The global law firm Gowling WLG has just launched a platform that automates document production for a private placement offering.  The video above does a remarkably good job of explaining how the product (called Smart Raise) works.  Far from scary and technical, the innovation comes across as simple and inviting. Quite an accomplishment in two short minutes.

Gowling WLG is a global law firm that operates in Canada, the UK, Continental Europe, the Middle East, and Asia. Although it doesn’t have a US office, US firms ought to take notice, as the Gowling’s rollout is a good illustration of two trends starting to take hold in the legal ecosystem:

  1. The use of complex technical sales methods that include market preparation activities as part of a long-term strategy;
  2. New pricing models that connect together commodity and bespoke offerings in ways that thin out weak competitors.

Complex Technical Sales

This sounds like an oxymoron, but complex technical sales is about simplification. For example, when a new innovation is launched, prospective clients don’t understand its technical aspects. Thus, they have a reasonable fear of making an expensive mistake.  Closing this knowledge gap is costly, particularly in the B2B space, because it takes time and cognitive effort.  Showing the product in action in often the best way to reduce this load. Cf. Post 008 (explaining how lower complexity and higher trialability and observability increase innovation adoption).

In contrast to the rest of Law Land, Gowling WLG has head start. Its Leader of Innovation Initiatives is Mark Tamminga (pictured right), a long-time partner who pioneered the use of practice automation tools in building the firm’s Recovery Services practice. Through automation efforts that began over a decade ago, Mark and his colleagues built a series of products and services that captured the Canadian market. The practice has become very profitable and highly defensible.

One of the things that Tamminga and his colleagues understand is that you start the sales process by emphasizing simplicity and ease of use rather than technical prowess. This is hard for innovators because it requires extra steps.  The natural tendency is to jump to the most advanced features in an attempt to impress prospective clients. The result is typically confusion. Yet legal entrepreneurs make this mistake over and over again. See Post 008 (discussing how immersion in technical details makes it difficult to see the world through the eyes of the end user).

Finally, a short video can be an extremely effective sales tool because it is asynchronous and puts the viewer in control. If it’s done well, qualified buyers find you.  I first watched the video via a LinkedIn post.  In the year 2017, LinkedIn is a very important “communication channel.”   See Post 008 (discussing knowledge awareness and the adoption decision; discussing how more and better communication channels speed up adoption).

Pricing

Smart Raise reduces the volume of hourly work. It then seemingly compounds the financial hurt by showing the ease of the new process. Skeptical lawyers are bound to ask, “How does this support revenue production?”

The answer is that it probably doesn’t, at least not directly or in the short-term.  Instead, it signals expertise.  If Gowling WLG is smart enough to automate a substantial portion of the private placement offering process, it’s likely they’re experts on the remaining complex issues.  “Perhaps we would give them a call.”  This is a market positioning strategy based on a realistic assessment of where the legal market is headed.  As Susskind has written, “If [cannibalization of legacy offerings] is going to happen, you should be one of the first to the feast.” See Tomorrow’s Lawyers 128 (1st ed. 2013).

What’s next?  See Innovation in Organizations, Part I (015)

modriatylertechEarlier this week, Modria (mentioned in Post 008) was acquired by Tyler Technologies, a publicly traded company that specializes in information management solutions to local governments. See press release.  Tyler Technology is headquartered in Plano, Texas and has 3,800 employees. It’s total 2016 revenues were $776 million. See 2016 Annual Report. Modria’s founders, management team, and employees will all join Tyler Technology.  Per the press release, they will help build out Tyler’s “portfolio of courts and justice solutions, particularly for its Odyssey File & Serve™ solution.”

The sale price of Modria was not disclosed. Although I suspect that Modria netted a decent return for its investors, I think the financial details are a lot less significant than what the acquisition means for the future of state and local courts.

For readers unfamiliar with Modria, here is the essential background. Modria is an online dispute resolution (ODR) company founded by the technologists who created eBay’s and PayPal’s ODR systems.  In these early days, ODR has been targeted at disputes where the amount at stake cannot support attorneys’ fees, court costs, or travel.  A credible, trustworthy, and efficient ODR is valued by customers.  It can also reduce the number and vitriol of negative online reviews. Thus, it is no surprise that merchants are willing to pay a company for an ODR solution (at roughly $4.50 per dispute).

Yet, the acquisition by Tyler Technologies suggests that the solutions that Modria has pioneered is likely to have use cases further up the food chain.  One of the problems that Tyler Technologies is trying to solve for small governments is cost-effective handling of disputes that involve self-represented litigants. Cf. Post 006 (presenting statistics in a National Conference of State Court report where 75% of cases involve a party not represented by a lawyer).

Modria was likely an attractive buy for Tyler Technologies because Modria was already white-labeling a dispute resolution system for property tax appeals for hundreds of municipalities. Through Modria, the municipalities shed the cost of running a tax appeals venue. At the same time, citizens were also happier with the speed and resolution of the appeals, and the municipalities fared better in total tax receipts.  Note that Tyler Technologies has 15,000 local government clients — that is an ideal sales channel for Modria’s ODR products.

In Tomorrow’s Lawyers, Richard asks the question, “Is court a service or a place?” Lawyers conceptualize it as place.  Yet Tyler Technology is likely betting it is a service that can be outsourced.  I believe that is where we are headed.

Update:

Gabrielle Orum Hernández, via LegalTech News, has written an excellent story on the value of the acquisition to Tyler Technologies.

Quoting their chief strategy officer, Bruce Graham:

‘What we expect [following integration of Modria into Tyler’s Guide and File platform] is that if there’s a dispute within [Guide & File]—for example, if they’re filing for divorce, maybe there’s an issue around custody—that’ll actually kick them into Modria. …

‘I had four different chief justices come to me and say, ‘You’ve got to do something about access to justice,’ Graham said, adding that online dispute resolution often topped wish lists for court leaders.

The American Bar Associations’ (ABA) Center on Innovation is also exploring ways to leverage online technology to assist with nationwide small claims needs. ABA president-elect Hilarie Bass previously told Legaltech News that online dispute resolution tools could help courts alleviate some of the strain on clients in small claims cases.

‘Our current system requires individuals to take a day off of work, most likely take a bus or transit system across town for a pretrial conference, at which time if they can’t resolve the issue, they have to come in for a second day,’ Bass said. ‘Why can’t we do that all online?’

On Modria’s company blog, the senior management writes, “We are incredibly excited about merging Modria’s cutting-edge ODR platform with Tyler’s powerful software for the courts. This combination will create a single system capable of supporting citizens all the way through their justice journey.”

What’s next?  See World Class Innovation and Efficiency, Billed by the Hour (010)