Apperio, a real-time legal fee tracking platform, just announced a successful second round of funding. GrowthBusiness speaks to the man at the helm on why legal tech, and why now
Nicholas d’Adhemar is ahead of the curve. He knew when to pivot, and with today’s £1.7 million funding announcement, it seems he knows how to grow his business at pace.
D’Adhemar started an iteration of Apperio in 2012 after working as a lawyer and in private equity. Combining his experience on both sides of the legal business, d’Adhemar set up Legal Tender, a marketplace for legal services, which was essentially an e-procurement platform. Businesses would post legal services they need, and law firms would submit tenders for that work.
“We had some good traction behind it,” d’Adhemar told GrowthBusiness. “What we found was that sometimes law firms would tender for work and would submit an estimate that was quite low. Clients tend to choose the law firm that promises a great price, but lo and behold, they ended up receiving an invoice for three times more the original cost.”
A call for transparency
In his experience, this happened so frequently that pivoting the business was a natural course of action. “We were receiving enough requests to realise that visibility of legal fees was far more valuable to clients than just getting law firms to just bid against each other.”
And Apperio, in its current version, was born. More than £20 million in legal work has been pushed through the platform so far, and its providers include Olswang, a London-based law firm with a focus in media and technology.
Clients save an average 12 per cent in legal fees, while lawyers on the platform, on average recover about 10 per cent more of their costs. According to d’Adhemar, “People are more likely to pay for something when they are kept informed along the way.
“We give clients complete transparency of their external legal spend as close to real time as possible, pulling up extra data from law firms by setting up multiple data feeds, normalising this, and presenting it in a dashboard,” he explained.
Understanding the sector’s pain points
For d’Adhemar, getting data from the law firms meant getting to know the law firms. “Law firms tend to use antiquated software, and sometimes have antiquated people behind the software, so they struggle for transparency as well. We built a law firm version for that market. This allows lawyers to go into their historical data – a rich untapped resource for any firm – and use its own data to price their services with accuracy and transparency,” he said.
Is legal tech next to boom?
D’Adhemar has noticed a sea change in the past few years. Post recession, clients started to question their legal fees and trying to get value for money. At the same time, a new generation of digital natives began entering the legal space. Technology like smartphones, cloud networks, work related apps, and evolved HR practices like remote working are all mainstream.
“The industry is ripe for technology disruption. You wouldn’t believe how much time, energy and money is lost between companies and their law firms not communicating,” d’Adhemar said, explaining the sleeping dragon that is the legal tech space.
“Law firms write off millions of pounds every year due to poor communication, and in-house legal teams are unable to budget effectively and regularly with bills that exceed the original quotes. The initial challenge was building a technology service in a conservative industry that is seen as opaque and notoriously resistant to change.”
The biggest barrier in entering the legal tech space is the need for working knowledge of the law and to understand the issues faced in the industry. “Why would a developer straight out of university want to set up business in the legal space? It’s not an intuitive choice unless you’ve worked in the industry,” he explains.
“Yes, it’s been a little bit slower than other industries, but legal tech is going to be where fintech is now. It’s just going to take about four or five years more to get there.”
As an industry, the average law firm lockup period (unbilled WIP plus debtor days) is 120 days and recovery rates are around 84 per cent. Clients face uncertainty over pricing and find it difficult to accurately understand and budget for their legal work. A lot of the same problems exist in other industries that rely on knowledge-as-a-service and work with billable hours. D’Adhemar’s view is to eventually “get there”, but the current pull of the legal space is just too strong:“The legal industry has plenty of room to evolve, and there’s still plenty of room for us to build a better product. It’s a very big market, and that’s where we’re going to be for now.”