So, you’ve decided to launch a start-up focused on the legal industry. Congratulations! Now comes the hard part.
In this space — today, and in the coming months — I’ll walk you through the process of developing your company, from the ground up.
The first basic question you should be asking yourself is whether your product is viable. So, here’s a subset of questions, to help you make that decision.
Has Someone Else Already Built Your Solution?
Even though modern legal technology solutions are still far closer to the advent stage than the apogee stage — considering both breadth and market share — there are still a number of areas of the market that remain uncovered. So, your first question should be whether someone else has already created what you want to create. If so, that someone has a ‘first mover’ advantage that is often an essential precursor to subject matter domination. Even if another company is six months ahead of you, the advantage they have in building a brand, building a team and acquiring funding, may be significant. If you start by lagging behind, you may stay there. And, if a direct competitor is far more established than that, the grade of your uphill climb just increased significantly. Now, this is definitely something you should have researched before reading this column. And, if you have a direct competitor, who does the same thing that you do, you’ll have to figure out a significant differentiation point — or maybe go see if you if you can get your old job back?
What is the Competitive Landscape for Your Product or Service?
Of course, it’s more likely that you’ve done your homework, and won’t be entirely surprised by a direct competitor. You’ll likely know what your unique sales proposition is. So, now you need to find out how heavy the competition is in your specific product segment. Don’t flatter yourself — you probably didn’t come up with an entirely new idea. So, find out more about who is doing something similar and how they’re doing it. Let’s say you have created the best case management system ever. Well, I have good news, and I have bad news. I’m glad you love your product. But, you should also know that there are about 3.4 billion case management systems available to lawyers, many with a decade’s head start on yours, and with significant capitalization. If you want to compete in that market, you better be ready to spend — your own, or someone else’s money. If you’ve got fewer direct or indirect competitors, or competitors who are not capitalized, or who do not have viable routes to significant capitalization or who have obvious scaling problems, then by dint of simple math, your opportunity is better.
It may be that you have a direct competitor, but one that focuses on another industry. Even if this is a Goliath to your David, that’s not a dealbreaker, because you can access a first mover advantage for the legal industry, and that is part of your uniqueness. Of course, this is not a free ride. It may be that said Goliath suddenly realizes an opportunity in the legal vertical, and dumps a load of cash all over your best efforts.
Are You Inherently Different from Your Ostensible Competitors?
You may have direct or indirect competitors. And, you may not be deterred. Good for you. Now, ask yourself whether your product or service is inherently different from your competitors’. I’m not talking about a surface response either, like: we do the same thing, but our interface is soooo much better. That doesn’t cut it. Could you disrupt the legal research industry like Fastcase did, by focusing on analytics and cutting traditional related staff costs in a way that Westlaw or Lexis couldn’t or wouldn’t? Could you bring one of the first cloud-based versions of a product to market and build a platform, like Clio has? If you’re establishing a staffing agency, where big players already exist, and where you want to make a big splash, will you embrace the virtual staffing model, as other, more established companies lurch to do so? The question is not what makes you different, the answer is what makes you substantially different.
Do You Know Enough About the Market to Answer the Right Questions?
Market knowledge is important for any company that is settled upon focusing in on a particular industry. Like just about every vertical, legal has its quirks. If you’re entering the legal arena without a specific idea of how lawyers work and how lawyers are sold, you’ll have a significant learning curve in front of you. Law firms tend to be more tech-resistant than a layperson might expect, and they are also more cost-sensitive than the general public believes. Learning that at your peril will be painful. If you know the questions, you’re halfway to passing the test. If you have to figure out the questions, you allow your existing and potential competitors the time and space to catch up and overtake you, even if you acquire a first mover advantage otherwise
Do You Have Advisors with Industry Expertise or Knowledge to Help You Along the Way?
And, here’s the logical extension of that prior issue: If you don’t have industry experience, you need to determine whether you want to learn it on the fly, or whether a better play is to access industry experts — which itself can be managed in a variety of ways: You can add an industry expert to your team. You can add an industry expert as an advisor. You can add an industry expert to your board of directors. You can just ask lawyers, too — attorneys are often willing to help, and they don’t pull punches. If they think your product sucks, they’ll tell you it sucks,
So, generally: endeavor to figure out whether your product sucks, before the market judges that it does.
About the Author
Jared D. Correia, Esq. is the CEO of Red Cave Law Firm Consulting, which provides business management consulting services to law firms and bar associations. Red Cave also advises startup companies and existing companies wishing to reach the legal vertical. Jared is a recognized subject matter expert on law firm management. He is a regular speaker for local, state and national bar associations and lawyers’ organizations and consistently writes for national legal publications, including this column for Above the Law. He prefers James Taylor and was in noticeably better shape before his kids were born.