Legal Tech Startups: The Rewards of Being Customer Number One

Legal technology startups have been at the forefront of some extraordinary innovations as of late – especially those in the A.I. and data analytics space. For those of us in law firm leadership roles, each new day seems to bring at least one LinkedIn invite or cold call from a legal tech startup offering a demo. Truth be told, and despite the time commitment, I tend to engage far more than I decline. Why? Because with the right startups, the rewards of being Customer Number One are plentiful.

I’ve been privileged to have enjoyed the benefits of Customer-Number-One status with a roster of now-well-known legal tech companies, including Casetext, LegalMation, Manzama, and most recently, Blue J Legal. The rewards of forging those relationships early on far surpassed the risk and price of admission, providing exclusive benefits to my firms, to their clients, and to me personally. Here’s why:

1. EXCLUSIVITY

Exclusivity agreements – preventing the startup from working with Customer Number One’s direct competitors for a set period – are an increasingly common benefit of Customer-Number-One status. I have seen these range from one to two years depending on law firm and vendor, and with especially impressive legal tech, exclusivity can provide an invaluable differentiator between firms and their competitors for a period of time.

2. CUSTOMIZATION OF THE TOOL IN YOUR FAVOR

It’s often a fool’s errand to ask a seasoned legal tech or research vendor to change their entire user experience and user interface to comport with the customized needs and preferences of a single customer. Not so when you are Customer Number One. This status often ensures a direct line of communication with senior leadership, developers, coders, and designers, and they tend to be thrilled to receive input, and promptly oblige. And by guiding and customizing the tool, it will become a far more valuable resource and far less likely to become shelf ware.

3. SWEETHEART PRICING

Startups love to have Big Law customers vouch for them, and the hardest customer to reel in is Customer Number One. As an incentive to sign up with an exciting yet unproven product, the first few customers tend to get extremely competitive pricing. In my experience, that favorable pricing will often carry through after year one, paying dividends over time and mitigating the risk of a product that could underwhelm.

4. BFF-STATUS

Start-ups rarely forget the people who gave them a chance early on, and those friendships will often continue to grow once they reach widespread, commercial success. The professional and personal relationships I continue to enjoy with the leaders of legal tech startups are especially warm, and as an added bonus, have resulted in numerous unnecessary but greatly appreciated benefits over the years (client development opportunities, peer-to-peer networking, sneak previews and early access to their newest product lines, speaking engagements, social events, and more).

5. MARKETING BUZZ

Naturally, both law firms and legal tech startups love good buzz. Press releases, articles, case studies, and presentation opportunities often tout the exciting exploits of a Customer Number One and its vendor, especially when the vendor is doing something novel in the A.I. or data analytics space. When your firm is highlighted as being “innovative” in top-tier legal and business publications, you’ve hit the jackpot – and clients, prospects, and colleagues take notice.

I would be remiss if I didn’t discuss the elephant in the room, the natural counterpoint to the benefits of Customer- Number-One status. Certainly, there is risk of taking a chance on an unproven product, often by an unproven company: it could be a failure. It is a risk, for sure, but one that can be mitigated.

First, it goes without saying that Customer Number One Status should be thoroughly vetted and not entered into blindly, especially in this economic climate. Only take a chance on a legal tech startup with a product that helps meet an important business need and is likely to result in a strong return on a modest investment. Second, scrutinize the start-up and product sufficiently, and insist on a thorough pilot (and not merely a PowerPoint presentation). If they are confident in their product, they should have nothing to hide and will be happy to offer a pilot. If they push back, that is a red flag that it likely is not worth the risk. I have never regretted passing on a startup not offering me a pilot, and many of those who took that tack are either no longer in business or no longer actively marketing that product.

At the end of the day, my experiences as Customer Number One have overwhelmingly been positive ones. While results may vary, there’s one easy step that costs nothing and bears no risk whatsoever: answer that cold call and check out their demo. It could be the game changer.