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Ex-City solicitor who founded lawtech start-up when he was just one-year qualified sells it for £7 million

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The law student dream

A former City lawyer who got the idea for a lawtech proofreading business while reviewing a 1,000-page document at his Simmons & Simmons desk at 1am now has his sights set on every lawyer’s biggest bugbear: time recording.

Oxford graduate Stephen Scanlan’s first year post-qualification led him to wonder why a number of the tasks he was given couldn’t be automated. Many would have turned a blind eye but instead he founded XRef, a business which was formally incorporated in 2010.

Travis Leon, an old pal of Scanlan’s from law school, later joined XRef as a business co-founder. At the time he was working as a corporate lawyer at Linklaters, but took a massive risk in leaving his well-paid solicitor job to run the business full-time.

The growth of the pair’s “lawyer-driven project” was slow, but with their hard work tens of thousands of users were gathered in just four years. Even Simmons & Simmons is now a customer, Scanlan recalling this funny anecdote:

“One of my old trainees, who had sat with me for six months and heard all about XRef in that time, went to Watson Farley Williams’ office in Greece and she called me to say she’d just had an XRef training session there. I still have old friends at Simmons who message me saying: ‘your project saved my bacon last night!’”

Scanlan moved his lawyering skills over to Akin Gump in 2013. Billing thousands of hours at a US firm and running an expanding business, albeit alongside Leon, soon became “unsustainable”. He tells Legal Cheek: “I was working evenings, weekends, holidays. Even my honeymoon was compromised.” When approached by a private equity company, K1 Investment Project, he was made an offer he couldn’t refuse (quite literally — Scanlan’s wife said she’d divorce him if he did). XRef was recently sold for $10 million (£7.35 million), though Leon still remains the co-founder and executive director of the company.

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It must surely be tempting to bank the money and live off the interest. But Scanlan, after paying off the mortgage, used it instead as a business investment, as he thinks there’s so much more for him to do in the lawtech world. He says:

“XRef was a great project for proofreading documents, but time recording really goes to the heart of how law firms make money. And it’s painful, meaning technology in this space is potentially really valuable and really desirable.”

Scanlan’s lawtech senses clearly have clout: he’s made millions from XRef and his new project is now at advanced stages with “a major corporate partner” and a magic circle firm. So, how does he think our law student readers should approach the emerging world of technology and the law?

In short, use it to your benefit, not your disadvantage. While you can still be a very successful lawyer without being very technologically-minded, this is less true now than was the case five years ago, he tells us, before continuing:

“The market is changing now. In 2016/17, there was a notable step up in gears; major firms like Freshfields now have innovation departments, which is something that would have been unthinkable when I started XRef. But law students shouldn’t be scared of this development: technology can help with the primary skills of a lawyer, such as drafting, but it can’t replace them.”

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14 Comments

Anonymous

Surely you’d use the millions to go and sit on a beach somewhere rather to plough into … time recording?! Carpe diem

Very amused

Apparently he is really interested in time recording …

Pascal

Yeah, he got get his baps well and truly battered DAILY

justcurious

can someone post a link to the website of the co. super hard to find any resource about XFef…

Anonymous

It’s Xref, not Xfef. Website link below: https://xref.com/en/uk/

Anonymous

Congratulations and well done to him. Most solicitors and nearly all barristers will go through a whole lifetime working and still not earn what he has made in a few years. There is Life outside Law.

Anonymous

It’s not very much money. Seven large ones sounds a lot, but think again.

Seven million quid. That’s just a townhouse cash paid in Knightsbridge.

If they invest it, say £1 million as an annuity only buys you £30k for life.

They will still need to work, and a future Corbyn Government will tax them to hell and back.

Fair play, nonetheless. Beats time sheets.

Buy some Bitcoin, you might get rich too.

Corbyn. Symphathiser

“They will still need to work, and a future Corbyn Government will tax them to hell and back.”

Good.

“Buy some Bitcoin, you might get rich too.”

This is the worst possible advice.

Anonymous

£1m 3 bed properties in reasonable areas of London (or elsewhere to spread risk) x 7. Rent each out at £2,500 a month average = £17,500 rental income each month.

Of course hack that down somewhat with lettings agent fees / insurance / other costs, but that is a lot of spending money to travel with or do whatever you want to do for the rest of your life.

Although I’d probably hold £1m back and spend 500k on a boat, 125k on BTC, 125k on XRP and the remaining 250k on a mix of altcoins.

Anonymous

you sound like a real hoot.

Corbyn. Symphathiser

Dunno why Marx and Engels wrote an entire manifesto to convince people to rise up against capitalism when they could have just printed off this post.

Anonymous

I agree that the system is wrong and does not work, but the above is a very simple example of how much money you can generate with £7m. People play the game according to the rules. Unfortunately I do not have £7m and I am one of many who contribute £1k a month to pay off somebody elses mortgage.

The rules are not fair and we are gradually heading back towards a feudal society where there are land owners and non-land owners. It is not right that only those who inherit wealth and very high earners can afford to purchase a house.

Anonymous

Yeah, it never ceases to amaze me, when these people who haven’t a pot to piss in come out with crap like “it’s not very much money”. I have had clients in the past with personal fortunes in excess of 1bn who would sell their grandmothers for 50k nevermind 7m. It’s always those who have no real money that come out with crap about a million not being a lot of money.

Anonymous

The guy is a genius and how did he manage it all whilst working as a full-time laywer in the City! He must be an Adonis.

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