“Those that don’t innovate will be left behind”: We speak to Orrick about its new corporate venture fund
Silicon Valley-headquartered law firm Orrick has launched a new corporate venture fund to invest in legal tech start-ups around the globe. The firm will commit approximately $250,000 per deal, alongside lead financial partners, whilst acting as a beta customer to help portfolio companies hone their products. We speak to Don Keller (pictured), partner in Orrick’s technology companies group, about the fund.
“The real objective here is the growing need for law firms to be more efficient,” says Keller. “Law firms need to be efficient if they are going to help clients achieve their goals. To do that you need to be embracing technology, not running away from it.”
Keller believes that some firms are reluctant to embrace technology because they fear increased efficiency will hurt the bottom line. “I think that is a losing concept,” he says. “Efficiency and innovation may reduce billable hours but they will ultimately increase client demand. If we don’t become more efficient, someone else will. Those that don’t innovate will be left behind.”
Picking winners in the start-up arena is notoriously difficult, even for professional venture capitalists. But early-stage investment isn’t new to Orrick, which like many Silicon Valley-based businesses, has been running an investment programme for the past 30 years.
The new fund represents the first time the firm has invested specifically in legal technology that can support its own strategic objectives, however. Orrick will only invest in start-ups developing technology that it wants to use and can implement without too much difficulty. It will also only invest where there is a lead financial investor it has confidence in.
“We want these companies to be professionally advised by terrific financial investors and those investors should want us to be involved because we are the perfect beta customer for many of these technologies,” Keller said. “If we think it can help us then presumably it can help others. That is our investment rationale.”
Orrick is particularly interested in exploring technologies that make document review more efficient. Keller also sees opportunities in transactional collaboration and management technology. “Lawyers are still operating almost entirely in email and word and I think there needs to be more collaboration environments,” he said. “That is an exciting area.”
Orrick already has an in-house innovation unit, Orrick Labs, which it describes as a “skunkworks-style” operation that is developing new technologies not available in the market.
“The new fund is certainly not in lieu of building technology in house,” said Keller. “We have a team of developers and we have built some interesting products internally, including one which we are rolling out right now. I think a strategy that embraces both is a good idea. At the end of the day we will not be able to build everything we need. I also don’t think the market has all the solutions we require either.”
Keller is cautious about the extent to which a law firm should move into the software space, however, although he does believe there are several interesting revenue-generating paths that innovative legal firms can take.
“There is a logic to spinning out a company with an initial product, retaining rights, and allowing that company to build itself into a software business with Orrick as a beta customer. Or there is what Chapman and Cutler did recently, selling the product itself to someone else,” he said. “But I don’t think we as a firm should be marketing software. We are lawyers first and foremost.”
By Amy Carroll