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Law And New Order — “The Legal Sector Was Ripe For Disruption”

How LegalTech Clio transformed the practice of law, for good

Bettina Engert
Nov 25, 2020 · 6 min read

Some sectors adopt faster than others. However, this doesn’t mean there is no latent demand for innovation among the slow adopters. Take lawyers for example: while they might be hesitant to adopt cutting-edge technology, they gladly embrace a simple, yet groundbreaking solution to minimize the administrative burdens of their practice. Enter Clio: a Canadian grown-up that provides law firms worldwide with a solid and intuitive cloud-based software to manage their workflow. Founded in Vancouver and backed by Acton since 2011, Clio has now 1,000 employees based in offices all over the world and raised with a US$250 million Series D one of the largest funding rounds in LegalTech history.

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Clio founders Jack Newton and Rian Gauvreau (image source: Clio)

Digitalization brings technologies and tech-enabled innovations that have transformed some markets faster and more profoundly than ever before. From finance to media, cloud computing has changed existing sectors, while simultaneously creating new markets and value networks, displacing or replacing established big players, products and services. Needless to say, disruptive innovations tend to be introduced by start-ups rather than industry incumbents.

In 2007, many areas had already been changed by cloud computing and some were about to be: “Back then, the costs and effort SME law firms invested to manage their daily administration and reporting were a true nightmare. I’m talking about time tracking with pen and paper and a Rolodex to manage the client base. All this, with billing on the clock and lawyers are under pressure to be accessible or risk losing clients,” Acton’s Managing Partner Christoph Braun recalls. “The legal sector was ripe for disruption.”

Although the legal industry had traditionally been regarded as slow to adopt technological changes, it was ready to benefit from smart innovations like Clio. Founded and based in Vancouver, it offered a web-based Software-as-a-Service on a monthly subscription that included time tracking, billing, reporting and client management. “Their value proposition to small and mid-size law firms was as strong as it was simple: if Clio helps recover one billable hour per month, it will have more than paid for itself.”

Clio case study: 2019 Reisman Award Winner // Best New Law Firm: Vanst Law (source: YouTube)

Within ten years, Clio has redefined how lawyers around the world practice, due to the visionary efforts of its founders Jack Newton and Rian Gauvreau, two friends from Canada who met as kids in third grade. “We always wanted to build a company together, we had this entrepreneurial drive,” co-founder and CEO Jack recalls. Over the past decade, they have not only built a successful company, but also successfully transformed the practice of law for good.

“I’d describe myself and Rian, when we came up with the idea for Clio, as being two hammers looking for a nail,” Jack recalls. “We saw this huge technology wave approaching, which was cloud computing back then. We saw that there was this once-in-a-lifetime opportunity to capitalize on this tech launch, a technological transformation wave that would be disruptive in an industry.” They then started looking at industries that were ripe for fundamental transformation by this technology. “Rian happened to have exposure to legal. And he got to see how lawyers use technology — or maybe better put, don’t use technology — and the kind of opportunity that creates. That was the light-bulb moment for us,” he remembers.

The two friends not only noted about a dozen desktop-based products that had mostly been built in the 1980s and had remained relatively unchanged in the last two decades. Other common on-premise options were expensive, too hard to implement, unreliable and difficult to use. They also learned that smaller firms often faced more ethics and malpractice complaints, in part because they didn’t have the right software tools to help them manage their businesses.

Jack and Rian asked themselves: “What if we could make all of this available via the cloud? What if we could make it easy to use? What if we could make it simple, and what if we could make the administration of your law practice via a simple web-based application a lot easier than with the existing solutions on the market?” And that’s exactly what they did. “It was the grind, and it was a lot of hard work and a lot of uncertainty, but we were lucky,” he says. Both founders were technically skilled, Jack was a software developer by training, Rian had an MBA and experience as an information technology manager at a law firm, which enabled them to build the first software version themselves. About one year after they came up with the initial idea, they launched Clio.

“For a while, Rian was working on the company in Vancouver and I was working on the company in Edmonton,” Jack remembers. “Our first 10 employees were completely remote, working from home.” Initially, they were bootstrapping, moonlighting, weekending, while working day jobs and building families.

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Clio’s founders Jack Newton & Rian Gauvreau (image source: Clio)

“We thought a terrific outcome would be if this thing got big enough to return a couple hundred thousand dollars a year that we could divvy up and live of,” he says and admits: “we had no idea and, initially, no intention of building a company of this scale. We just didn’t think the market was there for it. Once we launched, we realized that number one, this market is enormous and way bigger than we ever thought it was in the first place. And two, we discovered that there’s this unbelievable latent demand for technology in the legal space.”

The start-up quickly gained industry notice. In its founding year, the company won a best-in-show award from the American Bar Association and law firms everywhere quickly adopted Clio’s legal practice management service.

The two founders realized this was a massive opportunity and began looking to raise venture capital. “We don’t invest if founders are already thinking about an exit while making their pitch,” Acton’s Christoph Braun states. “We invest in entrepreneurs like Jack and Rian who want to be on board for the long haul and have a real vision for their company.”

From early vc case to category leader in legaltech

At the time Acton’s investment took place at the end of 2011, Clio’s growth resulted from word of mouth in the legal community. With the funding, the company started hiring additional staff and invested in marketing. “Since our very first investment, the Clio team has been driven by a clear long-term vision and a focused product strategy, leading to years of phenomenal growth and satisfied clients,” says Christoph. “Today, as one of the category leaders in terms of LegalTech, its platform enables lawyers around the world to spend more time on their client’s cases.”

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Photo by Tingey Injury Law Firm on Unsplash

For a decade now, the company has been transforming the industry — 150,000 customers spanning 100 countries, and the approval of over 66 bar associations and law societies globally. Clio’s award-winning culture has made it the employer of choice for top talent in Canada and beyond. “Every day we work to create a scalable culture that is both human and high-performing,” CEO Jack says. “We believe we can have both, without sacrificing one for the other. Our teams are made stronger by diversity, and we aim for culture-add, not just culture fit.”

The company continues to lead the industry with initiatives to drive innovation in the legal sector and has been recognized as one of Canada’s Best Managed Companies, a Deloitte Fast 50 and Fast 500 company, and, most recently, Company of the Year by the British Columbia Tech Association.

A Canadian success story, to be continued

In September 2019, Clio raised $250 million in venture capital funding from TCV and JMI, one of the largest funding rounds in Canada’s and LegalTech’s history. This, says Jack, sets the stage for the next phase of Clio’s growth and will accelerate its ability to realize this vision: “Clio is committed to building the essential operating system for lawyers, one that focuses relentlessly on unlocking new efficiencies and entry points to legal services. This will allow legal professionals to easily deliver exceptional client experiences, increase their productivity, grow their firms, and make legal services more accessible.”

A new order in law and disruption for good. Clio’s success story demonstrates just how that works.

Acton Capital

GROWTH. DRIVEN BY REASON. Insights into our investment strategy and portfolio.

Bettina Engert

Written by

Shaped @FlixBus’ story from startup to corporate in Europe/US. Writing about entrepreneurship and tech-enabled business models, ready to scale & built to last.

Acton Capital

Insights into our investment strategy and portfolio. Sign up here for our newsletter: http://eepurl.com/cpCH-5

Bettina Engert

Written by

Shaped @FlixBus’ story from startup to corporate in Europe/US. Writing about entrepreneurship and tech-enabled business models, ready to scale & built to last.

Acton Capital

Insights into our investment strategy and portfolio. Sign up here for our newsletter: http://eepurl.com/cpCH-5

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