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Startup lawyers in Utah: Innovation comes to the legal industry

Building a business from the ground up is a quintessentially American model, but not one coming to law firms across the country and internationally. Whether the legal industry is, as this article online in Venture Beat claims, “in acute distress” or simply experiencing growing pains, is something that will be determined in the next decade or so. One thing that is clear, however, is that “the cracks in the traditional law firm business model” are making clients and profit scarcer and scarcer, prompting lawyers like Michael Van, an attorney following a recent trend of startup lawyers in Utah, to rethink their business model from the bare bones.

Having been called “inefficient,” and not well known in general for innovation and forward thinking, the legal industry has seen skyrocketing rates for clients represented by private firms, essentially alienating significant portions of their potential client base. On the other hand, public defenders are overworked and not paid enough to see their student loans paid off within a reasonable timeframe. “Storied firms” have been going under, merging and laying off staff and lawyers at “unprecedented rates.”

The response by the industry has been surprisingly innovative given the traditionalist mentality of the profession in general, and startup lawyers in Utah and California are building a different firm model to encourage more efficient and productive practices. The Venture Beat article claims that since 2009, the number of legal startups has catapulted from just 15 listed on a national registry to more than 400 with over 1,000 investors.

Investors interests are piqued by the potential of the legal startup market. Though it’s hard to estimate due to the number of varying segments within law, “The U.S. legal industry is estimated to be worth in excess of $300 billion.” It dwarfs the medical industry in the U.S., sitting at about $127 billion. Technology startups and industry giants who rely heavily on web-based practices are in the vanguard of the changing legal industry, but “startups are attacking every segment of the legal market, including legal research, legal self-help …practice management tools, education, and analytics,” to name a few. And while some of those startups have become stellar in size—from internet-heavy companies like LegalZoom with $200 million in investments—others, like the startup lawyers in Utah, tend to be locally oriented and focused on more efficiently serving clients in their community.

The law firms that are innovating their practices are rejecting the traditional law firm business model, says Van, and like the startup lawyers in Utah, firms are embracing the use of technology to serve clients faster and cheaper. Current obstacles these lawyers and firms encounter tend to fall within governing regulations that prevent non-lawyer ownership and investment in firms. Already “there is work underway to dismantle these regulations,” which would open up investment opportunities for individuals “to think beyond the marble and mahogany.”

Such dismantling has already occurred in places like the U.K. and Australia, whose legal industries are seeing more rapid innovation in comparison to the U.S. When an “industry” can become a “market,” the opportunities for creative innovation skyrocket, ultimately improving service standards for anyone looking for legal counsel. The times, they are a changing.

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