Earlier 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.
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)