Online Legal Marketplace UpCounsel Raises $10 Million – WIPs Continue Their Rise

The online legal marketplace UpCounsel announced Tuesday it topped off its earlier seed rounds, totaling $4 million, with a Series A round of $10 million. This news comes just on the heels of our recent article on an online consulting marketplace, Expert360, raising additional investment.

These events seem to suggest continuing interest on the part of investors and confidence in the future of online work platforms, despite the now intense controversy about the legal classification of platform-engaged workers as either independent contractors or employees.

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Founded in 2012, San Francisco-based UpCounsel offers small businesses a platform to access quality attorneys and their services while avoiding the overhead costs of traditional law firms. Co-founder and CEO Matt Faustman, an attorney at international law firm Latham & Watkins prior to starting the company, tends to be very clear about how the UpCounsel platform model dismantles law firm cost structures to the benefit of businesses and attorneys that conduct business across the platform.

The model is indeed an online freelancer marketplace, a type of work intermediation platform (WIP). Businesses in need of legal services search for and engage the attorney who meets their needs. Legal fees are negotiated between the business and the attorney. When the work is completed, the business pays the attorney through the platform. UpCounsel retains a processing fee between 3.5% and 20% of the amount billed to the client.

UpCounsel has essentially made a new market between the large numbers of small businesses priced out of legal services and the approximately 60% of legal services suppliers solo attorneys or small firms comprise. To date, UpCounsel has vetted around 10,000 attorney applicants, with 300 attorneys currently available through the platform.

The platform also provides a range of capabilities and services that support attorneys working without the support systems of law firms, including scheduling, document management and invoicing. It is also appears that UpCounsel will be offering third-party malpractice insurance to its attorneys.

The progress of UpCounsel, along with about 300 similar online work platforms operating today, supports our view that WIPs are evolving into a new set of sourcing channels for contingent workforce and services. Contingent workforce and services procurement managers should be aware of these developments and what they will mean for their organizations in the not so distant future.