Aron Solomon on the growth of legal tech in Canada
Aron Solomon, head of LegalX, MaRS, Toronto.
It's been only eight months since the MaRS Discovery District launched its LegalX industry cluster led by Aron Solomon. In that time two major national firms – Blakes and McCarthy Tétrault – as well as Thomson Reuters have signed sponsorship agreements. The CBA is also partnering with LegalX to launch an event at the CBA’s legal conference this summer in Ottawa. CBA National caught up with Solomon to get his insight into the state of legal innovation in Canada.
CBA National: How serious are the firms and organizations you’re partnering with about legal tech?
Aron Solomon: I think we’ve spoken with every large firm in Canada about being partners in LegalX and we heard a huge range of things — and some of them weren’t great. But we set out to work with two firms — Blakes and McCarthy — and what we’ve seen internally has been really positive. They’re big powerful firms, right? but they really are embracing innovation in a very concrete way. They’re willing to try new things; they’re willing to do things with us; they’re willing to talk to start-ups.
N: What have you seen come out of it?
AS: If you look at a big law firm in Toronto, its problems really aren’t unique to that firm. It’s a problem that’s probably shared with a big law firm in Silicon Valley and London and Dubai. So the firms here understand this and they’re willing to be open about solutions.
N: Take me through the lifecycle process of how an idea is generated in LegalX and makes its way to implementation inside a law firm?
AS: Great question. So we have start-ups working in all different areas and all different stages of growth. We have some really, really early ones that aren’t just an idea on a napkin. They’ve got a viable product but they’re not generating revenue, they’re not in the market yet. We have others who have raised significant rounds of revenue and of financing, and have a lot of revenue as well. We get a whole bunch of senior people from the firm to go deep with our start-ups and to ask them a lot of questions. Because not every start-up is out there building a product. A lot of start-ups are building features, and there’s nothing wrong with building a feature. It could be a feature that maybe somebody like a Thomson Reuters really wants, or it could be a feature that plugs in really well to something a law firm is already using.
N: What’s the difference between a feature and a product?
AS: A feature is much more narrow — something that could append or stick to something that’s already out there in the market, where a product is much broader and wider. Generally start-ups want to go out and build products. Sometimes they have a feature but they want to think that they have a product and we have to dissuade them from thinking that and actually tell them it’s not a bad thing to have a feature.
N: And how does the firm end up adopting the product or feature?
AS: So they might see something they like; they might say, “Yeah we’ll pilot it”. But we also have start-ups that are beyond the pilot stage, generating revenue from law firms with their products in Canada.
N: Just in Canada?
AS: We’re a global player. We’re working with start-ups all over the world, so it’s not just limited to Canada, and we have start-ups that are selling in other parts of the world as well.
N: What has surprised you about the start-ups you’ve seen?
AS: We didn’t expect to see very interesting plays in the family law space and we’ve seen a couple. So we work with Miralaw, for example. That’s one of our start-ups that’s doing some really cool stuff. We also work with the guys from Beagle. Beagle is an AI play when it comes to contracts; they’re doing great global stuff. I helped to run an accelerator in Beijing and Beagle was part of that accelerator.
N: What are they doing that other legal start-ups could learn from?
AS: Those aren’t the only two; I like all of our start-ups. But they have really good teams that come at the problem from a different perspective and with a lot of experience. They’ve got good products that really solve a pain point for people who go through the difficult process of, say, getting a separation and divorce on their own; they’ve shown a very cost effective and complete way of doing it.
N: What are you looking for in a legal start-up?
AS: What I look for is a mix in the team, a good idea. Timing is critically important. Even though legal technology and legal innovation is still pretty young, I really don’t want to work with a start-up that’s hitting a space that was maybe hot a year and a half ago. I want to work with start-ups that, by the time they’re built and ready to go, are going to be hitting an area of law that’s really clicking now.
N: How do you identify that?
AS: I’m an experienced entrepreneur myself and I’ve worked with hundreds, if not thousands of start-ups, and probably seen 4,000 pitch decks in my life, if not more. So you’ve got to go with your gut, because we probably meet seven or eight start-ups for every one that we choose to work with, just because we don’t have enough bandwidth to work with everybody that wants to work with us.
N: Any advice for a young legal entrepreneur?
AS: You know, sometimes you’ve got young associates who’ve working big law. They’ve managed to save a couple bucks. It gives them an extended runway that’s critically important, because early stage financing is really hard, and it’s particularly hard in Canada. If you’re going to go out and build something yourself, you need to make sure that you’ve got enough runway so that the whole thing doesn’t die before you can get it to market. Something that people don’t think about enough is that if you’re actually going to go and leave your job and be a legal entrepreneur, you’ve got to make sure that you’ve got a plan as to how you can do it, because in 2016 nobody’s investing in your idea. They may invest in something once it’s built and you’re able to show them some traction, but people aren’t throwing money at you because you have a great idea on a napkin.
N: Is the legal start-up space finally catching up with other industries?
AS: I was an education technology entrepreneur a decade ago. The exact things that were happening in edtech 10 years ago are happening in legal tech now and I’ve seen so many things that give me a sense of déjà vu. And the same thing is going to happen.
N: What about the whole regulatory environment? Does it need to fundamentally change? Or can you get around it anyway?
AS: Both. First of all, you can get around it. Secondly government approaches us and says you know, “We actually want to be innovative”, like different branches of government they say, “We’d love to work with more entrepreneurs, we’d love to see stuff”. Folks who we don’t think – entities that we don’t think have money are willing to put money behind ideas. So the answer is twofold. You can often get around things because they present a bigger obstacle in the mind than they do in practice, and the second thing is that a lot of folks, even within the system, realize that change needs to come. Not all that change is going to come through technology but some of it will.
N: Where does Canada stand in legal tech?
AS: What we’ve done in eight months with LegalX and what all our friends at the Legal Innovation Zone at Ryerson have done is absolutely solidified Toronto’s place on the map in legal innovation. We have our flag planted in the ground in Beijing, in Hong Kong for LegalX. We go to places like that and we hear about the things that are coming out of Toronto.
This interview was edited and condensed for publication.
Yves Faguy is senior and online editor.