Startups in the legal tech or services market have traditionally had to go up against more robust legacy companies with an established toehold in law firms or legal departments. But the economic disruptions brought about by the spread of COVID-19 may be pushing firms and other consumers of legal services to consider pursuing less established—and in some cases less expensive—alternatives.

To be sure, startups are occupying the same legal tech market as legacy companies, a space that has already seen some collective belt tightening among both businesses and clients alike. Law firms are engaging in salary cuts, layoffs and furloughs, while legal tech providers like e-discovery company DISCO have also trimmed staff to "proactively address and reduce potential risk" in the face of COVID-19.

However, it's possible all of this wallet-watching could reap unintended benefits for legal startups as law firms and legal departments seek out cheaper alternatives to longstanding incumbents, or realign their needs in preparation for the arrival of a post-pandemic world. Legal research provider Fastcase, for example, has received more interest as of late from large-scale upmarket firms looking to make a change.

While CEO Ed Walters stated that the company had been trending up market prior to the outbreak of COVID-19, he also indicated that it can be difficult to tear law firms away from prestige or legacy incumbents in the space, which features heavy-hitters with recognizable names like Thomson Reuters and LexisNexis. "I think when times are good, it's hard for the Am Law 250 firms to buy something like Fastcase… No one ever got fired for buying IBM," Walters said.

But with firms being pushed to make tough decisions with regards to layoffs and salary cuts, name recognition may start to count for less. Per Walters, firms typically keep two legal research services in use so that neither provider can exert too much leverage or power in the relationship. He postulated that firms may be inclined to cut one of those legacy providers in search of lower-cost alternatives, a way of thinking that could remain in place even after the economy recovers. "I think it's a one-way ratchet. That there's no going back," Walters said.

Still, a COVID-19 economy may not offer a path to new business for all legal tech startups. Law firms, legal departments and other businesses operating in the legal sphere may be reluctant to set up new projects while the future remains so uncertain. But Zach Abramowitz, a consultant in the legal technology space, suggested tech companies that have done previous work with a client around solutions like contract extraction tools could find themselves called upon to help navigate pandemic related anxieties related to deal provisions or terms.

"How many companies are taking on new initiatives right now? Probably very few. But if you've already done some work with a technology company and you already have a working relationship there, that's probably an amazing opportunity for the tech company," Abramowitz said.

For instance Evisort, an AI-powered powered contract management platform, has changed its focus in the wake of COVID-19 to concentrate on existing customers. The move was in part a reaction to the obstacles facing new sales. Evisort co-founder and CEO Jerry Ting pointed out that with more offices working from home, it's difficult to reach perspective customers over the phone. The company was also weary of appearing tone-deaf in the midst of a global pandemic.

"It's like, 'Hey, our business is going through a hard time. Do you want to buy some contract management software?' We think that's not tasteful," Ting said.

Instead, the company is taking a more consultative approach to its services, reaching out to existing clients and offering to help them navigate problems related to contract issues like force majeure or locating alternative opportunities for cost cutting. "We're trying to lean into the [COVID-19] situation as much as we can," Ting said.