Raad Ahmed said he co-founded Lawtrades in 2016 with the aim of helping recent law school graduates secure remote legal gigs with startup companies, as well as small and mid-sized businesses (SMBs).
But it gradually became clear that early-stage companies were not consistent users of legal services, in part because many go out of business fairly quickly.
Additionally, the businesses eager to use Lawtrades to find legal talent rather than staffing up their in-house departments were looking for more experienced attorneys than those just starting their careers.
However, Ahmed said his small team noticed that one frequent user of the talent platform was the general counsel at EquityZen, a pre-IPO equity marketplace. The GC explained his legal department had evolving needs by the day, so he preferred the speed and affordability of finding help on Lawtrades compared to recruiting new talent or turning to an expensive outside law firm.
Ahmed, the CEO, said this information prompted Lawtrades to pivot its focus in 2019 to serving mid-market and enterprise-sized businesses, particularly hyper-growth tech companies with small legal teams.
“In order for us to break even or get to cash flow positive, we needed to build a business with a customer base that had more recurring usage,” Ahmed told Legal Dive.
Rapid growth during the pandemic
The timing of Lawtrades’ shift in its target customers proved auspicious, as the COVID-19 pandemic that swept the world in 2020 caused a transition to widespread remote work and presented companies with a vast array of legal challenges that needed to be addressed quickly.
Additionally, the pandemic prompted many legal professionals to leave behind full-time law firm and in-house counsel jobs to pursue more flexible work opportunities as part of The Great Resignation.
These factors helped spark significant growth in the number of companies utilizing Lawtrades and its matchmaking algorithm to connect with lawyers for help with a variety of projects.
Meanwhile, the number of legal professionals on the platform rose from 400 at the end of 2020 to upwards of 1,000 by the end of 2021.
This increased activity resulted in Lawtrades, which has a transaction fee that it embeds into its professionals’ hourly rates, seeing its annual revenue rise to $2.7 million in 2020 and more than double to $6.6 million in 2021.
“We got a lot of these mid-market companies that would use us for like 10 to 15 hours a week, and then we would match the supply-side lawyer with multiple similar engagements,” Ahmed said. “So a company would be able to hire them flexibly and the lawyer would essentially get their desired work out of it, whether it's 25, 30 or 40 hours [a week].”
Lawtrades’ improved financial performance helped the company raise a Series A funding round of $6 million that it announced earlier this year.
The fundraise was supported by more than 100 investors and customers, according to Ahmed and co-founder Ashish Walia, and brought the company’s total funding to $9.7 million.
The platform’s revenue growth has further accelerated in 2022, with Lawtrades achieving $1 million in monthly revenue for the first time in August and growing its roster of professionals to the 2,000 range. The platform’s lawyers have an average of 6-7 years of legal experience, typically with a corporate background.
Professionals on the platform worked more than 7,000 hours last month, also a record for the company. The most active practice areas on the platform in 2022 have been commercial contracts, workflow management and privacy.
Diversifying beyond attorneys
Another contributor to Lawtrades’ growth in recent years was its decision in 2019 to add non-lawyer legal professionals to its platform, including those working in legal operations and as paralegals.
Ahmed said this change was made due to a demand from customers for a wider array of personnel to assist their legal departments, and it has resulted in GCs utilizing legal teams they find on Lawtrades.
“We've always sort of thought of this as, ‘One company, one lawyer,’” Ahmed said. “Now we're getting one company and they’re getting a lawyer, a legal ops person, a paralegal, maybe a contract admin person, and they're using them in a flexible way. And then that pod is also working with other teams across other engagements. So it just became this really interesting, natural organic progression towards diversifying legal beyond just attorneys.”
While lawyers still make-up 62% of the legal professionals on Lawtrades, 18% are paralegals, 5% are legal operators, 4% are compliance professionals, 3% are contract admins and 8% comprise the “other” category.
Ahmed said Lawtrades hopes to attract even more legal operators to the platform, which is one reason why it hosts events focused on the growing field such as a recent webinar about paralegals who have transitioned to legal operations.
“We're thinking about ways to potentially train more folks to become legal ops-certified or paralegal-certified on Lawtrades just because the demand has been pretty high,” Ahmed said.
Expanding customer base
Meanwhile, Lawtrades now has more than 100 business customers, including Yelp, Cruise, AngelList, Headspace and Duolingo.
Headspace, which offers mindfulness products, has been using Lawtrades since 2017 for commercial transactions assistance and more recently has utilized it for legal operations.
Michael Marchand, deputy general counsel at Headspace, said he appreciates that Lawtrades is cost-effective, efficient and user-friendly.
“I love the decentralized roster of attorneys — it allows me to simultaneously allocate different personnel across projects and geographies to meet specific business needs,” Marchand said in a prepared statement. “And perhaps most importantly, the client service is incredibly responsive, flexible and creative to help meet the evolving needs of a rapidly scaling business.”
Lawtrades says that clients are paying an average hourly rate of $150-180 to hire a legal professional on the platform, which compares favorably to some of the nation’s largest law firms charging as much as $2,000 an hour.
Lawtrades’ top industries this year are Internet, technology and financial services businesses, and the platform said it has seen an increase in the number of crypto and public companies using its platform.