LegalZoom - the world’s preeminent legaltech company, went public on 30 June 2021. Its share price closed 35% higher at day’s end than its opening price, effectively valuing the company at US$7.35 billion.

The company was founded back in 2001, and helps customers create legal documents without having to hire a lawyer. This extends to wills, trusts, business formation, copyright registrations, and trademark applications.

The listing is a shining example of the power of applying automated tech solutions to old problems - problems that were previously handled by human lawyers. 

But where does this place the legaltech behemoth in the pantheon of the wider legal services landscape, amongst hallowed names like Sidley Austin, Latham & Watkins, and Clifford Chance, who have all been operating not since the early 21st Century, but since the 19th Century. 

Well, if you take Law.com’s Global 100 ranking of law firms by revenue, and apply a standard valuation multiple of 3x, LegalZoom would in fact sit amongst the world’s top ten law firms by valuation. 

Top 10 legal services organizations by value*

1. Kirkland & Ellis: $12.5 billion

2. Latham & Watkins: $11.2 billion

3. DLA Piper: $9.3 billion

4. Baker McKenzie: $8.8 billion

5. Dentons: $8.7 billion

6. Skadden Arps: $7.9 billion

7. LegalZoom: $7.35 billion

7. Sidley Austin: $7 billion

8. Clifford Chance: $6.9 billion

9. Morgan Lewis: $6.8 billion

10. Hogan Lovells: $6.7 billion

*assuming 3x multiple on revenue for unlisted law firms

Not bad for a company that was founded just 20 years ago, entering what was an uber-competitive and traditional sector. 

Classic Disruptive Innovation

LegalZoom’s play is a classic disruptive innovation case study. They entered the market pursuing what the late HBS professor and author, Clayton Christensen, called low-end disruption - serving customers at the bottom end of the market in a way that is essentially ‘good enough’. 

Such customers were satisfied with off-the-shelf wills, trusts, and the like. 

Doing this enabled the company to take a beachhead in the world of legal services, and effectively march on and grow from there. They’ve since helped over 2 million individuals, and 3.8 million entrepreneurs, get the legal help they need.  

Lesson Learned

Some lessons lawyers can take from LegalZoom’s rise to prominence in a saturated market, steeped in both tradition and a conservative approach to doing business. 

1. Good enough is good enough - lawyers have a tendency to ‘overcook’ things in a way that doesn’t add additional value, but adds cost
2. Use technology to automate rudimentary, repetitive procedures - this effectively keeps your cost to serve low, enabling you to drop your prices and attract more business, and freeing up well-remunerated lawyers to focus on more complex work 
3. Focus on niche segments of customers for whom your product solves a painful problem - don’t try and be everything to everyone

Check out our list of the 10 most valuable legaltech startups in the world, here.