Q&A: Dominic Woolrych – “Whereas I used to have to beg lawyers to join our platform, now we easily get 20 applications a week”
In our Q&A, Lawpath founder and CEO Dominic Woolrych explains how a relatively young company has become Australia’s leading legal software platform for businesses and individuals in the past six years; why he gave up the security of working for a big firm; and outlines his two key pieces of advice for others wanting to pursue their entrepreneurial dreams.
For starters, what is the state of the online legal services market?
There’s been really significant growth in the past two or three years. Lawpath is now onboarding more than 250 clients a day on to our platform where they can create legal documents, register a company, and access legal guides. So, we’re seeing a big shift. The legal sector is one of the last industries that technology has really touched. Accountants went through a huge shift about 10 years ago when a lot of new accounting software came into the industry and it totally changed the way accountants and bookkeepers worked, and we’re seeing that now in the legal sector, too. As clients, especially small businesses and individuals, become more familiar with online tools they are doing commoditised or simple legal tasks themselves. This change is not yet really touching the top end of town, though.
Can you tell us more about your client profile?
Small businesses with under $5 million in revenue and up to 20 employees are our main focus. About 40 per cent of them would classify themselves as online entities, such as e-commerce operations or someone from the gig economy. The other big increase is coming from professional services people such as financial planners, accountants and other lawyers. The early adopters have tended to be younger businesses and start-ups, but now we are seeing a lot more bricks-and-mortar and traditional business use our skills as well.
You believe the online market is largely untapped at the moment. Is that right?
Yes, legal tech represents about 2 per cent of legal spending around the world at the moment. Total legal sector revenue in Australia is about $25 billion a year, and that increases to about $150 billion when Asia is included. That is the known legal market – small law, medium law and big law. What I’m really concentrating on is what I call ‘tiny law’ – all those legal transactions that happen every day that people potentially don’t even seek legal services to complete. That market suits a service like ours because using technology to do a lot of the work means it can be done affordably. We estimate that such work could be worth an additional billion dollars at the moment.
Lawpath has said it wants to be the ‘Xero of law’, referring to the success of the New Zealand accounting software platform. Just as there has been consolidation in the accounting software sector, do you expect there will be a lot of players initially in the online legal market, after which consolidation will occur?
Yes, like the accounting experience, I suspect there will be one or two clear winners ultimately. These are high-volume, low-margin services. The bigger you are, the more efficiencies you have and the better you can provide those services. However, I suspect the transition to online services will take longer in the legal sector than in the accounting industry. Accounting was very well suited to moving some of those basic bookkeeping tasks online and now it has gone so far as totally automating them. In law, there’s still very much a trust element and many clients either want a face-to-face meeting with their lawyer, or at least some kind of personal connection. There are also changes required from jurisdiction to jurisdiction, so I don’t think we’ll see one global winner for a while.
Your business has recently secured a $4.4 million funding round and the future looks bright. But what is the reaction from lawyers to businesses such as Lawpath?
At the beginning we had a lot of pushback from lawyers who were saying, ‘You’re coming to take our jobs’ and ‘Robots are coming to take away our billable hour’. But we’ve seen a big sentiment change in the past two years because a lot of lawyers have seen that technology won’t necessarily take their jobs; it just changes the way they work and will probably make them more profitable in the long run. So whereas I used to have to beg lawyers to join our platform, now we easily get 20 applications a week.
How many lawyers do you have on board?
The critical thing to remember is that we’re a tech company, not a law firm. So we have about 40 team members internally and that is split mainly between marketers and developers. Then we operate a legal marketplace for clients who can use our software to create documents or set up companies and use our trademark tools, and who can then get legal services or legal advice on top of that if required. That’s when they can tap into our marketplace of about 1000 lawyers, all of whom work from home or run their own small legal businesses. Typically, they are retired regional lawyers, or stay-at-home mothers who may have worked in large firms in the past but who are looking for something different or working only 20 hours or so a week.
How do you ensure quality control of legal work?
To join the platform as a lawyer, you must meet certain criteria – 10 years’ PQE (post-qualified experience) is our standard. Lawyers also have to send us reviews and recommendations from clients, and once they join the platform we use a peer-to-peer rating system. So every time a lawyer completes a job through the platform the client rates them out of five stars, just like an Uber driver. Based on this rating, the lawyer will move up or down in terms of their visibility to the client. At the end of the day, this is a pure marketplace in that if you’re a good provider of legal services you’ll get better ratings and move further up on our platform.
What do lawyers think about being rated?
When we introduced the system about 24 months ago there was a big pushback from the lawyers – their view was that lawyers should not be rated, or they questioned how ratings could be applied when clients don’t understand the legal side of things. What we make clear, though, is that lawyers aren’t rated on their legal skills – they are rated on actual matter outcomes, customer success and satisfaction, timeliness and communication. Now lawyers can see that if they have high ratings they are much more likely to be hired, so we find that they are very keen to be rated.
You worked as a corporate lawyer for Minter Ellison before giving it all up to establish Lawpath in 2014. How big a call was that?
I loved the firm and my time as a corporate lawyer, but what I couldn’t ignore was the opportunity that I could see coming. I’d looked to America and seen the huge growth in online legal services over there and I felt as though the Australian market was on the cusp of new tech businesses starting. It was a really difficult decision. If you are working for a large legal firm you’re in a good spot and if you tell people you’re leaving to launch a start-up, they think it’s a crazy idea. But I couldn’t ignore the opportunity. I made the right call at the right time.
Do you have a natural entrepreneurial streak?
My Dad is a bit of an entrepreneur himself and I had also set up the OnDemand Training group, which is the largest online training platform for ride-share drivers in Australia and New Zealand. That was my first real taste of what an entrepreneurial-type lifestyle could give me. I was lucky in the end that through Lawpath I can combine my two passions; entrepreneurship and the law.
A lot of ALMJ readers have their own small firms. Can they work through Lawpath?
Definitely. I lot of the work coming through our platform is general commercial, and it is commoditised work. Lawpath won’t make or break a firm. You won’t get 100 per cent of your clients through us, but we are a good capacity filler. We have 2.5 million visitors coming to our website a year, so there is an opportunity for small-firm lawyers to work with clients right across the country. I love it when I see, for example, a sole practitioner working from home in Byron Bay who is helping a business based in Adelaide.
What about lawyers who are thinking about making a career change or pursuing their own entrepreneurial pursuit. Do you have any advice for them?
Yes, a couple of things. First, as lawyers we have a different risk profile to others out there. So it is quite a scary leap to say, ‘I’m going to start my own business’, or try something new. You have to change your risk profile a little bit, and that was one of the big things I struggled with when I came out of Minters. I had to put my other hat on. Second, my advice is that if you want to start a new business, focus initially on an area in which you already have some knowledge. I see a lot of entrepreneurs come through and say, ‘Well, I’m a lawyer now, but I want to start my own Uber competitor’, but they’ve never worked in that industry. So I’d suggest that lawyers seeking to start a new business or a new model should focus on the law. There are so many opportunities in the sector to combine your legal skills with your entrepreneurial spirit.
As CEO of Lawpath, you have to manage a big team. What’s your leadership approach?
Given our rapid growth, I’ve been thinking about this question a lot lately. We’ve gone from being a small business where everyone was basically in the one room and knew what was going on, to a larger company. What has helped at Lawpath is having dedicated practice leaders or business department leaders. I try to hire people from outside the legal profession with different skillsets who can apply them within legal. I rely very heavily on my different department heads – in marketing, technology and sales – who have skillsets that, to be honest, most lawyers and law firms don’t naturally have. I give them a lot of autonomy to do what they want to do and to date it has worked well. I try to delegate a lot of tasks and empower other leaders.
Do you expect disruption to keep occurring in the legal sector?
Technology has come into the legal sector and it is here to stay, but I don’t think it will fundamentally change the sector too much. For example, a lot of universities are now starting to create their own technology, or legal tech and innovation courses. That’s fantastic because it’s a really good skillset, but I’d hate to see them replacing some of the core legal courses with technology courses. If you’re a lawyer, it’s important to have a basic legal knowledge and then you can apply the tech-innovation skills on top of that.
What about Lawpath – where do you go from here?
In the next 18 months it’s about getting our brand out there. We have quite good user adoption in the start-up and new business space, but the bricks-and-mortar businesses of Australia don’t really know about us yet, so we’ll be doing a lot of advertising in mainstream media. On the technology and software side, you have to be constantly innovating. We have a strategy whereby we test technology with third-party applications before building the technology internally. For example, we’re working with Amazon machine-learning software to analyse data. We have 120,000 users who complete legal documents on our platform. With that use comes a lot of data around those clients and, if we can start using machine learning to predict what a certain type of client will do, we can then start recommending the next steps for clients. Legal has always been very reactive. What if we could swap that around and make it proactive? If we use technology and software and machine learning based on data, then that presents a really exciting future.