Building a Legal Marketplace
A Conversation with EJ Lawless for the HR Tech GTM Podcast
Key Takeaways:
- Building a startup is a constant learning journey
- The future of hiring is headed toward hyper-vertical labor marketplaces
- RUVs are amazing tools to help niche founders
- Turning customers and supply-side users into investors is the ultimate competitive advantage
- I’m expanding my startup into other verticals
Intro:
Host: EJ Lawless, founder, HR Tech GTM
EJ hosted me on his podcast, HR Tech Go To Market, where we discussed building out
a vertical marketplace based on the legal industry, including finding the right market,
how network effects work in vertical labor marketplaces, and potential ownership
amongst customers and users.
The Inception of Lawtrades
1:08-3:54
- The original inception of the idea came to me when I was in law school
- I didn’t want to go the traditional route of working at a law firm for 10 years
and making partner
- I realized there wasn’t an easy way for lawyers to be independent
- I tinkered with the idea of an internet platform that could make more legal
professionals independent
- I have a pretty entrepreneurial background
- Before Lawtrades I launched a Facebook cover-photo web app and made a
6-figure income while in law school
- It all stemmed from wanting to make more lawyers entrepreneurs
Finding the Imbalance Between Supply and Demand
3:54-6:25
- When I graduated law school, I was entering one of the worst legal
job markets in history
- I realized I might not get hired
- There was an imbalance between supply and demand
-But, demand for lawyers was still increasing
“What if we connected these independent lawyers with companies who were
willing to hire them…and built out tools to make it more efficient?”
- These hyper-vertical labor marketplaces were being built across anything
from management consulting to finance
- We’re disrupting the Big Law model
How I Validated my Startup
6:25-9:03
EJ:
“What in your mind was the most important to validate... that lawyers would want
to be entrepreneurial, or that clients would use a service like this?”
Raad:
- Our marketplace validates both the needs of the client and the talent
- On the supply side
- Will the lawyer actually validate this as a source of income?
- On the demand side
- Would the client try out something new, opposed to just going to Big Law?
- The pandemic forced companies to consider us as a viable option as
work moved online
- Our growth has been snowballing ever since
Finding the Target Market
9:03- 10:30
EJ:
“I am assuming you are not selling into HR departments...how does it
look like for finding the clients?”
Raad:
- We’re predominantly selling into legal
- We work with general counsels, assistant general counsels, or senior
in-house lawyers
“It really just is selling to lawyers”
- We use companies with one sole legal decision maker, and companies with a
legal team
How I Leverage Network Effects
10:30-13:15
EJ:
“Does this create any network effects as you sell into lawyers who know if they
want to, they can start their own practice and use Lawtrades?”
Raad
- We have actually had some people on the supply side get hired by a company,
become the GC there, and in turn hire other Lawtraders
- There’s network effects on the supply side from a traditional market perspective
- The more talent we have on our site, the faster matches and better experience
“It’s a very referral driven industry”
- You’re not going to really sell via a LinkedIn ad or cold email
- It’s word of mouth driven
- Getting a couple of customers really happy in the beginning led to a lot of our growth
- Our focus is on community building through virtual and in-person events
“For vertical marketplaces, it’s important to provide an amazing experience for both
sides, because they’re going to drive your growth”
Building Momentum
13:15-15:30
EJ:
“Do the referrals start coming after you get those first pieces, then everything
starts building on it?”
Raad:
- We have private communities for both clients and talent
- We have virtual events, a Substack, podcast, and an online private community
for clients
- We’re rolling out a slack channel, and recurring town hall meetings for talent
“It really is just investing into the community, and sometimes that takes awhile”
- You may not see immediate results, but when you reach a critical mass it
really does snowball
- It’s a slow burn, but expansion grows fast
Creating a new Category of Work in the Internet Community
15:30-19:24
EJ:
“It sounds like you’re basically creating a category... by building awareness
for lawyers then helping to create social proof, and a community for
support- is that right?”
Raad:
- It is a different category, building into the internet community
- It’s about your online profile reputation, rather than who you know
- We’re signing up lawyers that never considered this a real possibility
“We have no idea how many lawyers are sitting in full time jobs right now
and considering us a real possibility”
- Just because you have a full time salary doesn’t mean you’re
guaranteed a job
- It’s viewed as a more risky bet (post-pandemic), than diversifying
- You can diversify your skill set and be more marketable online
- You can get hired within the same day, even minutes on Lawtrades
- Vertical marketplaces bring hiring into the future, in a more predictable
way
- Our talent are way more easily hirable by companies, because payments
are seamless, and there's a dashboard with spend predictability
“It’s a peak into the future of work”
How Lawtrades Works
19:24- 23:42
EJ:
“I'd love to understand what your actual product looks like today”
Raad:
- From the perspective of a customer, you go onto Lawtrades and create
a position
- You are given a shortlist of candidates that are a good fit based on price,
practice area, and jurisdiction
- Then you’re able to say who you’re interested in and request interviews
- After the call, you can hire with one-click
- The client signs a quick one-page MSA, and then you’re entered into an active
engagement
- You can forecast spend every 30 minutes, and receive real-time work updates
- Payment is seamless, you get weekly updates on who’s working on what and get
a nice clean invoice at the end of the month
“You have one central portal for all your legal data and everyone that is involved
into your legal operations”
- From the talent side, if you create a profile then get verified and approved, you
get a curated feed of opportunities
- With one-click you can apply to your Lawtrades profile
- You use your dashboard to do all your work, communicate, and receive payouts
- You can jump from one company to another seamlessly
Why a Two-Sided Review System Works
23:42- 27:23
EJ:
“As a lawyer how is your work product reviewed… is it similar to Upwork or Fiverr?”
Raad:
- With marketplaces, you typically have transactional reviews
- We’re on the the opposite side of the spectrum, because the work is on-going
- The average engagement on Lawtrades is 8-12 months
- We collect private feedback on a week-by-week basis
- We institute month-end reviews for both clients and talent
“We’re looking to collect feedback from both sides to make better and better matches”
- It’s a two sided review system that’s more focused on a getting that level
of transparency to make both sides perform better
- We’re exploring allowing both sides to take a mini personality test and get into a bigger
picture of how they work so we can match people in a more deeper way
How I am Turning my Users and Customers into Investors
27:23- 30:50
EJ:
- Braintrust is a freelance marketplace on the development side that gives
governance tokens to people who sign up and refer others.
“Have you thought about something similar for Lawtrades?”
Raad:
- We’ve definitely talked about a model like Braintrust for a year or two, but we
didn’t want to be the first company to do it
- There’s inclusive elements that we include without even offering a token
- We have a RUV that allows us to raise from our users and customers
- We have town hall calls around new features
“We’ve taken a different approach, but we’re both trying to get some
skin in the game from our users on both sides of it”
- Turning customers and supply side users into investors is the ultimate competitive advantage
Why I Decided to Raise Funding for my Startup with an RUV
30:50- 34:12
EJ:
- The RUV is a “roll up vehicle” that allows you as a founder to allow smaller
check writers to invest in your company
“How does it create a sense of ownership for the stakeholders?”
Raad:
- It’s amazing tool to help founders
- You can create an RUV and get this link where you are able to accept checks
directly from accredited investors
- We’ve had people invest as little as 1k, and some put well over 6 figures into it
“You can close your round from strategics and people that will actually add value to
the company beyond the initial check”
- We’ve had customers, and strategics invest, and we’ve had people from the
supply side invest
- The RUV was a little bit scary at first
“It’s so new but it feels so right”
- If you’re doing a good job building a great community within your company,
it lends itself so well to the idea of raising money directly from them
“The idea of acting like a public company even though you are private and raising
via an RUV is the future of fundraising”
- Less and less founders will be at the mercy of a VC and those closed door
conversations
“It’s revolutionary and I hope more people leverage it”
How I Facilitate the RUV Process
34:12- 36:44
EJ:
“Given who you are selling into, if you have customers who are selling into you
in the legal trade, how do they think about disclosures to the company?”
Raad:
- If we’re selling into bigger companies, they’ll most likely need to
get approval for the disclosures
- We’ve had people that invested and were told that somebody else would
need to lead the deal
- From a founder’s perspective, if you’re open and transparent that’s all
we can really do
- Most big companies have a built-in process to facilitate that
- There might be more of a wait, but it’s worth it for both sides
“No one is going to get your product better than your customers”
- They truly understand the pain-points that a VC or outside angel will not
“There’s going to have to be more companies built around certain
pain-points VCs just can’t understand”
Why I am Considering Expanding my Startup into Different Verticals
36:44- 39:23
- It's always doubling down on the product and expanding the suite of
features we have
- Our customers often tell us what feature they want next
- We’re interested in inviting other outside counsel relationships through our dashboard
“The tools that we’re building are applicable to many other verticals around the
professionals category- other than legal”
- Our tools are built for knowledge workers who think for a living
- This can apply to people in finance, management consulting professionals, or HR professiona
“If you take out the word Lawtrades and use the product, it can pretty much work across
anyone that’s looking to become independent”
- We’re experimenting and tinkering with the idea of this becoming even bigger
than we originally thought
Why Starting a Startup is the Ultimate Learning Journey
39:23-42:46
- When Lawtrades first started it was this little appointment booking system that
connected people looking for divorce, or personal injury lawyers
“The journey of building a startup is taking the hits, but not taking it too personally...and
trying to extract some truth from that”
- We struggled for a good portion of the beginning
- When we were able to pivot, things started working
“Studying your startup under a microscope and doing that day-in and day-out for
years is the ultimate learning journey”
- There is no book or course to compare what you’ll learn doing your startup
- You are going to change and evolve, especially if this is a long-term journey
- You want to stay true to your mission, For us it’s making professionals independent
and democratizing services on the internet