Liu Guangchao: How do investors view entrepreneurship in the legal services industry?
I am a practicing lawyer, but I also have an identity as the Secretary-General of the Green Law (International) Alliance. Next, I want to look at the law from the perspective of investors, or from how legal professionals want investors to view the law. From the perspective of the service industry, I would like to share a few questions with you.
First of all, what is the legal services industry? Many people have their own understanding, but it may be difficult for everyone, including myself, to describe where the boundaries of this industry are, how big it is, how to define it, and what the industrial logic is... These are the basic issues we need to solve. , can be considered from the following dimensions:
First, who are the service objects of this industry? I believe that in addition to those who demand legal services, organizations and even individuals that provide legal services are also one of the targets. Of course, this "legal service" may be broad, including some marginal and cross-cutting types of legal services.
Second, in what form does it exist? Legal services have gone through the process from individuals to workshops, enterprises and industries, and the final form must be a unified entity composed of various forms of industry. The entire legal service industry ecology may contain five forms: service type, technology type, platform type, investment type, and production type.
Third, what is the entire industrial chain like? From the perspective of the entire industry chain, the position of an enterprise or organization in this industry can be judged like this: some enterprises or organizations are at the front end of this industry, such as the production end and R&D end, and some are at the market end. , server side, and some are on the back end, such as the investment side and management side.
Fourth, what are the core elements of the industry? It can be roughly summarized into the following categories:
Legal services
The combination of legal services and other services
The combination of legal services and technology
The combination of legal services and finance
This is also a division of the main forms of the industry. It is these different dimensions that form such a three-dimensional and networked industry.
Objectively speaking, the scale, quality, and order of the current legal services industry are not mature enough. There are more than 30,000 law firms and more than 300,000 lawyers in the country, but the legal service output value is only 70 billion. Why is this happening? I think two things are missing.
First, there is a lack of entrepreneurial spirit. Different from professional service providers, technology providers and investors, entrepreneurs have two important characteristics: creating value and innovation. It is difficult for an entrepreneur to take on the title of "entrepreneur" without such a spirit, so many people who run businesses are not entrepreneurs.
Why are some of the friends here able to be recognized by this industry and the investment circle? It’s because he is doing what entrepreneurs do, he is creating a model, creating some value, and truly innovating the industry.
However, the legal services industry is often constrained by professionalism and always uses technology to think about market, management, investment and other issues, but is lacking in entrepreneurship.
The second is the lack of investor awareness. How do investors view the legal services industry, how do they judge its investment value, and how do they amplify its value? I saw a data. As of September this year, investment in the legal services industry, including the pan-legal industry, only accounted for 1.67% of the total investment. A relatively small proportion shows that everyone’s recognition of this industry still needs to be recognized, and laws and regulations are still not there. There are some restrictions.
So does the legal services industry have investment value? Is it possible that one or more funds specifically invest in the legal services industry? What role can investment play at this time?
I think it has at least four effects. First, it may give birth to more entrepreneurs in this industry. Because many entrepreneurial models in the legal services industry are spontaneous and casual, and are not as constrained as the investment community, if there is investment, the operating methods of many companies may change and truly become entrepreneurial.
Second, investment can accelerate the development and integration of this industry. According to my preliminary statistics, there are currently more than 500 companies and institutions engaged in Internet + law. Do they all have value? There is no market to judge or test, because there are no investors to evaluate. Once there is investment, these companies will judge the model and value, which may promote the development of this industry.
Third, the intervention of funds is likely to expand the boundaries and content of the industry, and may make this industry truly possess industrial logic. At present, compared with some relatively mature markets, developed countries and regions, China's legal services industry still lags far behind. Its boundaries are relatively small and blurred.
Fourth, integration with other industries allows legal service products to dialogue with other industries.