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The legal industry is changing fast. Technology is shaking up how services are delivered, and client demands are changing faster than many law firms can keep up. But what if this challenge was also a trillion-dollar opportunity?
In our latest File Notes podcast episode, we spoke with Jack Newton, CEO of Clio (a $3 billion cloud-based case management software). Jack shared his insights on the “latent legal market” — those who need legal help but can’t access it — and believes it’s a market with enormous upside and untapped potential.
In this blog, we share some of the key ideas Jack shared, including lessons from Clio’s evolution, achieving product-market fit, bridging the access-to-justice gap and actionable strategies law firms can take to better meet the needs of their clients and seize this sizeable opportunity.
Clio’s big idea: Changing the game for legal tech
As you can hear about in our full conversation with Jack, Clio’s story is a prime example of how innovation can transform an industry. Co-founded in 2008 by childhood friends Jack Newton and Rian Gauvreau, Clio introduced cloud-based legal software at a time when many law firms hesitated to adopt new technologies (an uphill battle we still see today!). Clio was designed with small and mid-sized firms in mind, addressing challenges such as disconnected workflows, inefficiencies, and outdated technology.
It was a bold move that paid off. Today, Clio is a leader in cloud-based legal software, supporting over 150,000 legal professionals in 130 countries. The secret to their success? Clio’s mission wasn’t just to build legal software or improve the old way of doing things, but to reimagine what legal practice management could be.
What is product-market fit and why should you care?
That’s a great result for Jack and Clio, but what does their journey have to do with attorneys today?
Jack firmly believes that for law firms looking to innovate, understanding the concept of product-market fit is crucial. Popularized by venture capitalist Marc Andreessen and often used in the startup world, product-market fit is a simple concept but hard to achieve in practice: identify a need in the market, and build the right product to perfectly match those wants or needs.
Clio nailed its product-market fit by addressing the challenges small and medium law firms face with outdated and inefficient practice management systems. Similarly, VXT has found its product-market fit by creating a legal phone system built specifically for attorneys.
Jack says the opportunity for law firms to define their own product-market fit has never been bigger. And it’s not just about delivering legal help — it’s about delivering it in a way people can actually use and afford.
The access to justice gap: A big problem (and an even bigger opportunity)
Unfortunately, most people can’t get legal help when they need it most. According to the World Justice Project, 77% of legal needs go unmet. That’s like having a giant “closed” sign hanging over the legal industry. This research also highlights that 86% of civil legal issues faced by low-income individuals receive little to no assistance. For most industries, that would be a sign of significant product-market fit issues.
The inability for individuals to seek and obtain legal help that is timely, affordable, and fair, is often referred to as the access to justice gap. The way traditional law firms work—high hourly rates, complicated billing, and confusing processes—locks out millions of potential clients.
Here’s the twist: fixing this isn’t just about doing good—it’s also great for business.
The 23% of legal services that are being provided add up to more than $1.6 trillion USD globally. Although there are differences in how services are priced and packaged, Jack estimates another trillion-dollar opportunity sitting in the unmet legal needs of people who can’t afford help right now.
But how do you reach new clients seeking lower costs?
Hello Divorce: Making law affordable and profitable
To bridge the access to justice gap, law firms must rethink how they price, package, and deliver their services. In our conversation, Jack mentioned innovative legal tech startup Hello Divorce, as a compelling example offering innovative, lower cost alternatives.
Nearly half of all marriages end in divorce, and the process can feel like its designed to be expensive, stressful, and bitter. Hello Divorce, founded in 2019, aims to make the process smoother by flipping the messy, expensive world of divorce law on its head. Instead of charging sky-high fees, Hello Divorce’s tech-enabled platform has been able to reduce the costs of uncontested divorces down from the typical $18,000 price tag to as little as $1,000 (yes, you read that right).
Here’s the kicker: by making the process cheaper and simpler, Hello Divorce can help far more people too. This model addresses the inefficiency of uncontested divorces while also expanding the size of the market Hello Divorce lawyers can serve, and in turn, expanding access to justice.
What’s more, the lawyers at Hello Divorce are making more money than traditional law firms because they’re handling higher volumes. Clients get what they need without breaking the bank. Everyone wins.
Lessons from Jack: Carving out a lane in the latent legal market
So if the legal profession is part of a global market worth trillions and traditional barriers prevent firms from capturing their full potential, what can law attorneys do?
As Henry Ford famously said, “If I had asked people what they wanted, they would have said faster horses.” Newton echoes this statement: customers often articulate their problems as solutions they think they need. The real opportunity lies in digging deeper to understand underlying issues and delivering transformative solutions.
Clio’s success didn’t happen by accident. It stemmed from a deliberate, customer-centric approach to innovation. Here are a few lessons from Clio’s playbook:
1. Think like a startup
Startups thrive by solving real problems and adapting quickly. Law firms can do the same by encouraging staff to embrace new technologies and changing their processes by listening to what their clients actually want.
Firms that embrace legal tech tools, such as VXT and Clio, are already seeing the benefits of increased efficiency and client satisfaction. Law firms can position themselves as pioneers in delivering client-centric services, by leading with, adopting and embracing legal tech. If you’re still unsure about the value of tech, take a look at our recap of ALPMA 2024 for more on how tech-savvy firms are pulling ahead.
2. Rethink your pricing models
As Clio’s Legal Trend Report highlighted, traditional hourly billing often deters clients. As more tasks become automated and time tracking becomes less necessary, law firms are switching to flat-fee billing. This allows them to retain the value of their services and handle more cases, staying profitable by being more efficient.
The legal trend report showed that changing pricing is a win-win for firms and clients alike. Flat-fee billing cases are resolved 2.6 times faster than hourly-billed cases. Firms using flat fees are nearly twice as likely to get paid immediately after closing a case. This shift aligns with client preferences, with 71% of clients favoring flat rates for their legal matters given the transparency and consistency that model offers.
3. Leverage automation and use tech to handle the ‘boring’ tasks
Automation is a game-changer for the legal industry. According to Clio’s Legal Trends Report, up to 74% of a law firm’s billable tasks can be automated. While complex legal tasks like negotiating settlements still require human intuition, automation is perfect for routine and tedious work (and can help address some of those unmet legal needs we mentioned earlier). For example, attorneys using VXT’s legal phone system can make and receive calls that are automatically transcribed, summarized, and saved directly to a case in Clio.
By automating manual paperwork such as time recording and file notes, VXT can save attorneys five to ten minutes per call. In an industry where billing is often measured in six-minute increments, these time savings can significantly impact profitability and free up your time to focus on work that matters.
4. Focus on client experience
We believe the future for law firms is client-centred. Jack Newton agrees — in fact, he’s quite literally written a book on the subject. Those attorneys that can better meet client needs are the ones that will earn better reviews, more referrals, and more returning clients.
Client experience is becoming a critical differentiator. Research from the Legal Trends Report shows only 33% of firms respond promptly to emails, and nearly 50% of firms fail to answer phone calls, leading to lost business.
Clients prefer firms that communicate effectively and transparently. Tools like Clio and VXT enhance communication by integrating client interactions directly into case management systems, ensuring no detail is missed.
Listen to our podcast episode, "The one mistake that's costing law firms new clients" for more insights on how VXT can improve the way you communicate.
VXT’s cloud-based phone system is essential for improving client experience. By integrating with case management systems like Clio, VXT syncs your contacts so you always know who’s calling, meaning you can always prioritize clients over other callers.
Is your firm ready to make the change?
The legal industry is sitting on a trillion-dollar opportunity. But to unlock it, law firms need to rethink how services are delivered.
Much like Clio and Hello Divorce, achieving product-market fit starts with understanding client needs and addressing the access-to-justice gap through creative, efficient, and client-focused solutions.
For traditional law firms, this is a wake-up call. Those who embrace innovation—just as Clio did—will bridge the access-to-justice gap, achieve growth, and secure their place in the trillion-dollar future of law. It’s time to stop playing catch-up and start leading the charge. So, are you in?
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