by Dr. Lance B. Eliot
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Key briefing points about this article:
- Many attorneys harbor a dream to do a startup business based on a LegalTech idea they have
- An entrepreneurial-minded lawyer needs to think ahead and prepare for the rough journey
- The good news is that the VC/PE funding for LegalTech startups still seems to be doing well
- The “bad news” is that there are lots of LegalTech flops and failures, so be forewarned
- Abide by the included list of 20 key factors for your startup and you’ll have a better chance
Many lawyers harken to startup their own business that would bring the next legal-world shattering latest-and-greatest LegalTech product to the marketplace.
Many software developers have a likewise ambition.
Oftentimes, those entrepreneurial lawyers seeking such a quest are not especially tech-savvy, but they do know the legal arena and believe they also know what attorneys need or want. As such, they hope to leverage or exploit their legal domain knowledge by getting underway with a new startup to craft the LegalTech software they envision, though whether the law-oriented application is viable to be created and technically feasible is an open question.
Meanwhile, those software developers that dream of doing a startup that showcases some exciting new technology as embedded into a LegalTech context are frequently bereft of any in-depth understanding of the practice of law. As such, they hope to leverage or exploit their software expertise and technology know-how by starting a new company that would create and brings to the market a LegalTech tech-amplified product, though whether it provides a sensible and profitable market-fit solution is an open question.
Whichever manner that you are opting to come into the LegalTech niche, there are some key precepts that you ought to be considering.
In this first of a series of articles, we’ll take the perspective of the attorney that wants to move ahead with a LegalTech-related startup.
And, include a handy list of the twenty key startup factors that you need to stridently address.
The Startup Landscape And Approach
According to the latest statistics, Venture Capital (VC) and Private Equity (PE) funds are flowing lavishly into budding startups that are striving to bring forth the latest and greatest in LegalTech, especially those newbie firms that are seeking to infuse state-of-the-art Artificial Intelligence (AI) into law practice legal systems and are aiming to demonstratively boost the day-to-day work of lawyers and other legal professionals.
There are quite a number of enterprising and spirited lawyers eyeing those LegalTech ventures and wondering whether they too have what it takes to launch into becoming an entrepreneur and take an outsized shot at making a go as a startup founder.
Here’s how the entrepreneurial zeal typically gets rolling along.
Attorneys that are especially savvy when it comes to using computer-based legal systems can often readily discern what works for law offices and their fellow lawyers, and what does not work, along with ingeniously detecting the existence of gaps in coverage by the automation. This realization of an unmet need begins to fester inside their heads and becomes the spark to find a means of turning the seeming weakness or omission into an opportunity of bringing a new solution to the marketplace.
Okay, so the inspired lawyer knows the law and knows what lawyers do and ponders repeatedly how to make tech that will fill in the hole or otherwise bolster what other existing LegalTech cannot yet seem to accomplish.
Note that there is usually a wide chasm between the idea itself and the formulation of a software product that embodies that crafty idea.
Building robust software that can withstand the rigors of usage in law practices is not quite as easy as it might seem. Some of these budding entrepreneurs are overconfident about their programming skills, perhaps led to believe they have the needed software chops due to being a wizard with spreadsheets and handling legal databases with ease.
Be cautious in getting ahead of yourself.
Based on working with dozens of LegalTech firms and founders, you might want to seriously look before you leap into this, since the odds of such startups ultimately succeeding is dismally low, though admittedly the seasoning and experiences gained are apt to bolster your overall skills and make you into a stronger and more well-rounded attorney regardless of the entity outcome.
Generally, getting involved in or starting a new company is decidedly not for the faint of heart.
Keep in mind too that you should be cautious in betting the farm on that kind of jump. Sadly, some lawyers get so enamored about doing something new that they leave whatever paying job they have and falsely assume that they will soon be rolling in the dough from their new venture. More likely is that you will be devoting all your time and attention to the startup and won’t be making a dime for quite some time.
You’ll either need a cushy nest egg to keep you surviving or get a (rare) upfront bankroll to initially fund the effort. Even then, it is usually assumed that the key partners or founders will be putting skin into the game and the monies for the firm are supposed to go toward others such as software developers and non-legal staff that do your marketing or accounting.
One of the key tips is to put together a solid pitch deck that conveys what your startup is all about.
Notice that I said a pitch-deck and did not refer to a business plan.
It used to be that a lengthy strategic business plan was the recommended approach to depicting the vision of a new venture. These are still frequently put together, though the mainstay of attention goes toward a succinct pitch-deck instead (note, you can do both, rightfully so, namely having a detailed business plan and a corresponding pitch-deck that portrays the salient facets in a highly communicative manner).
If possible, you should also consider putting together a prototype of what you have in mind.
This is often crucial since it becomes a tangible means of showcasing what you hope to do. A full-blown version of the prototype is normally referred to as a Minimally Viable Product (MVP) and provides enough of an indication of the proposed capability that you can do a demo, but it is also acceptable that the MVP lacks bells-and-whistles and is still a far cry from being ready for the real-world.
Twenty Factors That Make-Or-Break Your Startup
In any case, for your pitch-deck and a corresponding business plan, here are the essential twenty factors that you are expected to have considered:
1) Solvable Problem — what is the problem being solved and is it solvable in any practical way
2) Viable Solution — what is your proposed solution and is the solution feasible or not
3) Customers — what is your target market, its size, and its need for your proposed solution
4) This Is Similar To — what is your solution similar to, compare and contrast
5) Core Business Model — what is the business model that will underpin producing the solution
6) Product/Service — what is the nature of the product and/or the services involved
7) Differentiation — what makes this a Unique Value Proposition (UVP)
8) Startup Funding — what amount of startup funding and from which sources are you aiming
9) Monetization — what will ultimately be the ongoing sources of revenue and making money
10) Unfair Advantage — what do you have that provides a barrier to entry, such as IP
11) Your Expertise — what makes you suited for this kind of effort
12) Your Team — what team are you going to assemble and what talents are needed
13) Accomplished To-Date — what have you accomplished to-date on your startup quest
14) The Ask — what resources and monies do you need to get underway
15) Cost Structure — what are your anticipated costs and scalability facets
16) Exit Strategy — what are your end game goals and ideal exit
17) Marketing — what will be needed in terms of promotion, pricing, channels, etc.
18) Competitors — what are your competitors doing, including why they are missing the boat
19) Prior Pitches — what pitches have you been making and to whom, how did those go
20) The Pitch — what your pitch is will be judged as to whether you are investment-worthy
For more details and vital explanation for each of the twenty factors, see my book entitled “How To Win a Startup Pitch Competition: Successful Insights from a Topnotch Judge for Boosting Your Startup” available on Amazon at this link here: https://www.amazon.com/How-Win-Startup-Pitch-Competition/dp/0692793933/
Admittedly, the list of those twenty factors seems daunting and nearly insurmountable, but they are actually all crucial to any startup worth it’s salt and require attention else the new venture is like a three-legged stool with one or more legs missing.
Being an entrepreneur can be exhilarating and the media loves to fawn over those that make it. You do not though often see the founders that regrettably floundered and were not able to get traction. There are lots and lots of those.
Undeniably, shifting from being a lawyer into becoming a flourishing entrepreneur has challenges, and each person needs to mindfully do some sober introspection about their situation and circumstances that either will propel them forward or bring their startup ambitions to a screeching halt.
Like any good attorney, make sure to study up and be sure that you have considered the favorable and disfavoring factors, and thoughtfully render a reasoned choice that proffers the best logic and highest chances for taking this moonshot-like breathtaking step.
For the latest trends about AI & Law, visit our website www.ai-law.legal
Additional writings by Dr. Lance Eliot:
- For Dr. Eliot’s books, see: https://www.amazon.com/author/lanceeliot
- For his Forbes column, see: https://forbes.com/sites/lanceeliot/
- For his AI Trends column, see: www.aitrends.com/ai-insider/
- For his Medium column, see: https://lance-eliot.medium.com/
And to follow Dr. Lance Eliot (@LanceEliot) on Twitter use: https://twitter.com/LanceEliot
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