Our latest GCRC Interview in our series about startups in the legal market. The interest in legal tech and innovation is huge at the moment as VCs look to seize the moment amid the shifting legal climate.
This interview is with Colin Rule from Modria.
To find out more about Modria, you can have a look at their website:
What does Modria do?
Modria is the world’s leading online dispute resolution company. Our business is rooted in deep expertise and proven technology. We are passionate about turning disputes into successful outcomes. Businesses and government agencies rely on Modria Resolution Center to turn their disputes into fast and fair resolutions.
One size does not fit all when it comes to resolving customer and citizen disputes. We’ve created an intelligent resolutions platform that eliminates endless meetings, complicated integration and overblown budgets, freeing parties and neutrals to focus on achieving resolutions. Each Modria Resolution Center module is built to maximize fair outcomes for all parties.
For what reasons did you start Modria?
I became interested in dispute resolution during my undergraduate days at Haverford College outside of Philadelphia. I managed the campus mediation program, majored in Peace Studies, and eventually took a job with the National Institute of Dispute Resolution in Washington, DC after graduation.
As the internet started to expand, I had a realization: all of these people interacting online were going to have disputes, just like in the offline world, yet were never going to meet face to face. They needed a way to resolve their conflicts. What’s more, the Internet was evolving as a communication platform that could fundamentally transform the way people resolved disputes. I knew there had to be a way for people to take advantage of the Internet to work out disagreements. This led me to launch OnlineResolution.com in 2000, an early ODR service provider.
In 2003 I was recruited by eBay as its first Director of Online Dispute Resolution. I led the team that implemented eBay’s ODR platform from scratch. We created online tools to help buyers and sellers resolve disputes. From eBay I went to PayPal and built their ODR system. My team scaled these platforms to process more than 60 million disputes each year. And we learned that providing fair redress drives not only huge economic efficiency, but also increased customer loyalty by more than 10%.
While at eBay I met Chittu Nagarajan, who was running the largest ODR system in Asia, ODRWorld, which included ODRIndia and ODRChina. We had always known that disputes, complaints and problems happen everywhere, not just in eCommerce markets. These issues often become a drain on time, money and legal resources, generating huge inefficiencies. In 2011 we realized that the Internet and online behaviors had matured to the point where it was time to do what I set out to do with OnlineResolution.com a decade earlier.
Chittu and I started Modria because we believe there is a better way to resolve disputes – between businesses and their customers, government agencies and their citizens, and between people. Our vision is to create a way to resolve disputes with clear communication and respect, harnessing the power of the Internet, allowing all sides to be heard, improving access to justice and helping businesses turn customer complaints into brand loyalty.
How did your legal experience motivate you to start the company? Did you feel there was a gap to be filled here in respect to what Modria is doing?
I was originally trained in mediation by the Society of Friends (Quakers), and managed the campus mediation program at Haverford College. I took a job with the National Institute for Dispute Resolution right out of college and noticed there was a gap in tools for alternative dispute resolution like arbitration and mediation.
Today I’m a Fellow at the Martin Daniel Gould Center for Conflict Resolution at the Stanford Law School. I believe the law is in crisis. Many of our legal systems were designed for a world where business was transacted in a single geography, at the pace of in-person transactions. Today, the courts can’t keep up with the pace of a socially-connected, mobile and online society. What’s more, cross-border transactions are challenging some of the fundamental jurisdictional frameworks. My background is in mediation and the intersection of dispute resolution and technology, and I saw the opportunity to combine my work with legal processes to improve access to justice and fair redress.
At Modria we work closely with lawyers to design adjudication processes, to support neutral decision makers in arbitrations, and to enable lawyer-mediators. I’ve worked closely with Stanford, Hastings, and other leading law schools. But realizing that I’m not a lawyer, I’ve always built teams that include lawyers. Even today, our product management team includes lawyers that focus on ensuring support for complex legal processes and ease of use for legal teams. Lawyers understand the need for ODR better than anyone.
How does Modria differ from other startups in the legal profession doing similar things to you?
The first difference is that we’re entirely focused on the resolution process: from capturing the details of a dispute from parties in an easy, online process; to powering negotiation, mediation, arbitration, and appeal. Other legal startups aim to streamline existing judicial processes by improving case management, docketing, or document management. These are features of Resolution Center, but we look at the dispute resolution business process from start to finish optimizing resolution processes to achieve fast and fair outcomes, not just making existing processes work a little faster.
While other startups have sought to tackle e-discovery or case filing processes, we bring parties, counsel, and dispute resolvers together on one secure software-as-a-service platform, opening new options for communication that aren’t available inside a traditional court system.
Our approach is made unique by bringing in thinking from ADR and ODR, and combining it with our technology and implementation experience from building the highest-volume online dispute resolution platform. Said simply, we’re the only ones that have tackled this problem at scale. The future of efficient resolutions is better software (as a service).
We hear from our customers that another key point of difference is that we “get it”. We’re dispute resolvers ourselves. We understand the human, social, and technological dynamics of dispute resolution. We know how to design dispute resolution systems that meet our customers’ needs, and we do that with a configurable platform that is designed from the start to adapt to our customers’ (and their customers’) needs.
Just how big is the legal market at the moment? How much is the market worth to investors?
We view the market for Modria products as more than the legal market, although the legal market is central to what we do. Every day there are millions of transactions. We estimate that 1% to 3% of all transactions, both online and offline, result in a dispute. In total, this amounts to at least 500 million disputes annually. The global online dispute resolution market is valued at $4B, and spans legal teams within corporations, government agencies and courts, law firms, and alternative dispute resolvers.
But with technology also, in some ways, a threat to the legal industry – in terms of the automation, say, of many of the processes that lawyers are paid so well to do – how long will investment in the industry last?
This argument about technology and the law has been unfolding for many years, well before Modria came on the scene. The debates over fee-per-hour vs. value-based billing, the impact of e-discovery and standardized drafting tools on fee-generation, and other such technological innovations have been seen as threatening.
In an increasingly global and always-on economy, the legal industry is presented with new and complex issues that continue to require the expert and rich skills of lawyers. Lawyers must be at the forefront of inventing the future of justice, both online and offline. Modria provides the technology platform. We partner with lawyers, law firms, and dispute resolution organizations to deliver dispute resolution services. Modria’s platform provides a level of efficiency and transparency that allows lawyers to focus on the hard parts that require expert legal skills.
Yes, the changes facing the legal field can be seen as threatening, but Modria is committed to working with legal experts to find new opportunities and exciting possibilities for legal professionals.
Larry Bridesmith from ERM Solutions told us recently that this is an excellent chance for innovation in the legal industry because of disruption. Is this chance being taken by the profession?
Accounting, human capital management, customer relationship management, marketing – each of these business areas has been fundamentally transformed by technology and the Internet. Beyond tools like word processing, email, and document management, technological change has been slower to transform the practice of the law. But now that disruption is coming to the legal industry, and there are definitely opportunities for innovation. The old ways of doing things are no longer keeping pace with the pace of civil and commercial disputes, and the field has to be creative in finding new ways to serve these cases. Modria is a part of reimagining how to achieve the objectives of the legal system, but it’s not the only solution, not by a long shot. Look at other forums like The Center for Innovative Justice and Technology, the Hague Institute for the Internationalisation of Law, and ReInvent Law for more examples. Some have chosen to resist change and try to hold on to the old approaches, but ample experience in other fields has demonstrated that such an approach is ultimately futile.
Investment in the legal industry seems to be growing slowly and there are hundreds, if not thousands of startups trying to follow in your footsteps. What advice would you give to any start-up looking for investment?
At Modria we have the benefit of a leadership team that has built successful companies from startup to IPO. The key for startup success comes in three ingredients: know your market and your customer, know why you’re the best at solving your customers’ problem, and focus. That last point is critical. The one advantage a startup has over mid-sized and large companies is the ability to completely focus on one thing, and adapt faster to develop a solution and a business model that scales. In a big space like legal technology, it’s easy to get distracted.
You have to find the part that you do better than anyone and focus on it. For Modria, that’s online dispute resolution. For each startup, it’s something different.
As to raising money, if you can address the points above, and present them in the context of a compelling business model, you’re on the road to raising money.