skip to navigation skip to content

 

Disruption in the legal market

The legal-services sector has proved stubbornly resistant to technological innovation. But with companies facing pressure to reduce their legal spend, digitisation is at last beginning to disrupt traditional business models – and Tools4Legal is at the forefront of the revolution.

Filip Corveleyn and Felix Rackwitz

Filip Corveleyn and Felix Rackwitz

The Frankfurt start-up is the latest venture of Filip Corveleyn and Felix Rackwitz, both graduates of the Executive MBA programme at Cambridge Judge Business School. It offers clients a modular solution to their routine legal requirements: instead of paying lawyers, they can use versatile software tools to manage the workflow. As well as saving money, this frees up valuable time, allowing legal departments to concentrate on more complex strategic work.

The two lawyers met while undertaking the Executive MBA at Cambridge. They each wrote their Individual Projects on the law-firm service delivery model. “One of the surprises we had was that we saw innovations happening in the UK and US, but nothing happening in the continental legal market and we started to wonder why that was,” says Filip.

After graduating in 2012 they returned to their respective law firms, but found they were unable to effect the changes they believed necessary. “We took the ideas away from the EMBA, trying to implement them in our current business lives,” says Filip. “But we soon found out that was not going to happen. It was clear that change couldn’t come from the existing players in the market.”

At the end of 2014, they developed the idea of creating workflow-based software tools for legal departments. A successful test product with a major fashion retailer gave rise to the incorporation of Tools4Legal in early 2015. Since then the start-up has gone from strength to strength: in October 2015, Tools4Legal was honoured with a Standout Award in the Technology category of the prestigious Financial Times Innovative Lawyers awards.

Filip says: “If you look at what happens on a daily basis in a law firm, 80 per cent seems repetitive, routine work – and an estimated 60 per cent doesn’t need a highly trained legal professional at all. When Felix and I were lawyers, we’d spend time on tasks like looking for the right documents, altering them and even retyping because they were in the wrong format.”

But if, like traditional law firms, you have a business model based on billing the maximum number of hours, where’s the incentive to be more efficient?

To realise the concept, Tools4Legal turned to Appronto – a Netherlands-based technology company that specialises in agile enterprise application development using the Mendix platform. The flexibility and adaptability of this platform proved ideal for their needs. Filip says: “We said to them, we want to be your exclusive partner for developing applications in the legal market. We want to produce simple, easy-to-understand apps that will save money on a daily basis. We don’t want to look at highly technical legal work; you’ll still need lawyers for that.”

The company’s model has already proved itself in a pilot project with a major worldwide fashion brand. After initial trials in two jurisdictions, Tools4Legal now manages the company’s legal housekeeping in 18 countries. The results have been impressive, with the client reporting a 64 per cent internal time saving and 30 per cent reduction in legal fees during initial testing.

A spokesperson for the brand says: “As a legal department, we face different problems every day. Dealing with repetitive legal matters can often be quite an added burden. That is also the case when managing corporate secretarial work at a European level. The integrated Tools4Legal technology solution has freed a lot of up internal time spent on dealing with corporate secretary work in Europe. In turn, that has allowed us to focus more time on important matters”.

Building on this success, Filip and Felix have ambitious plans for the further development of Tools4Legal. “We’ve been exploring ways of getting external finance on board,” says Filip. “So far, we’ve had the luxury of not really requiring any urgent funding; but if we want to grow the business and scale it up, we’ll need substantial capital injection.”

And although the past year has seen an explosion in the number of legal-technology start-ups, Felix believes that Tools4Legal still has a market niche all to itself, especially in the continental European market. This is very much still uncharted territory, with most competitors focusing on common-law jurisdictions. He says: “There isn’t a direct competitor to us as such in Europe. We compete with law firms who have all these very skilled junior lawyers, and this kind of work usually ends up in their desk. Although they’re highly qualified, the result is often mediocre; these people didn’t join a prestigious law firm just to do corporate housekeeping.”

Filip adds:

The problem is that the legal sector is one of the most conservative buying audiences. As former lawyers ourselves, we know we are among the most risk-averse groups on the planet. But the demand in the market is there – and we’re already proving that our model works.