The process of business model disruption in knowledge-intensive services: The case of Legal Tech

Abstract

Disruptive technologies were introduced as a concept in the late 1990s, where the process of disruption was largely attributed to technological developments and the inertia of incumbents. Later scholars have emphasized the difference in technological and business model disruption, where recent scholars point to the integration of the two. Whereas technological disruption considers the substitution of user value as a result of a superior technology, business-model disruption is the discovery of a fundamentally different way of dealing with and offering value to the user compared to existing models. The process through which these dual disruption processes takes place at the same time has to a limited degree been researched. While past research has pointed to the role of first and second movers, limited work has been done in understanding how new business models disrupt industries. Past research further emphasizes product-based businesses in their exploration of disruption. The fourth industrial revolution implies considerable disruption in service and knowledge-based industries. The research presented here aims to address the process of this disruption. In particular, we study LegalTech and explore the business models of 400 start-ups based on Angel’s List – a list for start-ups and Angel investors – as well as articles on Legal Tech in the Factiva database. The context of law is interesting as it is characterized by a high level of regulation and institutionalization, which restricts and limits the opportunity for innovation. Still, alternative technology-based business models arise and survive. Based on inductive classification, the data reveals 3 main business models that target the existing law industry: platform, software and infrastructure. The research shows that these different business model contribute to disruption in different ways and based on different logics – illustrating how the application of different technologies in different business models impact disruption differently. In particular, the models emphasize ease of access, work process support and prevention. Each of the mechanisms and how these models impact incumbents are discussed in the paper. Thus, the paper develops and details existing disruption theory in enriching existing understanding of the process and models used. By doing this it adds insight of relevance to practitioners in start-ups and incumbent firms, as well as to policy makers.