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.
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.
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.
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.
Check out our list of the 10 most valuable legaltech startups in the world, here.
Steve Glaveski is the CEO and Co-Founder of Collective Campus which he established to help companies and their employees to create a more meaningful impact in the world in an age of rapid change and increasing uncertainty. Steve also founded Lemonade Stand - a children's entrepreneurship program, author of Wiley book, Employee to Entrepreneur: How to Earn Your Freedom and do Work That Matters, Harvard Business Review contributor, author of the Innovation Manager's Handbook vol 1 and 2, host of the Future Squared podcast, and keynote speaker. He previously founded HOTDESK, an office sharing platform and has worked for the likes of Westpac, Dun & Bradstreet, the Victorian Auditor General's Office, Ernst & Young, KPMG and Macquarie Bank. Follow him at @steveglaveski