Right now, there are hundreds of thousands of LegalTech products in development. Following my experience, a significant number of them are being built by lawyers - or more precisely, by law firms or forward-thinking legal professionals who manage to assemble project teams.
Many LegalTech ventures, however, are still in still under wraps, waiting for the right moment to go public. And while the LegalTech market is projected to hit USD 35.4 billion this year - and double again by 2035 - here’s the harsh truth: a large share of legal products currently being developed will either fail soon after launch, or never make it to launch at all.
Not because lawyers aren’t smart enough. But because what helps you grow a legal practice is exactly what holds you back when building LegalTech.
Here are a few insights I’ve gathered over nearly two decades of working with law firms across Europe and LegalTech companies founded by lawyers.
My background in business development and marketing gives me a clear view of the traps stalling LegalTech progress.
Caught Between Perfection and Progress
Many lawyers - by nature or by training - are perfectionists. Whether it’s an innate trait or something instilled through years of legal work, they tend to operate with meticulous attention to detail, a deep focus on risk mitigation, and an overarching need for precision. And while this mindset serves them well in legal practice, it often becomes a stumbling block when venturing into LegalTech.
Why? Because the LegalTech market plays by very different rules - rules firstly driven by speed and adaptability. Just look at the numbers. According to various sources, the LegalTech market is expected to grow at a compound annual growth rate (CAGR) of around 12.80% from 2023 to 2029. In contrast, the global legal services market is projected to grow at a CAGR of just 4.5% from 2025 to 2030. That’s almost three times slower. That’s why, in LegalTech, speed matters more than perfection.
Sure, lawyers are used to the “we need this yesterday” rhythm from clients. It defines their workload and eats away at any work-life balance they might have. But startup speed is a whole different beast. It’s not about urgency for urgency’s sake - it’s about being first to market, validating an idea, and answering all the tough “why” questions before the competition even blinks.
In the startup world, this speed has a name: the Minimum Viable Product (MVP). It’s the leanest, simplest version of a product that still delivers real value to target users - and gives the team actionable feedback under real-life conditions.
So why is launching with an MVP so crucial in LegalTech (unlike in traditional legal services)? Because it’s the only way to test whether you’re solving a real problem and whether your solution actually matters. It’s how you get real behavioural data - not just opinions or assumptions. Plus, it helps you avoid wasting time, budget, and energy by steering development in the right direction from day one.
But let’s be honest - how likely is it that a lawyer-led LegalTech startup would launch something that feels “unfinished”? Most wouldn’t dare. I’ve seen it too often: instead of shipping, the product is endlessly polished, developers pour in hours, and features keep shifting. In fact, all that was needed was a methodical sprint through six core MVP stages.
|
MVP Development Step |
What Needs to Be Done? |
Common Pitfalls |
|
1. Hypothesis |
What’s the problem? Who is the user? What’s the core value promise? |
Target audience defined too broadly (often to convince themselves the product has a wide appeal). |
|
2. Core Functionality |
Identify one or two essential features without which the LegalTech product has no value. |
Wrong assumptions about what the client actually values; efforts go into the easiest features to build, not the most critical. |
|
3. Quick Prototype |
Build a prototype using no-code tools, existing platforms, or a concierge model. |
No strict limits on time, budget, or functionality scope - resulting in full product development instead. |
|
4. Metrics |
Clearly define upfront what metrics will be tracked (e.g., conversion, activity). |
Choosing vague or misleading metrics -e.g., “Users liked it” ≠ “They’d pay or use it regularly.” |
|
5. Real User Testing |
Test with a small but well-targeted beta group. |
Selecting the wrong tester group - outside your real target audience. |
|
6. Feedback → Iteration |
Does it validate the hypothesis? If not - pivot or persevere. |
Overinterpreting or ignoring real user data when deciding the next step; failing to dig into the "why." |
“We’re not some student-run startup - we can afford real development.” I’ve heard that more than once. But here’s the reality: the companies that actually made it big didn’t wait for perfect - they shipped fast.
Dropbox launched with nothing but a video. No product, no platform - just a story and a waitlist. Zappos faked their backend by running to local stores every time someone placed an order. Amazon? Manual listings, orders shipped from a garage. It was clunky. Unscalable. Unimpressive on paper. But it worked - because it was fast, focused, and obsessed with real-world feedback.
That’s everything most lawyer-led LegalTech projects avoid - and exactly why they fail.
There’s another challenge that often comes hand-in-hand with lawyers’ pursuit of perfection when building a LegalTech product - an enormous amount of energy is spent on managing risks. Even those that are highly unlikely to ever happen. Or the ones that, worst-case scenario, could be solved with a couple of hundred euros later. In the meantime, we waste valuable time and burn through budget.
Why does this happen? Because a lawyer’s unofficial second title is “risk manager.” It’s a mental algorithm drilled into them from university days.
But here’s the catch - in the startup world, the spotlight is on the exact opposite: hidden opportunities. And shifting your mindset toward that, when you've been wired to think defensively for years, is anything but easy. But it’s also where real breakthrough begins.
Underestimating the Real Investment
Far too often, lawyers don’t fully grasp just how much it takes to build, test, and launch a LegalTech product. Sure, there’s a vague sense that development and coding aren’t cheap. But other critical expenses - like marketing - are seen as optional, even marginal.
Where does this mindset come from? Most likely from their own law firm management experience, where in many European countries, less than 1% of law firm’s revenue is allocated to marketing. But that logic doesn’t hold in the startup world.
Startups live and die by speed. And to launch fast, you need serious money - especially for marketing and communication. We're talking about investment levels most 100-200 lawyer firms wouldn’t dream of putting into a whole year’s marketing budget, let alone just for launching one product.
So when reality hits - it hits hard. Many lawyers feel they’ve already invested so much into development. The product is ready, it works, it’s smart. Shouldn’t the market just welcome it with open arms? But the market doesn’t care - and that stings.
If you asked me how much money you need to bring a LegalTech product to market, the answer wouldn’t be simple. It depends on your launch strategy, target markets, pricing model, and more. But generally speaking? You should be prepared to invest at least €100,000 for the first year - just for go-to-market activities.
Yep. That’s the harsh truth.
And that’s just the beginning.
Generic LegalTech Tools in the Era of Niches
There are hundreds of tools for managing legal practice. Just as many promise to connect lawyers with clients. And AI-based platforms now handle everything from document drafting to legal research. It’s a crowded field - and most ideas aren’t as original as they seem.
If you believe yours is truly unique, you probably haven’t looked hard enough.
Now add your limited marketing budget for product launch and zero chance to outshout others. The dream of LegalTech success is over before it even starts.
The only viable way forward? Go niche. Hyper-niche. But that leads to a new challenge: is the niche big enough, and is the problem growing enough, to actually support a sustainable business model?
That’s the question that makes or breaks the story.
LegalTech Business Model - or Monkey Business?
Whenever I want to understand whether a lawyer is truly ready to jump into LegalTech startup development - and has the necessary weight - to enter the startup space, I ask just one question: “what is the client acquisition cost in your law firm?”
Most can’t answer it.
But when someone answers with, “Depending on the methodology, it’s A or B,” I immediately know they’re ready. They have the mathematical mindset essential for building a LegalTech venture.
Why do I place so much weight on this question? Because most LegalTech startups jump into product development without a clue how much it will cost to acquire a customer. They build pricing models based on what users might be willing to pay, rather than considering the actual cost of reaching and converting them - or the return on investment throughout the customer’s entire lifetime value. Just recently, I had a case where, based on the client's business model and pricing strategy, the customer lifetime value turned out to be half the cost of acquiring that customer.
When you put those numbers (client acquisition costs and customer lifetime value) side by side, the scales quite often tip against the LegalTech business model. Which means only one thing: you’ll be burning through your own or your investors’ money for quite a while before - or if - you reach break-even.
Frankly, I respect those who run the numbers and then decide to step away. That’s a smart move. Because LegalTech doesn’t have to be synonymous with monkey business.
But that only happens when we stop thinking like lawyers - and start thinking like startups.
By Neringa Petrauskaite, Founder, Bound
