The COVID-19 pandemic has devastated some industries, but leaders of two legal technology startups say the economic downturn has had a glimmer of a silver lining for them because they have had the chance to double down on product development.
The contract review platform TermScout has already participated two high-profile startup accelerators since the company’s formation in 2018, the LexisNexis Legal Tech Accelerator and Techstars Boulder. Cofounder Otto Hanson said TermScout raised about $1.25 million in Series C financing after Techstars.
“That was a phenomenal acceleration to our business,” he said.
Hanson said the COVID-19 pandemic has slowed down TermScout’s talks in client development because possible clients suddenly faced other worries, but the company has used the time to focus on building its platform. He said he’s optimistic the company’s product development efforts right now will make a difference in helping TermScout stand out in the market.
The platform TermScout plans to launch in November will focus on business-to-business software companies and allow users to compare contract terms and conditions across those companies. It will initially focus on business-to-business software companies. Hanson likened the concept to Healthgrades, which he called the “Yelp for doctors.”
“You could think of it like Healthgrades … where Healthgrades is the neutral, independent third-party arbiter of health services.”
He acknowledged the subjectivity of concepts such as defining a contract term’s favorability presents an inherent challenge to the information TermScout is intended to provide. Hanson said TermScout measures about 600 data points, such as whether a contract promises protection for confidential information, in every contract it reviews and assigns positive or negative values to the possible answers, which are each data points.
Whether a data point has a positive or negative value has been determined with the help of expertise from attorneys and the published guidelines for fair commercial agreements from the International Association for Commercial Contract Managers, Hanson said.
Hanson said TermScout has hopes to launch a consumer-facing platform around the middle of 2021 for people to get analysis of employment and independent contractor agreements to find out if terms are fair compared to the market. The company also plans to launch a consumer platform for comparing privacy policies within the next 18 months.
“One of the things we’re really good at at TermScout is finding ways to translate complex legal jargon into more simple takeaways,” Hanson said. “We were originally founded with the idea of doing this for consumers.”
He added that new consumer privacy laws such as the General Data Protection Regulation and the California Consumer Privacy Act have focused on the substance of determining what companies need to do to protect information, but it’s hard to know as a consumer whether companies are actually complying. For example, Hanson said, a law may require companies to disclose whether they sell information to third parties, but that term may not be easy for consumers to find in companies’ privacy policies.
LexDock Eases Legal Affairs Management for Small Companies
Abeer Abu Judeh launched LexDock about a year ago as a one-stop platform for companies to manage their legal affairs and for companies to connect with attorneys when they are looking to hire outside legal counsel. The inspiration for the cloud-based platform grew out of her experience as an in-house lawyer, where she had to juggle different platforms that managed communications and documents, which she said was a “true nightmare.”
“On top of doing your legal work that you have to do, you’re also having to deal with a lot of logistical issues, such as which service provider or which technology … does what,” Abu Judeh said. “As in-house counsel, I had access to $250,000 in different subscriptions for different legal technologies that I was using. None of it communicated with each other.”
She added LexDock also allows companies to see their spending outside legal counsel and predict their future spending based on their history.
She said the platform is industry-agnostic, but health care, education and insurance are three types of companies that are using LexDock. LexDock’s network of attorneys just step in for the legal matters companies need them for, and Abu Judeh said it is well-suited for companies that don’t necessarily need legal counsel every day or that may not already know where to find an attorney.
“We have clients that are, I would say, in the 100-employee range. And that’s a sweet spot, because they do have enough legal matters.”
She added the platform also benefits the businesses of attorneys in LexDock’s network that companies can hire as outside counsel.
“Mostly we have the independent practitioners,” she said, adding that solo attorneys and small law firms are trying to democratize the legal marketplace of opportunities for client representation. “They’re talented; they’re just not competing on the same level as a big law firm is.”
Right now, LexDock caters to businesses, but Abu Judeh said she doesn’t rule out the possibility of expanding its services to individual people to organize their legal affairs, such as mortgages and taxes, and find attorneys. Technically they could use the platform now, she said, and the expansion would be a matter of marketing LexDock to individual people so they understand the benefit to them.
“Most individuals don’t see how much legal affects their lives,” Abu Judeh said. “You’re always going to have these junctures where you need legal assistance.”