By Daniel Fisher, Forbes Staff
Dollar Shave Club was just bought by Unilever for $1 billion. That’s a mighty big number for a five-year old start-up. But the real story is how a start-up could disrupt an industry not by improving the product or service but by altering its delivery structure and pricing. Short form explanation: Internet, mass transportation, and globalization mixed with customer service, marketing, design, and a good niche. It made me wonder: is legal delivery ripe for similar disruption?
When Dollar Shave Club launched a few years back, Gillette dominated the razor business as it had for quite some time. That’s why Proctor & Gamble shelled out $57 billion for Gillette in 2005. Think back, say, to 2005 when law firms held a similarly dominant position in their market.
Dollar had a simple idea to combat the high cost of razors, a recurrently used item. The idea was to change the way men buy razors. This had two components: (1) make purchase easier; and (2) make it cheaper—without sacrificing quality. Dollar customers purchased razors online and subscribed to a monthly delivery; product was shipped to them for a fraction of the shelf price. Dollar eliminated the middleman; streamlined efficiency; routinized supply; and reduced price. Now think about agile service providers replacing traditional law firms, operating from a transparent, fixed-price model at vastly lower price points and stripped of all the pass-through costs of fancy office space, skyboxes, and partner tribute. That’s where legal service providers come in—law’s answer to Dollar.
Legal service providers are a multi-billion dollar market segment. They deliver disaggregated legal tasks (e.g. e-discovery, data management, document review, contract review, etc.) more cost effectively, transparently and efficiently than law firms. And the leading service providers, notably LegalZoom and Axiom, among others, are well-capitalized, tech- and process-savvy, broadening their portfolio of products and services, and gradually migrating up the complexity chain. And while LegalZoom is in the retail end of the legal market and Axiom the corporate, there’s more convergence than one might think.