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The legal tech sector has seen significant investment over the past few years. While most of the focus to-date has been on legal practice management (LPM) solutions that serve the SMB market (less than 20 attorneys), there has been increasing interest in mid-market (20-100 attorneys) solutions. Vendors are increasingly tailoring their offerings to meet the distinct needs of this growing and relatively underserved market.
With extensive experience in the LPM space, Stax explores the unique dynamics of mid-market law firms, comparing their needs to SMB firms, assessing the vendor landscape, and identifying opportunities for TAM expansion.
Growth Drivers
New adoption and switching continue to drive growth:
Mid-market firms (20–100 attorneys) account for 1% of all law firms in the US but represent ~20% of the total LPM TAM. A third of mid-market firms have yet to adopt an LPM solution, creating considerable whitespace.
Additionally, the ongoing shift from on-premise to cloud-based platforms is driving further market growth. As legacy systems are sunset, many firms are re-evaluating their systems, creating opportunities for vendors to capture share by offering modern solutions.
Mid-market firms prioritize back-office depth and customizability:
While SMB firms use LPMs to manage the lawyer and matter, mid-market firms use LPMs to manage the firm. The goal of the LPM is to reduce costs and increase revenue via increased visibility into KPI performance at the attorney, matter, client, and firm level.
As such, mid-market firms prioritize advanced back-office functionality in their LPM. These include advanced timekeeping, billing, financial accounting, and customizable reporting, with many firms treating their LPM as an ERP system. Unlike SMB firms—which focus on price and ease of use—mid-market firms value depth of functionality and the ability to customize tools to their needs.
At the same time, many mid-market firms operate as collections of “mini firms” due to their multiple practice areas. Each practice area often manages cases independently, whether through manual processes, their firm’s LPM, or document management systems like iManage or NetDocuments.
Still, not all mid-market firms are the same. Lower mid-market firms (~21–50 attorneys) with simpler workflows and fewer practice areas often align with SMB preferences and are more likely to adopt SMB-oriented vendors. Upper mid-market firms (~51–100 attorneys) demand greater sophistication, especially in financial reporting and customizability, reflecting their more complex workflows and client demands.
Vendor Landscape
The vendor landscape is fragmented and evolving:
Vendors serving the mid-market include SurePoint, Centerbase, Tabs3, Juris, and Actionstep. Unlike the SMB market, there is no 800-pound gorilla in the mid-market yet.
Vendors that successfully serve this segment must prioritize advanced financial functionality, as it remains a core requirement for mid-market firms. While SMB vendors are increasingly adding basic firm accounting capabilities, mid-market firms demand more sophisticated and customizable features.
- Effective mid-market solutions include features like alternative fee arrangement invoicing, custom accounting fields and data tracking, advanced KPI visibility (at attorney, matter, client, and firm levels), and granular permissions management.
Still, as vendors expand their offerings, the competitive landscape is evolving.
Differentiation is no longer limited to functionality depth. Cloud capabilities, ease of use, customer support, and AI-powered features are becoming increasingly important in vendor selection.
Some SMB-focused vendors, such as Clio, PracticePanther, and Caret, are making efforts to expand into the mid-market. While the success of these vendors has been mixed, they have gained traction in specific pockets, such as a singular practice area within a mid-market firm, or lower mid-market firms with simple workflows that operate more like an SMB firm.
However, these vendors often lack the depth of functionality required to fully address the demands of the broader mid-market segment. Although they may not pose a significant threat at this stage, it’s important for mid-market vendors to stay aware of these developments and monitor potential competitive dynamics.
Vendors explore expansion opportunities to further differentiate and expand TAM:
As mid-market adoption increases and whitespace narrows, vendors are exploring opportunities to expand their offerings. By integrating additional tools, they can unlock new revenue streams and enhance their value proposition. Key areas for expansion include:
- BI/analytics
- Docketing
- Marketing (e.g., CRM, client intake, website management, etc.)
- Data/intelligence
Recent acquisitions reflect this trend, such as SurePoint acquiring Coyote/Leopard and Centerbase acquiring Legalfit. These moves underscore the growing emphasis on broadening product offerings to meet evolving customer needs.
Conclusion
The mid-market LPM space offers a significant growth opportunity, with substantial whitespace remaining and firms increasingly open to switching solutions as they transition to the cloud.
As more vendors attempt to attack this space, it is important to recognize what segment of mid-market firms each vendor serves and how aligned they are to serve them.
Key considerations include:
- Which sub-segment of mid-market firms does the vendor serve most effectively?
- How does the vendor’s differentiation strategy align with mid-market demands?
- What are the vendor’s retention rates among customers transitioning to cloud-based solutions?
- What additional capabilities could drive cross-sell?
Stax is a leading partner to equity sponsors and investment banks in the Legal technology sector. Our work is routed in deep sector and asset-specific experience, as we’ve continued to track and monitor the legal technology space over the past several years. To learn more about Stax and our services, visit www.stax.com or contact us here to learn more.
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