Focus: Legal startup tries to tap unserved market

The founder of a legal startup has designed his business to try to tap into small businesses he says have been largely unserved so far.

Cian O’Sullivan’s company, Beagle Inc., uses artificial intelligence to read contracts.

Through the Kitchener, Ont.-based company, O’Sullivan hopes to tap into the 93 per cent of small businesses that don’t currently use legal services, according to an American Bar Association study.

Launching a venture in the legal space has its risks. But there are opportunities out there that can help legal startups gain their business footings. And there is money to be had, too.

O’Sullivan, a Canadian contract negotiator who is also licensed to practice law in New York, took a page from current communications tools that provide immediacy, such as texting and social media.

He created Beagle to read contracts and present information in an intuitive way, providing immediate assistance to lawyers and businesses consuming contracts.

With machine learning, it also learns the preferences of its user.

“We’re filtering. We’re bubbling the stuff that’s most important up,” says O’Sullivan.

“Beagle addresses a lot of . . . issues by providing the technical infrastructure to allow people to understand what’s going on in a contract dispute instantaneously, as well as being able to break down that communication into individual points to enable that micro transaction as needed.”

Beagle was named among the Canadian Innovation Exchange Top 20 most innovative companies of 2015.

A Canadian Bar Association jury was impressed enough to award Beagle its top prize in its The Pitch competition last summer, which came with a two-week residency at the Toronto incubator MaRS and a shot with four other startups at an equity investment of $200,000 from the China Angels Mentorship Program.

Although it’s only three years old, Beagle is already involved in a pilot program with publishing giant Thomson Reuters to use the technology for its client base.

Last fall, Australian law firm Corrs Chambers Westgarth announced it had entered into a joint venture with Beagle to provide its technology in Australia and New Zealand.

And starting in June, German automaker Volkswagen’s car parts purchases will all go through Beagle software.

O’Sullivan has also been working with Dentons’ Nextlaw Labs, which has been aggressively pursuing technical solutions for the legal industry and decided to invest in Beagle.

“Beagle is committed to making a global impact for law firms and their clients, as well as non-lawyers and small business owners who may not have had access to contract review capabilities before,” O’Sullivan said in a press release when the deal was announced in December.

There has been acknowledgement of the need for new initiatives in the legal space by the legal industry itself. Blake Cassels and Graydon LLP held an innovation forum with MaRS in November where Blakes announced its Global Legal Innovation Challenge, asking legal technology developers around the world for solutions to keep businesses updated on relevant legislative and regulatory changes.

Krista Jones, head of the work and learning cluster at MaRS, says the international law firm Dentons’ U.S.-based initiative Nextlaw Labs is driving and attracting new initiatives.

The advantage to Nextlaw Labs is that the connection to the firm allows access to customers and feedback from people already in the industry, says Jones.

“What’s really interesting here is there are new businesses being created that are just different business models in law that uses technology as an enabler but not at its core,” says Jones.

Investments often follow trends, and technological innovations are definitely emerging as a trend in the legal industry.

While generally a business needs to have some early market traction to attract investors, Jones says deep technological development, such as in artificial intelligence, seems to attract money a little earlier in the process.

And contrary to popular thinking, innovation is not owned by the hoodie-wearing, skateboarding sect, she adds.

Only 11 per cent of business founders at MaRS are under 30 years old, while another 14 per cent of the business founders involved a youth along with someone older.

The greatest majority of startups — 75 per cent — were launched by people older than 30.

The Legal Innovation Zone at Ryerson University also had a pitch event, the Ontario Access to Justice Challenge, with Ontario’s Ministry of the Attorney General. The winners were announced in December. ParDONE was the winner of $25,000 in seed money, while Legally Inc. came second and received $15,000 in seed money.

Law Scout was third and received $10,000. The companies were also given the chance to work out of the LIZ for four months, in addition to the four months they had already spent there gaining access to pitch workshops, mentorship and advisors.

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