How Do You Disrupt The Legal Industry? Offer Value The Big Firms Can’t Match

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daniel2What’s the best way to stop yourself doing something? Try consulting a lawyer. By the time they have finished outlining the risks involved in your plans, and quoted you a price, you will have tears in your eyes and a large hole in your pocket.
Or so the story goes. What is certain is that large legal firms are not set up to cater for the needs of start-up businesses. They do have a tendency, however, to attract and then horde all of the top legal talent. Until now. The legal industry is ripe for disruption, and one ex-insider has set out to prove it.

Daniel van Binsbergen was educated in Holland and the US, Washington DC to be precise, where his father worked for NATO for several years. When the family returned to Holland Daniel studied Law, and, having persuaded De Brauw Blackstone Westbroek, Holland’s largest Law Firm, to sponsor his Masters at Oxford University, it was clear he had been marked out for great things.
Daniel returned from Oxford to Holland and joined the firm, but soon transferred to De Brauw’s London office to be closer to his girlfriend. He became a Senior Associate; the next step would have been to become a partner. But, after 5 years, Daniel’s entrepreneurial instincts kicked in, and he knew that he was not prepared to go down the traditional route.
At age 11, Daniel had his first taste of running a business, buying and selling the Beanie Baby cuddly toys that his sister had started collecting. “It was an incredible market”, Daniel laughs, early limited edition toys were changing hands for upwards of $2,000 each. Housewives adored them. And then, all of a sudden, the bubble burst.”
An interesting way to cut your entrepreneurial teeth. Daniel says he always knew that one day he would run his own business. He became a businessman masquerading, albeit very convincingly, as a top lawyer. Finally, however, he sensed his opportunity and together with his technical co-founder Chris O’Sullivan, he founded www.Lexoo.co.uk, an online platform where businesses can compare and receive quotes from high quality, pre-screened solicitors.
“Law is a ridiculously old fashioned business model”, he declares. “Firms are inherently risk averse. More often than not key decisions are taken by Partners who are thinking of retiring in a few years, why would they endanger their retirement plans if they perceive an idea or business to be risky?”
Another thing that struck Daniel was that with current technology, lawyers no longer need to operate out of glamorous but expensive offices in the centre of town. All a lawyer needs to service clients properly is a laptop, a phone, a Wi-Fi connection, and maybe a suit or two. A lot of his friends had joined start-ups; “when you’re bootstrapping, you don’t need a lawyer with a wow factor, you need an expert in that field who can get the job done for a reasonable price.”
The plan became obvious: create an online platform where businesses can compare vetted, qualified lawyers with impeccable credentials but who are crucially working on a low overhead basis. The advantage of it is you can obtain the same high quality of legal advice at a fraction of the price, without having to negotiate on price and without the risk of your work being passed off to a recent graduate.
Importantly, the participating solicitors know they are quoting in a competitive environment, so they will offer their best price up front, without businesses having to ask for it. All the ingredients of a classic disruptive start-up.
lexooDaniel quickly began to leverage his contacts to find willing independent solicitors, typically those who had trained in the City but for lifestyle reasons had decided to start their own firm, or join a smaller firm. People he knew who would do an honest day’s work for an honest price, mainly to gain experience or exposure to a start-up community that has generally been reluctant to bring lawyers on board, unless there was no alternative. A chance to build a new reputation as legal advisors that can make a genuinely useful contribution.
By way of example, a key start-up legal requirement is co-founder vesting. Vesting is a means of keeping all parties interested and ensuring a founder does not simply disappear after 3 months whilst still keeping his 50% of the shares, which would essentially kill a start-up (nobody would want to take the co-founders place, knowing that a large tranche of the shares are held by someone no longer contributing to the business).
A standard vesting model will involve a 4 year schedule whereby founders receive their stock incrementally until they reach 100% of their allotted holding. Leaving the business early means forfeiting your shares.
Vesting is obviously important, and the legal side of it shouldn’t be too burdensome, yet many start-ups defer taking the legal side of their business seriously enough until it’s too late. Lexoo gives start-ups the chance to quickly source multiple competitive quotes from specialised solicitors and make sure they are covered. Lawyers have a chance to show they know a thing or two about business and can really add value. Everyone wins.
As with any start-up, there was no way of knowing whether Lexoo would be a resounding success, but Daniel did a very un-lawyer like thing, and decided to take the risk anyway, starting with market research carrying out around 20 in-depth interviews with potential customers.
“Fortunately he found himself in good Company very quickly. Whilst playing squash with a banker-friend of his, he overheard his friend on the phone to another friend who worked at Forward Partners. Daniel’s squash buddy explained to him what they did, and before long Daniel found himself with £125k of investment, with another same sized chunk to follow shortly.

As I plan to discuss Forward Partners and their managing partner Nic Brisbourne in another article (watch this space) I won’t go into too much detail, suffice it to say that the self-styled “Ecommerce Investment Studio”, which specialises in helping solo-founders get started, were able to provide Daniel with many of the tools he needed to get things moving fast: office space, marketing and software development consultancy, and, of course, investment.
Initially Daniel had followed the legendary Tech investor Paul Graham’s advice: “do things that don’t scale”. In other words he did everything himself, totally immersing himself in his project. Having satisfied himself that everything worked, the platform, the lawyers, the clients, the money (solicitors pay Lexoo a 10% marketing fee for any work they receive through the platform), he was ready to scale, but first he wanted to prove concept.
Of the first 40 leads he generated via his online platform 33 were deemed of sufficient quality to generate interest from the pre-screened solicitors, and there were 15 confirmed matches. Good news. Next, he prioritised customer feedback and testimonials, his website gives them pride of place, in fact, as he believes a satisfied customer is the most powerful proof that the system works. Testimonials from Mixcloud, and Makers Academy, 2 prominent UK based start-ups in the music and coding fields, were worth their weight in gold.
Daniel wants a core group of around 75 lawyers covering a variety of specialist areas, and he believes word of mouth recommendations will pay a big part in who ends up on his platform. If a business using Lexoo requires expertise that the current solicitors on the platform don’t have, the solicitors help Lexoo by recommending people they know that specialise in that area, and so on until the network is built and reinforced.
Many lawyers coming from large city firm backgrounds realise that starting out on their own comes with challenges that they wouldn’t have faced at their previous firm, mainly having to market themselves to prospective clients continuously to obtain work. Lexoo is part of the solution to that problem, although they will have to compete with their colleagues to get the contracts on offer.
“Of course”, remarks Daniel, “this gives the power back to the client, as prices are completely transparent”. So it’s not all peaches and cream, being a lawyer. Nothing, it seems, is handed to anyone on a plate.
law of disruptionIt’s natural at this stage for Daniel and Lexoo, a start-up themselves, to have a strong focus on working with fellow early stage entrepreneurs. But Daniel sees his business developing to encompass a much wider market. “There is no reason why the likes of Shell, Proctor & Gamble, and other big companies can’t ultimately use Lexoo”, he explains.
“Even though the larger law firms may try to innovate, they will always struggle to truly revolutionise the sector, and there are an increasing number of lifestyle reasons why the traditional legal career path is not as attractive as it used to be. Lexoo allows these companies to find and hire the same solicitor they used to instruct through their ‘magic circle’ law firm, but now for half the price, because the solicitor is doing the work from his or her kitchen table”.
That is certainly true. Habits are changing, mainly because technology has made almost any form of first world work so versatile. We have seen it with industries such as wealth management, where IFA’s with expensive daily rates have been replaced with simple, easy to use investing platforms with support provided over the telephone. Less personal perhaps, but more power to the consumer.
Daniel is hoping to become the no 1 platform for finding, comparing and hiring legal services in the UK. He believes he can attract £100m of legal work, which may sound a lot, but consider that the legal market in the UK is worth some £25 billion. Then there is Europe, and the US.
It’s an enticing prospect. Call it the democratisation of legal services?
Whatever will the partners say?

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