Disruption versus Subtraction

We buy a lot of stuff from Amazon. A lot.

Every day I get text messages telling me what Amazon has shipped us and when something has arrived. I'm often baffled that my wife and kids have become so familiar with the "Buy Now" button, but I'm also amazed at how quickly and cheaply Amazon sends me all this stuff.

The switch from stores to Amazon has been weird, but the experience is simply better. I can tell my Alexa device that we're out of pasta, or find my Audible book on my Apple Watch, or set up subscriptions that send me what I need automatically. And it's all cheaper than if I drove to the store up the street.

Does the affordability of Amazon make our purchases risky? Dumb? Why does "You get what you pay for" not apply to my family's Amazon purchases?

In short, innovation. And this applies to legal tech as much as audiobooks and pantry staples. True innovation cuts costs while improving the user's results, and it's time we expect that from our legal tech providers.

The Disrupted Don't Like Affordability

This question of innovation and cost-cutting landed on my desk in the form of a white paper from LexisNexis. The Gray Lady of the legal research world took aim at more affordable research upstarts like Casetext. They began with a pretty shocking argument.

Here's Lexis' take-home message: "There may be situations where cheaper is better, but often, going the cheap route will cost you more–sometimes a lot more–in the long run. Legal research tools for attorneys are an example of the latter."

The white paper essentially argues that affordability is a sign of inferiority in our corner of the world, that high quality products always cost more. This conclusion, as my Amazon experience illustrates, is potentially insane.

I don't want to get into a pitched battle with the Lexis people – Casetext did that well here – but I am very interested in the argument.

When does making a cheaper legal research tool signal a lesser legal research tool? How can you tell when cost really indicates quality?

Cheaper by Subtraction

In my law practice in East Austin, we served a lower income bracket than many attorneys in the area. My partner, Angela Faye Brown, and I took the access to justice issue seriously. We desperately tried to solve it ourselves.

We bent over backwards in an attempt to lower our costs. We set up a subscription model for our family law cases. We limited the scope and allowed people to pay over time. In some ways it worked, and in other ways it killed our practice.

You see, if we reduced the costs by 40%, we still didn't change the buyer's expectations and experience. Cutting a case from $5,000 to $3,000 was an enormous slice for us, but a prospective client that doesn't have $5,000 also doesn't have $3,000. We tried to offer the same product at a lower price, and it was impossible.

To be honest, we didn't innovate; we just cut options. We certainly made innovative changes at the edges, but the court system was the same and the client expectations were just as high. Our lower price was an indication of restricted services (which we in law kindly refer to as "limited scope"). We tried to get bare bones, and we created a lesser version of our product.

Ethics rules required that we still deliver a high standard of care which created a friction that cost us our practice. We had to decide: do we innovate or do we stay traditional? That's the decision legacy publishers like Lexis and Westlaw face every day, and it's one that new market entrants like Casetext have grappled with as well.

Cheaper by Disruption

No example of innovative disruption is more overplayed than Uber (and here's a good analysis of the overplayed term "disruption"). We know that taxis cost more than Uber's peer-to-peer leasing and that Uber uses modern technology to facilitate those connections. We don't need to rehash the history.

The interesting part of this example that most people miss, however, is that Uber is not a technology company; it's a design company.

Uber didn't create much that was new, in fact. They stacked existing apps in a way that solved a particular problem (as is thoroughly detailed in the book The Fuzzy and the Techie). Uber designed a user's experience. Their design innovation cut out inefficiencies in the use of owned property and in the experience of finding a ride. The lower cost was a result of Uber's disruptive design.

There's a larger principle at play here: you can disrupt simply by creating a better business model.

As I've detailed elsewhere, businesses large and small must constantly ask themselves four questions: how the company creates value, who it creates value for, how it captures value, and who it captures value from. The combination of answers to those questions is what defines a business model, and answering them differently than traditional players is a formula for innovation.

Uber did this. Their service costs less because the company changed the game. They innovated a business model, answering the four questions differently than the cab industry. Through that effort, Uber saves users money without simply subtracting features.

Couldn't a legal research company do the same?

Are Casetext and Google Scholar Both Disruptive?

To help apply this "disruption versus subtraction" framework to legal research, let's contrast two targets of Lexis' ire: Casetext and Google Scholar. It's an instructive comparison. (We'll leave Fastcase, the other target, to defend themselves as they'd like. They also deserve way more credit than Lexis' paper gives them.)

Let's start with Google Scholar. In simplest terms, Google Scholar is a search tool rather than a research tool. It allows Google's search customers to access previously hidden legal text. The tool is paid for through Google's other products like search ads and Google captures that value from its advertisers. Google's goal is to provide accessible content. That's the business model.

Casetext comes at legal research differently. It is truly a research tool, going beyond mere access to content. We use A.I. tools to not only find patterns, but to help lawyers find insights behind those patterns. We provide these tools to law firms of all sizes through an affordable monthly subscription program. These firms pay directly for the tools. That's our model.

Google Scholar subtracts. It provides access to content that Lexis and Westlaw once had monopolies to. Nothing more, nothing less. They strip away most of the bells and whistles that the duopoly added over the years to make their products more attractive and costly. That is competition by subtraction.

In contrast, Casetext disrupts. Our advanced tools cut out many of the inefficiencies of the legacy publishers. Rather than hire teams of writers to create case summaries, for example, we pull summaries from opinions written by later judges. That simple change saves users money not through subtraction, but through innovation. The difference matters for lawyers looking for alternative research tools.

No, Casetext and Google Scholar are not the same. Equating them demonstrates a fundamental misunderstanding of the disruptive technologies that threaten legacy players like Lexis.

Choose Wisely

This all seems academic if you're a law firm owner, but it isn't. Understanding the difference between disruption and subtraction allows you to evaluate your legal tech providers with a better critical eye.

Lower costs matter. As a solo attorney, you can bet I paid close attention to price tags. However, they may also signal important truths about your tools.

Does the tool cost less because the company cut out key features? You should know that in advance and either replace them or learn to live without them.

Or does the tool cost less because the company designed for innovation? If so, decide whether the value they focused on is the value your firm needs.

In the case of Casetext, I've been amazed at what design innovations can do. It's easy for companies like Lexis to dismiss us with the "you get what you paid for" cliché, but that would border on business owner malpractice for you. You need to find the tools that change the game.

Hold your legal tech providers to the flame. Hold yourself to the flame as you evaluate those providers. Hopefully, using this "disruption versus subtraction" framework will help you do both.