Locally sourced: Legal tech startups carve out niche in Indianapolis

Law firms of every size are increasingly relying on legal technology tools to help them do their work, improve efficiency and assist with contract and transaction management.

Depending on the firms’ needs, they may also contract with legal technology service providers.

Ryan Short, vice president of Indianapolis-based Proteus Discovery Group, said Indianapolis has seen its share of legal tech companies launch within the city since his company was founded in 2015. Proteus advertises itself as a legal services and consulting firm specializing in information governance, e-discovery and document review.

In addition to his company’s continued growth, Short pointed to Doxly and PactSafe as two software platform providers that he views as Circle City success stories.

“That’s a huge testament to the legal and tech acumen of Indianapolis,” he said.

According to Short, the biggest change he’s seen with legal technology companies locally since 2015 has been the infusion of private equity.

For example, Doxly, a software-as-a-service firm, was founded in 2016 by Haley Altman, a former partner at Ice Miller LLP, under the High Alpha umbrella. The firm’s clients were mostly law firms, primarily for the Am Law 200 market.

In 2019, Doxly was acquired by Litera Microsystems, a Chicago-based provider of document-management software. Likewise, PactSafe was bought by Ironclad, a global digital contract management company.

Proteus has decided to remain financially independent, with 90% of its revenues coming from referrals, according to Short. He said the company has thrived by being responsive and available in ways a global company can’t for its customers.

Law firms and other companies don’t want to fill out tablets and forms and wait for extended periods of time to hear back from a legal tech provider, Short explained.

“They want one or two people to build relationships with,” he said.

Also, Proteus offers stripped-down pricing and tries to make things as simple for its customer base through its legal tech offerings.

The tech tools getting the most attention right now are transaction management and contract management, Short said. The most popular thing is minimizing the amount of data hosting.

“That’s a recurring cost that clients have to pay every month,” he said.

Proteus has 13 employees and is not looking to layer a lot of cost to its operations, Short said.

“A lot of our (customer) requests are in the Midwest,” he said. “It tends to be concentrated primarily in Indiana and surrounding states.”

Law firms’ interest in legal tech services

Tony Paganelli, of Paganelli Law Group of the north side of Indianapolis, said most legal tech startups he’s heard about help business/transactional lawyers with high volumes of real estate transactions.

In his own practice, Paganelli has grown his firm from working out of a spare bedroom to a 30-person team, including 18 lawyers. He credits legal tech tools with making that growth possible.

“We spend a lot of time thinking about data security,” Paganelli said. “We use two-factor authentication and encryption for everything, and we leverage Apple’s fingerprint and Face ID technology to secure all our devices.”

In the early years when his firm was small, Paganelli served as his own IT support and leveraged the best technology he could to encourage his firm’s growth. He said he wasn’t in a position initially to enlist the help of legal tech vendors.

But starting in 2017, Paganelli began outsourcing his IT support needs via a contract with company called My IT Indy.

That continued until last summer when, with the firm tripling in size, Paganelli brought IT in-house and hired the firm’s first full-time IT director last June.

Paganelli called his law firm “tech-heavy” and described it as ahead of the curve in that area.

“It allows us to litigate anything, anywhere against much larger law firms,” he said.

Also, the firm is as paperless as possible, which Paganelli said makes it unique for its size. Everything gets scanned, and all the firm’s data is stored in the cloud with local backup.

“We store everything in PDF format,” he explained. “This helped us incredibly in March 2020, when we had to close the office and work remotely for many months. We still have a lot of remote work, and the technology continues to make it possible.”

Meeting the need

Getting to 25-30 employees probably motivates a lot of firms to bring their IT needs in-house, as Paganelli Law did, Paganelli opined.

Seth Wilson, an attorney with Adler Attorneys who frequently writes about legal tech issues, said legal technology startups are used to solve more specific problems. He said small and midsized law firms are looking at how to integrate technology into their practices and may go to legal tech companies for services, depending on their needs.

Wilson said he’s optimistic that legal tech startups have a good opportunity for success in Indiana. That’s because he’s seeing a higher adoption of legal tech tools, as well as growth in practice management tools in recent years.

Also, lawyers are becoming more aware of technology tools, Wilson said.

“There’s some great stuff on the horizon with these tools,” he said.

At Paganelli Law, the firm uses similar software as other firms, including Microsoft Office, Adobe Acrobat, Westlaw and the Slack messaging program — all of which have made remote work easier to manage, Paganelli said.

The firm is also on its third or fourth document management system, Paganelli said, adding: “We buy a new computer at the rate of one a month.”•