ContractsCounsel
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ContractsCounsel

The Challenges of Building a Professional Services Marketplace

By Ray Allen, Founder, ContractsCounsel

In the past 10-plus years, we have seen a shift in the employment preferences of professional service providers such as business consultants, accountants, and even lawyers. Rather than working solely within large firms or corporations, these highly-skilled professionals have shifted away from traditional firms toward marketplaces. By design, these tech-enabled marketplaces cut out the middleman (e.g. the big firm) and allow professionals to connect directly with their customers.

With the increasing demand for remote work as a result of the pandemic, this trend has continued to accelerate. Business consultants on Catalant. Visual designers can be found on marketplaces like Behance. Software developers can be sourced on Upwork. And lawyers leveraging marketplaces such as the one that we founded, can be found on ContractsCounsel.

Sourcing clients via professional services marketplaces allow service providers to cut the time, risk, and expense of traditional marketing, while ensuring they’re connecting directly with customers in need of their knowledge and expertise.

Sourcing clients through professional services marketplaces allow service providers to cut the time, risk, and expense of traditional marketing, while ensuring they’re connecting directly with customers in need of their knowledge and expertise. Service providers can now acquire new clients without paying upfront marketing costs that provide them with no ROI guarantees.

For customers, these marketplaces are designed to simplify the entire process, end-to-end, at a more affordable rate. The feedback we receive from our customers consistently points to an ‘ease of process’, which highlights the friction in hiring a professional service provider.

But because the marketplace is, by definition, two-sided — designed to support both the service provider and the client — the team working behind-the-scenes must double the amount of time speaking to users, be empathetic to both sides of the marketplace, and triage what is most important to build into the product that will make the biggest impact in the shortest amount of time.

Launching and scaling a professional services marketplace is very different from traditional software-as-a-service (SaaS) companies for the primary reason that you are building technology and services for two or more sets of customer audiences, often with completely different incentive structures. Today, I’m sharing some of the things I’ve learned along the way as we build ContractsCounsel, a legal professional services marketplace.

Let’s start with the hard stuff.

Research the field, understand the opportunities, and the limitations.

Regulated markets with licensed professionals have unique attributes to their profession, often including independent codes of ethics that you need to navigate and design for. Specifically, regulators within the legal market create guidelines for how lawyers can operate their businesses, including how they market their services, who they can accept as clients, how they establish attorney-client relationships, and how they collect payments from clients. To successfully build a legal marketplace, you cannot build systems that are contrary to the rules that attorneys must follow.

Balance supply with dynamic demand.

Here’s an age-old marketplace problem: You must make sure you have enough supply, to fulfill the demand for services, and enough demand, to keep the current supply happy. Perfecting this balance is a challenge, particularly as you’re starting up. Focus on getting foundational supply in place, then grow from there, shifting focus on the demand side — the customers.

Within regulated markets, including the legal industry, you will quickly learn that supply is not homogenous. Service providers often focus on different subject matters, practice areas and are licensed to provide services within a limited geographic area. This creates a new challenge in supply management since the service providers on your platform cannot service all of the incoming projects from clients. To solve this, you need to start small and focus on building marketplace liquidity within specific geographic areas and practice areas or tasks types, which affects both how you market to customers and recruit supply. For example, when we first launched ContractsCounsel, we made a concerted effort to recruit lawyers in Florida that primarily worked with startups. We then focused on Florida startups on the demand side to work to get initial traction going in that market.

There are infinite permutations of use cases and services that can be provided.

The professional services category is very broad. This is reinforced by the fact that hourly rates are the preferred form of billing for most service categories, as opposed to creating a list of prices based on task-type. Because of this, there are nearly an infinite amount of tasks a professional services platform can offer for their service providers. Designing a platform that captures and indexes these tasks, with clean structured data, and a well-designed user experience is difficult. It’s also an ever-evolving challenge. Build your MVP to intake project requests as general as possible, and continue to make it more specific as you go, especially for tasks where you are seeing success.

Manage customer discovery effectively.

Most consumers lack a clear understanding of how professional services providers work. They’re often unclear on what they specifically need to solve their problem — particularly in the higher-end service categories like legal. And even more importantly, they have no idea of the estimated costs for these services. When building a marketplace, you have to design a customer journey that guides people to figure out what they need, so that you can extract the relevant information your service providers need to know in order to understand the project, and feel comfortable providing pricing.

When building a marketplace, you have to design a customer journey that guides people to figure out what they need, so that you can extract the relevant information your service providers need to know in order to understand the project, and feel comfortable providing pricing.

For example, a business owner with an e-commerce store may know they need to create online agreements for their business since they service their customers online. They may even know they need a Terms of Service and Privacy Policy created. However, if you simply ask for a Terms of Service and Privacy Policy to be drafted for your business, a lawyer will not be able to provide pricing until they further understand details about your business, including what service(s) you provide, how your customers use your website, and what information you collect from them. You need to build your product to effectively capture the information your service providers will want to know to provide pricing, while still keeping the experience easy for your customers. This is a balance that is difficult to manage and takes a lot of trial-and-error.

Flexibility (or inflexibility) of the services providers on the platform.

Many professional services providers invest to receive additional training, licensing, and education. As a result, they view their industry as being of a higher caliber than others. Because of this, they’re often more inflexible than lower-valued services categories, which means they dislike a constantly changing user experience.

Moving quickly and iterating is one of the best ways to learn what to build and where to focus your resources, but can often be met with pushback or lower engagement from the supply-side of your marketplace.

Moving quickly and testing a lot of approaches is one of the best ways to learn what to build and where to focus your resources, but can often be met with pushback or lower engagement from the supply-side of your marketplace. Even worse, it can lead to churn in your supply. Test new approaches only when necessary, and be able to empathize with your service providers to pre-emptively sell against their expected pushback. And, make sure to communicate the value of your marketplace improvements in a way that is meaningful for your service providers. At ContractsCounsel, we send out email updates each time we enhance our platform to ensure our lawyers understand that our site improvements are a direct result of their feedback, and designing to make their experiences better, and their work easier as a result.

Fragmented technology stack used by services providers to complete work.

There is a vast amount of software available to professional service providers to help them successfully complete their work, on time, and on budget. In the case of ContractsCounsel, the lawyers on our platform use software-enabled research tools, document automation software, case management software, CRMs, time-keeping tools, and more.

Building a platform that does not infringe on the use of these products, or effectively integrating these products, or even replacing these products is challenging. Consider that for some service providers, it may be helpful to have all tools on one marketplace. But for others, this may not be a high priority. Make smart investments in the tools you build for your supply side by building focus groups who have direct communication with your product team to share critical feedback that will set you up for long-term — and continuous — success.

Professional service providers don’t like competition.

Traditionally, competition between service providers has been minimal, since their industries are fragmented, and there is a lot of friction in getting clear pricing information. In some circumstances, regulators have also crafted industry rules to limit competition, which can be seen in the legal market. As a result, service providers can become disheartened quickly, and will churn if they don’t see immediate results.

Measuring and engineering an experience to show fast ROI to service providers is key to increasing engagement on the supply-side of your marketplace.

Measuring and engineering an experience to show fast ROI to service providers is key to increasing engagement on the supply-side of your marketplace. This is particularly challenging when you are first starting out since you do not have any audience behavior data for either side of your marketplace to make decisions around. You will need to constantly engage with service providers and even find other sources of value to keep them engaged in your platform. For ContractsCounsel, we have done this by sharing summary pricing data to service providers when they do not win a project. This allows them to gain insights on the market and provides tangible information they can use to better compete in the future.

Another consideration is conversion rates for your supply. Given marketplaces often create a new level of competition for service providers, their conversion rate is likely to go down relative to their regular practice. It is important to always be aware of your supplies conversion rates. You should also consider building tools that make it cheaper for service providers to put in proposals or offers. If participation is too high-touch and conversion rates are lower than normal, you are likely going to see your supply churn.

Service providers prefer to work independently, then build their practice on a platform.

The only way to build a sustainable marketplace business is to get both sides of the market to ‘lean in’ to your product. Both sets of users must eventually prefer working within the experience your product provides, as opposed to the alternatives. For service providers, this means they must prefer to build their practice on top of your platform, as opposed to building a practice independently.

The only way to build a sustainable marketplace business is to get both sides of the market to ‘lean in’ to your product.

Because the legal services market is still largely offline (it is estimated 8 percent of legal services happen online today), most service providers would choose to build independently. Your product and experience must show them a next level of improvement, which means improving both client acquisition costs and productivity, cutting down administrative costs, and making their work more profitable.

Having a preference to build independently also means service providers can assign different levels of priorities to clients. Clients retained through traditional channels, as opposed to through a platform, may get priority in service. This creates challenges with service providers being less responsive to customers, which can ultimately lead to refunds and cancelled projects.

With all of the work it takes to build a professional services marketplace — and it will be work — you may be wondering why I did it to begin with. For me, new technology has made it possible to innovate in professional service fields that are long overdue for change that improves the experience for both the client, and the service provider.

Building ContractsCounsel provided the opportunity to make working with a lawyer more accessible, simple and affordable for clients. And, it made working as an independent practitioner or launching a small firm possible for lawyers across the U.S. We’re proud of our work to continuously drive impactful innovation in the legal field. And I’m excited to see more professional services marketplaces launch in the future.

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ContractsCounsel is a legal platform that helps people and organizations easily find and hire contract lawyers online.

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Ray Allen

Ray Allen

Building a marketplace @ ContractsCounsel.com

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