We are excited to announce today our lead investment in the Series A financing of UpCounsel. This investment continues our strong investment thesis around vertical marketplaces. We are honored and excited to be partnering with Mathew Faustman, Mason Blake and Tim Parks in changing the legal landscape for the better.
The ever-evolving legal industry offers an interesting study in contrasts. While partners at the 21 biggest law firms in the country enjoyed average profits around $3 million dollars, recent law school graduates struggle finding high quality employment opportunities. For the class of 2013, overall employment measured nearly a year after graduation fell for the sixth year in a row to 84.5%. Perhaps most telling, however, was the fact that only 64% of these jobs required the passage of the bar exam.
Paradoxically, despite this oversupply of qualified lawyers, businesses continue to find themselves locked into rigid, high-priced legal relationships that have seen billable hour rates increase by 10% over the past 4 years. In many cases, lawyers at large firms bill at standard hourly rates for even minor adjustments to standard contracts. While companies such as Rocket Lawyer and Legal Zoom provide quick, affordable and generally one-off legal advice, access to a high-quality, personalized legal relationship has historically been cost-prohibitive for the nearly 6 million small and medium sized businesses in the US.
UpCounsel is poised to dramatically change the legal services market by providing businesses with flexible, affordable high-quality lawyers, and expanding employment opportunities for solo and small firm legal practitioners. UpCounsel provides small and medium businesses with an alternative to expensive and slow legal services through an online platform and an all-star virtual lawyer community. UpCounsel is working with thousands of entrepreneurs and companies to increase the quality and speed of legal services while dramatically reducing costs. When businesses have easy access to great legal services, they make better decisions and can grow their business with confidence.
We believe that the United States is in the midst of a paradigm shift to greater flexibility in the legal services industry, and that UpCounsel is perfectly positioned to capture that value. One of the things that truly excites us about UpCounsel is the company’s ability to acquire an incredibly high-quality supply of lawyers completely organically. This illustrates the incredible value proposition to solo and small law practitioners, who find that UpCounsel not only provides the tools for the practitioners to help them grow their entire business but also a community that provides support when needed. UpCounsel’s differentiated supply acquisition allows them to focus on the demand side, where we’ve been impressed by the extremely efficient inside sales team that gets SMBs to try the platform. Most importantly over time, we’ve noticed companies will often standardize on UpCounsel and begin shifting portions of their legal spend to the platform.
Menlo’s investment in UpCounsel continues to solidify our place as a leading marketplace investor. Our marketplace investments include Uber, Rover.com, Poshmark, Getaround, UrbanSitter and Munchery. All of these innovative services are disrupting traditional industries and changing the face of the global labor force.