strict regulations, the public’s distrust in technology, low penetration and usage of new technology by people, or something else?

- I see the legal market as an industry, and this industry has some problems. The first one is that the people who work in this industry do not work well with technology because the people in the legal markets have studied laws. They are opposite to a developer. The second thing is that we, lawyers, think that the legal industry is only for lawyers, and that is not true. Nowadays, a lot of businesspeople and entrepreneurs are entering the legal industry and providing services. They are going to gain a large share of the legal market, whereas the lawyers are only going to keep that part of the industry that, for example, is going to trial.

What technologies, in your opinion, are disrupting law firms and the legal profession and how are they doing this?

- When we talk about Legal Tech, there are many different kinds of technology. From my point of view, each of those technologies is impacting procedures in the most radical way. For example, software robots can file claims against the airline companies when there is a delay. So, robots like humans can now fill in the form. That is where the Legal Tech industry has started eating the legal industry's share.

The second part here is a big market. I think the database can be better because if we use technology like deep learning, it can learn and predict things better than a human. However, this market is only for lawyers and not for users. So, when we talk about Legal Tech, there are solutions that are for users, and some of the solutions are only for lawyers. I think that artificial intelligence or deep learning is going to impact the work of lawyers. Another example of technology that is affecting the law is a digital signature. From my point of view, notaries do not add any value. Many jurisdictions have public notaries whom you need to go to legalize some kinds of documents. However, you can do that using the signature with a digital identity, and that is easier, cheaper, and probably more secure. And I think we will see its rapid use soon because many companies, banks, and insurance companies provide the documents or the agreements online with a digital signature. As a result, a lot of lawyers and notaries have started losing their jobs. So, this is one of the areas of the legal industry that technology is impacting.

We know that Uber, the world’s largest taxi company, that owns no cars and Airbnb, the world’s largest accommodation provider, owns no real estate. What is the current situation in the legal services market? Do you expect the “Uberisation” of legal services or is it already happening in some parts of the world?

- Yeah, I think that it is already happening. For example, we own a company that it is called elAbogado ("abogado" means a lawyer in Spanish), and what we do is provide a marketplace of lawyers. If someone needs a lawyer, they go there. We have already managed more than half a million cases in Spain, but this marketplace is not like Uber. What Uber does is decides who is going to be the driver, whereas in our case, the user chooses the lawyer. Then, I believe that in the future, we could provide an easy way to give the solution to the user. For example, if you are looking for a lawyer, and you are a millennial, a person between 20 and 35, probably, you do not want to go to see a lawyer because of the legal issue. What you want to do is to solve the legal problem online through your mobile phone. And here is the space that I think that Legal Tech companies could fill. They, like Uber, will not have lawyers and will provide services. Then, if needed, they will contact lawyers to do the worst part of the business, like going to a trial. That is already happening all around the world, and there are a lot of companies that provide legal services using their software solutions. But in the end, when a lawyer is needed, he or she gets a small piece of the revenue of the business. So, yes, the legal market is going through the "uberisation".

This interview will probably be read or listened to by young entrepreneurs who are interested in Legal Tech. What is your advice to them? What do they need to pay particular attention to?

- My advice to entrepreneurs to start practicing as soon as possible. I recommend reading books like "Lean Startup" or "The hard thing about hard things", those kinds of books that are written by entrepreneurs or people who are very respected in the industry. So, there is a need to get some feedback from a customer as soon as possible to decide whether to continue, to stop the business, or change the product. Nowadays, the important thing that technology allows businesspeople to do is to learn a lot from their users. What I recommend to young entrepreneurs is do not lose time preparing a business plan. So, the important thing is to start a business as soon as possible and start moving. Also, I recommend putting a paper on the well in the office saying, “how many customers have I got today?". Zero? OK, that is a problem. I met many people who told me that they had had a lot of visitors on their website. However, they need customers, not website visitors. Another recommendation is not to invest too much in the first version of the product or service because it will not be perfect. Some years later, entrepreneurs will realize that they had made some kinds of mistakes. There is a well-known development technique called the MVP, which stands for the minimum viable product. So, my tip is to start with the MVP and learn from that.

It is no secret that artificial intelligence, Big Data, blockchain are actively applied in the legal profession. Could you please make a prediction on how the legal market and lawyers will look like in 10 years from now?

- For me, blockchain is a very good technical solution that has already been applied. For example, it is Bitcoin; blockchain can also be used as a registry. So, my prediction is that not in 10 years, but, probably, five years in, we will see a lot of solutions that use blockchain. Another example is Big Data. The good news is that you can store and process a lot of information; the bad news is that we have amazing tools like, for instance, TensorFlow from Google, but we do not know how to use it. And it is very complicated for a lawyer or a person who does not have the technical background to try to understand what artificial intelligence is. I strongly recommend starting to play with artificial intelligence, and it is free - you can use TensorFlow from Google. So, my advice is to start experimenting with technology and taking free online courses. I think we are going to see a lot of decisions made by artificial intelligence. For example, I mentioned that we, at elAbogado.com, managed more than half a million cases online. However, we do not have 500,000 lawyers to serve those people; therefore, we use technology to identify whether it is a civil or criminal case, or it is a fiscal or tax problem. And in 95% of cases, our technology identifies the issue correctly. Then, we try to understand if there is a real legal problem or just a small question. So, back to your question, I strongly believe that surely in five years from now, not in 10 years, we are going to see a lot of solutions based on deep learning and machine learning.

As you are specialising in Legal Tech, I would like to ask you about skills that, from your point of view, lawyers will need to possess in the near future?

- I am a Co-Director of the Master in Legal Tech program at IE Law School, where we spend two weeks in Madrid, two weeks in Silicon Valley at Stanford University, and also two weeks in Israel. What we are trying to understand there is the set of skills that legal industry needs. And the first thing is management. I think that a lawyer must learn management. For instance, when I was at university, I did not have any classes in management. We need to know how to manage a law firm and how to manage a business. That is why I recommend reading a lot of books about management, and the book that I love is "High Output Management” by Andrew Grove, who was the CEO of Intel. I strongly recommend this book if someone wants to champion the startup business. The second thing is to learn about what you can do with technology and do not be afraid. That is one of the crucial skills because it is just a tool, and you need to know how to manage that tool. Now, the lawyers know how to write a document online, and it is very easy. Lawyers need to learn how to use more amazing tools. The third thing is that I think that we need to be more customer-oriented and think about what clients need because I have many colleagues to whom the law is more important. However, nowadays, I believe that the law is just a commodity. You can find the legal solution almost everywhere you want. Now, the difference is not knowing the answer; now, the difference is how you provide the service. From my point of view, the legal solution is becoming a commodity, i.e., people can buy it like water: different bottles but the same substance.

Almas Serikuly

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