When Xavier Helgesen got the email on Feb. 3, 2020, that UpCounsel was shutting down, he was shocked. A client of the lawyer marketplace for his own businesses, he believed it had saved him thousands in legal fees. So he and business partner Sieva Kozinsky, who together had just founded a small private equity firm, Enduring Ventures, decided to act. To keep UpCounsel from closing down, they bought it.
Sixteen months later, the business is not only alive and well, but reporting double-digit revenue growth, consistent profitability, and accelerating demand for legal services through its lawyer marketplace. And now, it is launching a crowdfunding campaign with the mission of further accelerating its growth and of “bringing legal to the people.”
UpCounsel privately launched its crowdfunding campaign on WeFunder earlier this month (which you can access here) and will open it to the public on Wednesday, July 28. The company seeks to raise from $50,000 to $5 million, which is the upper limit allowed for such a campaign by federal securities law.
“We’re Bringing Legal to the People,” says the campaign’s WeFunder page. “The UpCounsel solution is simple: an online marketplace connecting businesses with a network of experienced independent attorneys — for 1/3rd the price. We remove the headaches and hassles for everyone, bringing you Legal You Can Love.”
“It basically gives us a chance to let our stakeholders buy into our success,” KJ Erickson, UpCounsel’s chief executive officer, told me. “And the more people we have that are shareholders in our mission and in our vision, the faster that we can grow it.”
It also offers a way to raise capital that circumvents many of the downsides of traditional venture capital, she said.
Erickson and Chief Revenue Officer Paul Drobot recently sat down with me in an exclusive interview to tell the story of the company’s phoenix-like rise from the ashes of near shutdown to now launching this campaign.
Erickson and Drobot lead a new management team that Enduring Ventures put in place after it acquired UpCounsel. Erickson is an experienced entrepreneur who was named by “Rolling Stone” in 2017 as one of 25 people shaping the future — a list that included the likes of Elon Musk and Kamala Harris. Drobot previously led sales at legal tech companies Atrium and Logikcull.
“We needed to take a business that was essentially closed, quickly formulate a plan, and then take that plan to market,” Drobot told me. “And the complexities of that plan is it needed to address all of the challenges in the previous model and also allow us to help this business to truly realize its potential.”
Before the acquisition, UpCounsel’s revenue came from charging clients a 30% commission on the fees they paid lawyers hired through the site. The problem with that was that revenue fluctuated unpredictably based on variations in site traffic and lawyer engagements.
Seeking more-predictable revenue flow, the new management team flipped some of that cost to the attorneys, instituting a monthly subscription fee for attorneys to be part of the service and to be able to bid on jobs posted on the site — something UpCounsel calls “legal-as-a-service” and which more closely aligned UpCounsel with a typical SaaS model.
At the same time, it significantly reduced the commission it charged clients to 8%, thereby reducing the cost to clients of legal services they purchase through the site.
Revamping its business model bore fruit, UpCounsel said, enabling the company to create a recurring stream of predictable revenue. “Our new business model has transformed UpCounsel’s future with a hyperfocus on recurring revenue,” UpCounsel says on its crowdfunding site.
Further, Erickson said that the company has doubled its revenue, seen its traffic explode, and has more jobs being posted than it can fill. UpCounsel says it was profitable (based on EBITDA) in its first 12 months of operation after taking over the company and that it is operating at a revenue run rate of $2.6 million.
Now, UpCounsel is planning to launch several new products — and eventually to launch its own branded law firm.
One such product, slated to launch within the next two months, is Direct Connect, by which attorneys will pay to allow clients to contact and book them directly.
As Drobot described it, Direct Connect sounds like an easy button, which attorneys can place on their profile page, social media sites, articles they publish, and elsewhere. Potential clients will be able to click to connect to the attorney’s UpCounsel portal and describe their legal need, and the attorney can then reach out directly to the client to connect.
Further down the road, UpCounsel says that it plans to launch its own branded law firm, citing new lawyer regulations that will allow it to do this.
“By standing up our own branded law firm, we will be able to dramatically increase the rate of fulfillment of current inbound demand at very high margins without impacting current subscribers, leading to a 4-6x jump in revenues,” the crowdfunding page says.
While Erickson and Drobot declined, for competitive reasons, to provide specific details, Drobot said that they have done a lot of investigating and have developed several potential options for how to create “the digital law firm of the future.”
“That can take a lot of different forms, but at the end of the day, the North Star for us is how do we best serve those millions of entrepreneurs and individuals and small business owners that want fast, affordable, transparent access to great legal,” Drobot said.
With UpCounsel’s crowdfunding campaign now underway, Erickson said she is committed to two core missions for the company.
One is to bring legal to the people. “We believe it shouldn’t be only the wealthy who can afford to protect themselves in a contract dispute or start a business that depends on a patent,” she said.
The other is to make legal “something you can love.” Erickson said she has heard testimonial after testimonial from clients about how much they loved the experience of hiring an attorney through UpCounsel and how it enabled them to get their businesses off the ground when they would not otherwise have been able to afford legal help.
“We basically cut all the overhead and the fat out of the old, bloated big law firm model and we make it easy and fast and reliable to hire partner-level attorneys at literally a third the cost of going through big law.”
(To read a more detailed report on UpCounsel’s development over the past 16 months and its crowdfunding campaign, visit LawSites blog.)
Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at email@example.com, and you can follow him on Twitter (@BobAmbrogi).