So, you want to sell technology to legal. Are you sure? Have you really thought this through?

The legal tech industry is a wide and, in many ways, untapped market that was worth $23 billion in 2022 with an expected compound annual growth rate of 9.1% through 2030. Within it, you have attractive buyers with annual revenues in the low billions and tech spending teetering on hundreds of millions of dollars. When we consider the legacy technologies and manual processes rampant in legal, it’s easy to understand why you’ve landed on selling your wares to legal. Just know that it won't be a walk in the park.

Unless you work with the government, you’re unlikely to find a more insular or hard to navigate market. Having a great product isn’t always enough to even get your introductory email read. Good luck trying to get a meeting with a real decision-maker if they've never heard of you or your product. 

Sales cycles in legal are notoriously long, ranging from 6-18 months. Should you miraculously stumble your way into closing a deal, you’ll be saddled with a new set of stakeholders who don’t care about your value proposition; their only job is to limit risk.  In one final twist of cruelty, there are no generally accepted titles nor standard organizational structures within legal, meaning it’s difficult to be confident you’re on the right track until you are. Or aren’t. 

Sounds fun, right?

Look. I’m not here to tell you anything is impossible. If you're anything like me, that will only make you dig your heels in more deeply. And I wish some of the things below weren't the way they are. But, in many cases, these are just the cold, hard truths. 

Whether you’re a genius, an outsider, a recovering lawyer, or otherwise, you will not be successful if you stomp in and try to inflict change upon an industry of highly educated, skilled debaters who have deeply ingrained risk averse tendencies. You have to meet legal professionals where they’re at today if you have any hope of convincing them of a different tomorrow. 

The harsh reality starts here.

Good benchmarks for legal tech are extremely hard to come by, but we can look to benchmarks for B2B Technology, B2B Services, Legal, and Professional Services for guidance. Depending on the source of the data and the definitions applied, close rates for each of these industries are frequently reported at less than 5%, with B2B Technology having the lowest success rates. When you combine these dreary numbers with the many hurdles to closing a deal with a sophisticated law firm, you cannot expect to experience success by working on just 10 or 20 opportunities. 

How do you take this knowledge and use it to your advantage? If you’re working in sales, increasing the volume of opportunities you’re working at any point in time will increase the number of deals you close. It's just math. If you have some very engaged deals you’re working, get creative to find other firms that “look” the same. Read industry news, follow thought leaders on social media, even a well-thought-out Google search can turn up ideas for similar targets.

If you’re a founder or CEO, stop putting pressure on your salespeople to report on the same 10 deals every week. If they pester good opportunities that aren't quite ready to close, you’ll kill them. And I can tell you from my buying experience, once I’ve mentally killed the deal, you’re not getting into the firm. Instead, ask your salespeople why they're not turning up more opportunities. After all, there are more than 440,000 law firms in the U.S. alone!

I’ve never quite understood this, but the sell side of the legal tech market has always had a rather self-absorbed world view. Promotions are timed to the service provider’s fiscal year, bundled and priced to meet the service provider’s objectives, and delivered according to the service provider’s organizational structure with little knowledge or concern for how any of this works on the buyer’s side. 

No one on the law firm side cares when your quarter or year ends, and there is a near 0% chance they’ll be able to move any more quickly on your very generous, but carelessly timed, incentive. I will grant that we’ve not been super open with this type of information in the past, but we’re all sharing it now. Time to update the way we interact.  And that starts with you understanding your Buyer.

Some of this information is more valuable and pertinent than others. Consider making the following questions core to your sales process and convert the answers to data points that can be easily reported upon:

When does your fiscal year start? While most U.S. law firms will observe a 1st of January start, it’s best to ask, especially if you’re selling internationally or to corporate legal. There are two incentives that I’ve seen work well around the end of the law firm fiscal year. First, “sign now, pay later.” This allows you to close the deal within your quarter and allows the firm to get started with implementation. This can be effective as early as October and is best aligned with firms who have confirmed they’ve budgeted for your solution, but don't have the ability to spend until the new budget year opens. The second is less common but becomes an option when a department or firm enters Q4 with a wild budget surplus – the classic “use it or lose it.” You may be able to pull a deal close forward from Q1 into the prior Q4 or sneak an unbudgeted deal into Q4. In both cases, the motivation on the buy side is the same – to use the surplus so my upcoming budget doesn’t get adjusted downwards. If you track fiscal year end, you can easily identify firms that will most likely be receptive to your drive to close deals at the end of your quarter as well.

In what department does the budget for a tool like mine usually sit? The information you are seeking here is an understanding of who ultimately owns the budget. You want the top level here, so you understand whether this sits in IT, Operations/Business Services, etc. Knowing this helps prevent a very common issue that arises when selling to legal – you find out at the last minute that you’ve not engaged the key stakeholder as you’ve proceeded to close. I’ve personally seen deals that looked like they would close fall apart at the last minute because the vendor didn’t know that the Chief Innovation Officer actually reported to the COO, and the COO didn't support the purchase. If you don’t ask questions that help you understand the stakeholders, the decision-makers, and timelines, you could be in for a tragic surprise.

Do you currently own any products that are in the same category as ours? Now, I know many of you believe you’ve invented something so unique such that you have no competitors. If that’s you, let's talk so we can straighten that out for you before it’s too late. For those of you that recognize you have competitors, there’s two ways you can approach this data collection effort. If you feel like your competition is well-defined, you can ask the prospect whether they currently own Product A, B, or C. The drawback is that you might miss a product they see as competitive. In the alternative, you can ask the prospect the open-ended question.  The risk here, of course, is that you’re really just testing their memory – they’re less likely to name everything relevant off the cuff. There are a million ways to use this info, from product development to responding quickly when one of those competitors retires a product or feature set.

Law firm budgeting typically runs 6 – 18 months ahead of deployment. 

Yes, you heard that right. Even in today’s fast changing technological landscape, firms set their tech budgets well in advance of their intended deployment date. Here’s an overview of how it can look at a large law firm. And remember, this is all tied to the timing of their fiscal year (are you seeing how critical it is to have that data point now?).

Q2 – The ‘wish list’ is formed. A ‘wish list’ is the entirety of products and services that a team would implement given unlimited resources. While this may seem a bit broad, wish list items can be proposed by almost anyone on the team. Since many won’t have visibility into competing priorities,  they simply propose what they believe is a good fit for the firm based on what they do know. The team manager, usually a Director,  is the curator of their team’s wish list. They ultimately decide what is proposed to departmental leadership. The ‘wish list’ is often due as early as August, and once submitted,  no additions are usually accepted.  If you’re working with a Director or lower on a deal, you need to be on their budget ‘wish list’ before August, meaning they need a proposal in July.

Q3 – Each team’s ‘wish list’ is sent to departmental leadership, for example the CIO, for consideration. The CIO reviews and discusses the many proposals and often works with the PMO to develop a rough outline of the upcoming year’s projects as a way of sense-checking resources. They ultimately create a proposed budget, usually with proposed deployment dates, that gets submitted to firm management. Again, the CIO’s budget is closed to additions at this point. Remember the question above about who ultimately owns the budget? If you’re working a deal directly with the budget owner, like a CIO, CFO, or COO, you probably have until the end of August to get them a proposal with numbers you’re committed to.

Q4 – Firm management finalizes the upcoming budget year. Because this so frequently gets impacted by how well the firm finishes the existing year, budgets are often not finalized until the very end of the year. Some firms re-forecast in September to get a feel for how their year-end might look, which makes October an interesting time for year-end incentives.

Q1 – No, the spending doesn’t usually start on January 1. Sometimes new spending isn’t approved until as late as February.  It’s at this point contracts for projects to be deployed in Q1 usually get signed.

Q2 and beyond – Most contracts don’t get signed, even if they're budgeted, until the firm is ready to deploy them. This means that you could have confirmed with the CIO that you’re in their budget in September 2023, but the contract still doesn’t get signed until September 2024 when they're ready to roll you out. And at any point in time, a pandemic, firm debacle, or other surprise could see your budget absorbed back into the firm operating budget. My recommendation is always to find a way to structure your deal so you get to signature asap, even if you don't get paid for a while. Once you’re “in,” you’re unlikely to have your project killed.

There you have it. The inside track on selling into legal. It’s not always fun, it sure isn’t easy, but when you have a passion for the industry, it all seems worth it.