The chasm between law and practice

No amount of legal research can tell you how a case will come out. You can predict a lot better than a layman can, you can narrow the range of outcomes, and you can affect the outcomes by doing good work; but you can’t get anywhere near the sort of predictions an engineer or scientist can make; your predictions will have variance of 50, 100, 200%. If you were building bridges, a lot of people would die.

The client might recover nothing with 20% probability, $10,000,000 with 60% probability, and $25,000,000 with 20% probability. The patent or permit might be completely denied immediately with 10% probability, it might be complete granted immediately with 20% probability, it might be argued over and then granted in part three years later with 40% probability, or it might be argued over and denied a year later with 30% probability. Exactly what conditions will be imposed? You just don’t know.

Neither laymen nor law professors appreciate this strong indeterminacy of law. Many lawyers don’t either. It isn’t the radical indeterminacy that some law professors think it is — legal outcomes are not completely unpredictable, completely untethered from the law in the books, raw expressions of politics or power — but neither is law the routine and predictable determinate thing, with occasional bad decisions that obviously deviate from the law, that laymen expect.

The main cause of this legal indeterminacy is that legal research is hard: it’s easy to do badly; it’s easy to fudge the answers; and it’s hard to demonstrate that someone has done it wrong and to hold them accountable. A lawyer who argues the law in a way that’s wrong but favors his client will be “urging his reading of the cases,” like in a literature class, not “defrauding the court” or “making a simple mistake, see, here it is,” like in an engineering class. A judge who writes an opinion (or who, like many state court trial judges, merely makes a decision without explanation) can similarly fudge the law and it will be seen as a “reading” or “interpretation” of the law rather than as simply wrong.

The first step to clarity in the law is making the legal research process regular and transparent, to make the rules inarguable. This requires tools for both doing the research (improvements in translating raw legal materials into statements of legal rules) and validating the research of others (determining whether briefs are correct) that even not-super-competent lawyers and busy-busy-busy judges can use and that great lawyers can continuously improve.

This kind of project will be central to the coming technological revolution in the law.

Channel Partners

In month three of our launch, we decided to focus on a channel sales model.

Channel partners add value in four ways: (1) by acting as our sales and distribution channel, giving demos, spreading the word about Disco, and maintaining relationships with law firm and corporate end users; (2) by providing day-to-day, local line support for end users; (3) by providing project management and other services that help end users get the most out of Disco; and (4) by bundling Disco with other products and services, like collection, forensics, copying and scanning, and paper production, that end users need.

The legal industry is a relationship industry. To sell into the legal industry, you need people who have existing relationships with partners at law firms and senior in-house counsel at corporations; these are the people who make the ultimate decision to buy legal products or services. Channel partners have these relationships and put time and energy into growing and strengthening them and building new ones. Our channel partners include both partners who are already in the eDiscovery space (e.g., partners who used to sell Relativity) and partners who are entering that space for the first time, but who have the correct relationships with end users because they sell other legal products or services.

Why did we settle on a channel model? First, as a practical matter, it would be impossible to quickly build up the relationships with end users that channel partners already have. Second, as a company, we do not have any special expertise in end-user sales and do not want to maintain a large sales team in each of the major legal markets. Third, each major legal market varies in terms of pricing and local practices; channel partners know these variations, while we don’t. Fourth, many bundled services are best provided locally: collection, copying, and scanning are classic examples. Fifth, end users often want bundled services that we do not provide, like intensive project management or outsourced review; we do not want to get into these businesses and would rather work with channel partners who are already experts in each of them.

We offer our channel partners a flat-fee eDiscovery product with 10x improvements in speed and ease of use relative to other products in the market. We let channel partners set pricing according to local conditions: both what they charge for (e.g., per GB, for processing, for hosting, per case, etc.) and the amount they charge. Our aim is to give channel partners the most flexibility and the largest margins in the industry: for example, many channel partners report 20% margins on Relativity sales, as compared to 100% or more margins on Disco sales, while still maintaining end-user prices that beat competitors by a substantial margin. We also let channel partners white label Disco, although most prefer not to so that they can benefit from ours and our other channel partners’ marketing and growing Disco brand awareness among law firms and corporate litigants.

We support channel partners by (1) providing unlimited training to a channel partner’s sales and project-management teams; (2) making our sales and engineering team available to participate in screen-share demos for a channel partner’s customers and potential customers; (3) flying team members out to participate in “demo days,” where we take over a law firm conference room for a day and let litigators come by for 15 – 30 minute demos whenever they’re free (this works wonders!); (4) preparing and supplying marketing collateral and assistance with RFP responses; (5) making engineers available for tech support questions that are escalated to us and accommodating minor end-user customization requests, often with same-day or same-week turnaround; and (6) in general, doing our best to help channel partners sell, sell, sell. We do all this at no charge to either channel partners or end users.

When talking to potential channel partners, we often get requests for exclusivity (e.g., for a certain geographic territory). We do not grant exclusivity. Any such negotiations in the future would depend on a channel partner’s proven track record in selling consistently high volumes with consistently high end-user satisfaction. For the moment, we are eager to build relationships with channel partners in major legal markets and see how each of those channel partners performs. Because Disco is a young product, there is lots of market share for new channel partners to win: in practice, our channel partners almost never get into bidding wars with each other; by contrast, a typical RFP will draw six or seven or more Relativity vendors.

We are a technology company, not a sales or services company. We have no ambition to expand into the businesses of our channel partners (services, copy & scan, forensics, paper production, etc.). We plan to expand through additional legal technology offerings — and we hope to have in place for those products, through the channel program we are building for Disco, a distribution network of two or three established channel partners in each of the major legal markets when they launch.

We view the channel partnerships we are building now as long-term partnerships in the legal-technology space. They are our answer to the problem of “how do you sell to lawyers?”