Data & It Law Week, vol. 32: legal startups funding, a trial of legal tech company and data breaches

A decrease in legal startups funding

The article at TechCrunch analysed the development of legal startups and their performance. The author shows that the investments in law-related start-ups had sharply declined.

“The sales cycle for the legal industry is so long – 12 months or more – and investors expect their companies to have more traction in the first 12 to 18 months than we can show.”

On the other hand, there are some examples of firms, which are still successful. However, in general, startups targeting law firms have struggled to secure a second round of funding.

In the last part of the article, the author describes positive effects of services, provided by legal startups.

Legal technology firm succeeded in the trial

LegalZoom is an example of a company that uses technology in legal practice. Thanks to that, it developed several products and services, which are more affordable than the traditional services of lawyers. Accordingly, LegalZoom is often under pressure.

ABA Journal article notes, that “LegalZoom has faced lawsuits in eight states seeking to shut it down for violating state laws barring the unauthorized practice of law.”

However, LegalZoom had succeeded in one of them. The decision was based on this idea:

“The referee compared the functionality of LegalZoom’s software to a scrivener who transcribes information without giving advice or consultation: “LegalZoom’s software acts at the specific instruction of the customer and records the customer’s original information verbatim, exactly as it is provided by the customer. The software does not exercise any judgment or discretion, but operates automatically in the same fashion as a ‘mail merge’ program.”

Data breaches by number

JD Supra had presented an interesting presentation about data breaches in business transactions. Some interesting facts:

– 42% increase in attacks in 2012

– 102 successful attacks per week

– The average cost of a data breach rose 15 percent since 2012 to $3.5 million per breach in 2013

– The average cost paid for each lost or stolen record that contained sensitive and confidential information also increased by more than 9 percent, from $136 (2013) to $145