After news that an LA-based court reporting startup, Steno, closed a $3.5 million seed round led by First Round Capital recently, industry beat reporters from Legaltech News and others reached out to Tom Livne, CEO and Co-Founder of Verbit for his thoughts.
As the court reporting marketing shifts and evolves with more remote depositions being executed, greater investments are occurring. Yet there’s also an ongoing concern of court reporters who are vocalizing their hesitations about more technology entering the profession. Some are fearful that technology may replace them in the workfield.
Livne said he is working daily to dispel these concerns and educate legal professionals on the helpfulness, not harm, of incorporating more technology into court reporting.
“From my conversations with CEOs of big court reporting agencies, they understand that we have a new reality with most depositions now being done remotely,” he said. “Their mindset is that they were dependent on court reporters and stenographers before COVID. They don’t want to clash with them on their fears of technology that can potentially ‘replace them,’ but now, in the new situation we’re in, the court reporting field is becoming customer-first.”
Court reporting agencies understand the need to service and support their customers and are doing whatever it takes to support them, Livne said. Now they’re embracing new technology, including Artificial Intelligence technologies, despite the fears of individual court reporters since now there is no other way to perform this work if you want to continue to service customers without delay. They’re trying to achieve a balance between supporting their customers, but understanding the concerns of the court reporters as well, he said.
“The way we think about this at Verbit is that we’re not ‘coming’ to replace these court reporters; we’re ‘coming’ to give them tools to become more efficient. If they used to do one deposition a week, now with the Verbit platform they can do many more depositions, be more efficient and eventually earn more money,” he said.
The average age of a court reporter is 58, and they’re afraid to embrace new technologies, which is the part of the problem Livne is seeing in the market.
When another company, Stenograph L.L.C., unveiled a new logo recently, it saw hundreds of comments on Facebook about how it was aiming to take the human element and people-specific skills out of court reporting with technology. The reality is that technology can greatly help these individuals to work more efficiently and complete more work, but tech companies are still encountering backlash.
“There will always be clashes. This is part of the dynamic, and we need to embrace it and respect those who are afraid for the way they make a living and explain we aren’t against them, but we want to empower them. This is the challenge,” he said.
“The trend of remote is not only because of COVID; it’s here to stay, and there’s more acceptance of technology and innovation, so we see a big increase in the demand for our solution,” Livne said.
So how do these clashes impact how investors view the space, and are they taking court reporter concerns into consideration before they invest?
“What I’m hearing from investors is they see this market as a $4 billion addressable market of court reporting agents, and they see that this world really still hasn’t been digitized,” Livne said. “Things are still happening in a really old fashioned way, and they know that tech can play a very important role in transforming this industry.
Livne said investors are seeing the value in investing in this area, especially during COVID times when the need to use digital tools and operate remotely is critical. Livne also said it’s a “blue ocean” with few players and competitors, making it an ideal industry for investment.
“There’s a lot of hunger now from court reporting companies to drive innovation and implement technology, and this is why these investors think this will be beneficial for them.”
Additionally, when it comes to legal tech as a whole, Livne said court reporting technology can be seen as a ‘hot market’ grabbing investor attention.
Livne said the private equity sector is going for large court reporting agencies, but more technology-focused investors and VCs are looking for more disruptive technologies at companies like Verbit that will be the platform to serve those court reporting agencies.
“Court reporting technology is hot compared to others because there isn’t a lot of competition… [Investors] see a big market, a clear application layer and use case, strong technology at the base and little competition,” he said.
Livne said Verbit then provides a unique value proposition by topping this off with a strong team to execute on the promise of all of the above, a key reason the company has been able to successfully raise $65 million.