PARIS — Technology is changing the way people secure legal services, turning clients into "consumers" by allowing them to bypass traditional law firms. Need help drafting that shareholders agreement? There's an app for that — at just a fraction of the normal cost!
The past few years have seen a boom, in France, of "legal tech startups," companies that like to think of themselves as the "Airbnb of legal services" or the "TripAdvisor of lawyers." And as their numbers grow, so too does the scope of the services they offer.
Together these startups are shaking up the market, carving away at a monopoly long held by traditional attorneys. The companies refuse, for now, to say just how much they're earning. But it seems that in some cases, these platforms are growing by as much as 500% per year, an increase that thrives on the growing demand for legal services and on the paradox between its abundant complexity and the automation of basic legal acts.
But are they reliable? Can an entrepreneur, for example, really trust a website that, for just $150, promises to handle all the paperwork needed to register a new company?
Lawyers in the Paris region typically charge 10 times that amount for the same services. Little wonder, then, that they're calling foul and filing "illegal activity" suits against what they see as "law poachers." Most of time, though, they lose.
Legalstart team at work — Photo: Facebook page
One of the biggest pet peeves for French lawyers is DemanderJustice.com, which handles minor disputes up to 10,000 euros, has 20 employees, and initiated close to 300,000 procedures since its creation in early 2012. And as proof of the interest such initiatives attract, an investment fund put more than $1.5 million into the website last year.
"Legal tech startups are setting up a new approach to legal services," says Blandine Jugé, who wrote a professional thesis on the subject. "They're scaring a profession that refuses to evolve." Jugé says that more than half of small and medium-sized businesses in France don't turn to professionals when they need legal advice. "These sites have filled out a void," she says.
Philippe Wagner, co-founder of a company called Captain Contrat, says his model is about collaborating rather than competing with lawyers. He says that by handling run-of-the-mill things — like tax-exemption documents, accounts approval, recruiting or dismissal paperwork — the startups allow traditional lawyers to focus on more complicated, "value added" assignments.
Captain Contrat raised more than $1 million in the spring, and dreams to become "the digital legal department for small and medium-sized enterprises." Its purpose is to be the middleman between lawyers and companies. "We automate all essential tasks with low added value," he says.
Platforms that connect clients and lawyers often toe a fine line by disguising their work as technical support service. And they don't, they insist, offer "counsel," a mission that is by law limited to lawyers.
Participating lawyers also find themselves in a tricky situation, happy on the one hand for the extra work the platforms provide, but reluctant, for obvious reasons, to offend the legal authorities. Some take issue as well with the TripAdvisor-like grading system used by certain sites. And they lament that the new model "drags prices down."
In the United States, where these services began to appear more than a decade ago, LegalZoom, Rocket Lawyer and LegalMatch are market giants. In California, 25% of new businesses are created via LegalZoom.
These figures are an inspiration to French startups like Legalstart, created by three friends from Harvard. The platform, which offers an automated legal-document-creation service, had its 100,000th client in June. And like its competitors, Legalstart's co-founder and CEO. Timothée Rambaud, insists his company isn't "stealing" clients from the lawyers. He's not entirely wrong. About 90% of Legalstart's clients are companies that would never have set foot in a legal office. The startup just signed a partnership with Uber and manages all things legal for its drivers.
But for now, French companies only have work in France. Only one site, Wonder.Legal, came up with the winning algorithm to be able to write legal documents not only in France, but also in Brazil and Italy. For now, the magic formula remains a secret.
"We sort of act as a public-domain writer, we provide the digital solution that lawyers use to create documents," the company's founder, Jérémie Eskenazi, says.