Law firms and regulatory bodies are increasingly adapting to technological innovations, which is accelerating the maturing of the legaltech market globally. Driven by innovative technology, multifaceted business models, and high customer expectations, the legal industry is facing unprecedented challenges and opportunities across its entire value chain.
The main driver of adoption is the need for streamlined, secure, and efficient legal frameworks that enable startups to grow and better manage their businesses. Subsequently, the rise of the legaltech market has been exponential over the past few years. Whether it’s the increased popularity of Virtual Legal Assistants, the organizational spending on third-party risk management technologies, or investment in privacy tech, one thing is definite: Legaltech is catalyzing the development of other sectors.
Abu Dhabi Global Market (ADGM) Courts have created a unique role model in the legaltech space in the Middle East. Specifically, ADGM Courts provide the world’s first end-to-end eCourts platform which eases the process for companies and startups to set up their entities in Abu Dhabi. Furthermore, the progressive regulatory frameworks opened up the legal market to alternative business structures and empowered alternative legal service providers to operate easily in Abu Dhabi.
This safety net has given Abu Dhabi-based legaltech startups the ability to experiment and grow market share and ultimately: profits. In addition to the thriving financial technology industry, access to international talent, and world-class universities; Abu Dhabi has become ahead of the curve when it comes to advancing legaltech startups.
Recently, ADGM had the opportunity to meet with Patrick Rogers, co-founder and CEO of Clara, an Abu Dhabi Global Market-based legaltech startup aiming to allow businesses to streamline their legal processes and ‘make informed decisions’. Its minimalistic interface and clean layout make it easier than ever for startup founders to form their legal companies, benefit from an all-inclusive advisory service, and to stay on top of things.
Your main customer segment is early-stage founders who don’t particularly have the time, money, or the knowledge around all legal matters - how are you planning on attracting and retaining other market segments (scale-ups and mature companies)?
Certainly, as Clara matures as a product in the coming years, its functionality and utility will increase and we’ll be addressing the needs of more mature companies. But for the time being, we’re staying focused on our primary user – founders of early-stage tech companies – and not getting distracted by requests to build features for later-stage companies.
Data leads to better decision making, more efficient legal processes, and endless opportunities - Though, how does Clara aim to address the unstructured siloed mess that is legal data, particularly in emerging markets?
We won’t be. We’re not aiming to fix a lot of the mess that’s already there. That wouldn’t be a good use of our time. But by focusing on companies that haven’t tied themselves into those knots yet, we can make sure the companies of tomorrow avoid these legacy issues. Our aim is to have every ambitious tech company “born” on Clara. Right now for example, if a founder wanted to incorporate an ADGM company, they could do so through our platform without ever sending an email, talking to a lawyer, or paying to use theirbank account to pay an invoice. This is the future of legal services. As digital natives from the get-go, the Clara platform can ensure that early-stage founders adopt best practice on the legal side from day one, while at the same time saving them huge amounts of time and money when it comes to legal procedures.
How do you see the future of legaltech in the MENA region?
There is certainly a lot of low hanging fruit that could be addressed. But at the end of the day, we’re playing in a regulated sector and the tech can only get so far ahead of the existing regulations. Broadly speaking, the MENA region comprises of civil law jurisdictions. But the Clara platform is focused on common law jurisdictions through which venture capital prefers to flow -including ADGM. Take something as basic as e-signatures. Our platform would lose substantial utility if the agreements you can create on it couldn’t take advantage of our DocuSign integration to have them executed digitally. In most MENA jurisdictions, the legality of e-signatures has not yet been written into law. So there are challenges to the progress of legaltech in the region but at some point, these will be overcome. The rabbit is out of the proverbial hat since the onset of COVID-19 and we should see most governments support the acceleration and adoption of all things digital – including legal services.
Legaltech in a post COVID-19 world: How were your business operations impacted by the COVID-19 pandemic and the resulting economic downturn? What consequences are you still suffering/benefiting from to date?
COVID-19 will be a net positive for our business – we’ve already been seeing that since Q2. A key premise of our strategy is that the world is ready for a lot more automation and digitization, even in respect of something like legal services, which have historically been delivered strictly by law firms. Law firms have been huge beneficiaries of the lack of competition / disruption from tech companies resulting from the fact that legal services are highly regulated and it’s been difficult for startups to break into the sector due to existing laws and regulations which often seem to be aimed more at protecting the position of lawyers than providing consumers with cheaper, faster and, yes perhaps even better service.
What resiliency and mitigation strategies have you adopted and/or planning to adopt to overcome the forecasted global economic recession?
Fortunately, we’re in a good cash position and our business is growing. The pandemic is teaching people a lot of things - including that a lot of services can be more efficiently delivered digitally. And a huge number of people will decide in the coming months, whether because they’ve been laid off or simply because they’re sick of working for a traditional corporate, that they’re going to become entrepreneurs - our target audience. As we move into 2021, I think we’re going to see an explosion of innovation from new startups the likes of which haven’t been seen before. And Clara is going to be ideally placed to help these companies on the legal side of things. So we’re bullish on our short term prospects.
We’re currently living ‘the future of work’ that everyone had been talking about- how will Clara’s business model adapt to a post-COVID-19 economy?
The value-driven solutions the Clara platform delivers doesn’t need to adapt – it was born with the future of work in mind. We’re building a solution that reflects a new model for the delivery of legal services – one that makes a lot more sense for founders – but also for VCs, accelerators, and innovative lawyers, all of whom will benefit from investing and supporting founders who are educated, informed and have their startups’ legal properly done from day one.
Have you benefited from any of the support measures [in light of COVID-19] provided by Abu Dhabi public institutions? If yes, which ones? And, in your opinion, how helpful have these steps been in sustaining the Abu Dhabi tech ecosystem amid the past few months of lockdown?
The ADGM authorities anticipated early on the extent of the negative impacts the pandemic was likely to have on business operations broadly and took prompt action to institute a range of measures to help reduce the costs of doing business for ADGM-based companies. At Clara, we have been fortunate to benefit from a number of these support measures, including the waiver of commercial license renewal fees and data protection fees.
In your opinion, are we going to witness an accelerated rate of mergers and acquisitions in a post-COVID-19 economy?
For sure. Given the rate of acceleration of technology globally, economic uncertainty, and rapidly evolving lifestyle choices, I think it’s inevitable that a lot of the COVID winners and losers will be looking to either take advantage of opportunities to scale through M&A – or simply to survive/make it to an exit.
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