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Startups take cloud-based tech savvy to legal realm

April 18, 2015

To some, the phrase “legal challenges” means lawsuits. 

For a few Indianapolis tech startups, it has an entirely different meaning: attorney pain points and business opportunities.

At least three emerging tech firms are targeting the legal space with subscription-based software, confident they can bring efficiencies to an industry heavy with clients, data and documents.

The three companies are Pact Safe Inc., Express Software & Services LLC and IP Software. Their plays underscore an increasingly diverse startup cohort in a city traditionally known for marketing technology upstarts.

mccarthy McCarthy

Executives at the three firms said they’re seeing traction and are raising capital, some of which is for beefing up sales and marketing. Still, the legal industry remains relatively slow at adopting cloud-based applications.

“They’ve been very cautious and they’re still cautious,” said Jeff Hawkins, a partner at Hawkins Law PC, speaking about firms migrating data and processes into clouds managed by third-party vendors.

“Security and reliability are the two biggest concerns.”

Legal tech players

PactSafe is the newest of the bunch, launching in February after about 18 months in development. It helps manage and deploy online legal agreements such as privacy policies and terms of service. 

Founder and CEO Brian Powers, a former Taft Stettinius & Hollister LLP attorney, said that, for decades, hashed-out contracts were stowed away until they needed to be enforced or debated.

“That very simple concept has been lost in translation when it comes to the digital world,” he said.

Pellegrino Pellegrino

Express Software & Services has a product called CasePacer, a customer-relationship-management platform that consolidates client data and case files and generates workflow prompts. The 4-year-old company primarily targets personal injury firms, but CEO Kevin McCarthy said he’s looking to use $2.5 million in newly raised venture capital to expand that target.

IP Software, also founded in 2011, looks to bring value from big data. Its ipAnalytx software combs reams of public, digital patent data to provide insights for patent owners and law firms.

“There are all sorts of heuristics in that patent data, which tell us important things about people’s behavior,” founder Mike Pellegrino said. He said examples include assessing patent-attorney effectiveness and determining which patents a company values most.

Big opportunities, challenges 

These legal-focused firms, as well as other startups, have sprung up in recent years as costs for software developers, computing power, bandwidth and storage have declined markedly from a decade ago, tech observers said. 

Background in the field also helps.

legal-table.jpg“The common denominator,” TechPoint CEO Mike Langellier said, “is that you have subject matter experts, intimately familiar with market problems, who are employing technology to solve those problems.”

Even though the legal software-solutions space is occupied by the likes of heavyweight firms Clio and LexisNexis, the market isn’t overly crowded. And some attorneys—including Seth Wilson of Hume Smith Geddes Green Simmons LLP—said they’re eager for better products.

“We use a practice-management software,” Wilson said, “and we review that on an annual basis to see, is it time to make a switch ... to something that would really benefit our client base?” 

While cloud-based software can be efficient and save money for legal firms, widespread adoption might be some time away. Tom Walsh, a partner with Ice Miller LLP, said cyber security remains a top reason Ice Miller has opted not to store some data in the cloud.

“We have gotten feedback from our malpractice insurer and clients that, in many cases, they do not want us to have attorney-client privilege information in cloud-based solutions,” he said.

Powers Powers

Hawkins, the Hawkins Law PC partner, said he considers himself tech-savvy. But he has no immediate plans to ditch his 2-year-old HP server, which hosts administrative applications and an email network.

“The server is in my building. I can look at it ... and if hackers get ahold of me, I can pull the plug,” he said. “Whereas, if I had all of that out on the cloud somewhere, I’d be awfully exposed.”

Warming up to change

Despite the hesitation, some firms are willing to retire old information technology habits.

wilson Wilson

Several factors are driving that trend, including growing cyber-security trust in some vendors. Wilson, the Hume partner, said, “Having a company’s livelihood dependent on their security means that they’re more likely to pay attention to it than a lawyer who’s trying to run a practice.”

Another factor is the desire to free up resources so lawyers can focus on being lawyers. That desire is tempered by the need to have control over quality and security, but, Hawkins said, “Lawyers are trained to provide legal service.”

Cloud applications are simpler to scale at, for instance, a law firm with multiple locations. And even in the IT space, renting can come with fewer headaches than buying.

An emerging middle ground is the use of private clouds, Wilson said, that allow third-party applications to be integrated on internal servers.

“I think that’s the hybrid model that’s coming,” he said.•

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