Few segments of the legal industry are poised for disruption quite like research—a market long dominated by Thomson Reuters Corporation’s Westlaw and Reed Elsevier Group plc’s LexisNexis. Even though Lexis and Westlaw bills can run into the millions of dollars at large law firms, the big two have had few viable down-market challengers. The barriers to entry in the field are high. New companies serving the legal sector have to be prepared for a market that changes incrementally and expects comprehensiveness and quality, says David Perla, a venture capitalist at 1991 Ventures. “More than any other profession, lawyers can’t be wrong,” he says.
The challenges of developing a new research product haven’t kept out all newcomers, though. One company that’s anted up is Fastcase, a legal research service that since 1999 has built a web-based library of primary legal materials: state and federal statutes and cases. Founders Ed Walters and Phil Rosenthal came up with the idea when they were associates at Covington & Burling in the late 1990s. A Fortune 5 client asked them to find which cases were available for free on the Internet. “‘We don’t pay to put the books on your shelves,’ Walters recalls the client saying. “‘That’s your overhead. Why are we paying for Lexis and Westlaw?’” (The sentiment is even stronger today: According to the The American Lawyer’s most recent Law Librarian Survey, 72 percent of respondents said this year they’re recouping fewer online research costs than they were a year earlier ["Beyond Recovery," July 2014].
