The Australian Legal Technology Association (ALTA) – in partnership with PEXA and Alpha Creates – has published its Diversity in LegalTech – it’s time for action report, commissioned by Women of ALTA (WALTA), to engage legal industry stakeholders on female representation in Australia’s legal tech industry and how best to address underrepresentation.

The report found that just 21 per cent of Australia’s legal tech founders are women. This puts the nation roughly on par with much of the rest of the world (21 per cent in North America, 17 per cent in New Zealand, 16 per cent in Europe and 15 per cent in the UK), but we are lagging behind Africa (25 per cent) and Asia (30 per cent).

Highlighting the gender disparity for founders is that only 19 per cent of Australia’s funded legal tech companies have at least one female founder. “Funding, which is crucial to early-stage legal tech companies, is a critical roadblock for female founders,” the report said.

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Female representation in the legal technology sector is also falling behind the national female participation rate, ALTA reported, with 21 per cent of our technology professionals being women while 29 per cent of Australia’s funded companies have at least one female founder.

Moreover, the quantum of women legal tech founders is in contrast to the number of female founders in Australian start-ups (22 per cent), owners of SME businesses (35 per cent), leaders in large businesses (39 per cent). However, female founders of legal tech companies far outnumber women CEOs of ASX200 companies (5 per cent).

Comparisons to the rest of the legal profession

As the 2020 National Profile of Solicitors report found, 53 per cent of Australia’s legal cohort are female. However, as noted by ALTA, just 30.4 per cent of partners in Australia’s 50 largest law firms are women, less than one-third (32 per cent) of the nation’s justices and judges are women, and – as was reported in 2019 by Lawyers Weekly – a mere 16 per cent of equity partners at 140 mid-tier firms are female.

Funding issues

Better understanding the reasons for such discrepancies, ALTA submitted, can help identify opportunities to address the imbalance.

Firstly, capital raising is an onerous hurdle for women, given that “male-only founded businesses receive the vast majority of venture capital funding”.

“We find a major hindrance to their ability to both participate and to grow. This experience of Australia’s legal tech women founders is reflective of the broader start-up ecosystem,” ALTA noted.

As aforementioned, less than one in five (19 per cent) of Australia’s legal tech companies with a female founder have been able to raise capital, while half (50 per cent) of companies with male-only founder/s have succeeded in securing funding.

“With a historically lower rate of funding for female-led or co-founded legal tech start-ups than for those with male-only founders, it is disappointing but not surprising that female representation in the Australian legal tech market is so low,” ALTA surmised.

“Either we need more women at the venture capital decision-making table, or the male decision makers need to consider and address their own unconscious bias when assessing female founded and co-founded businesses for funding.”

Such an environment appears incompatible with 2013 findings from Stanford Law School, ALTA mused, that more than women-led tech companies generate 35 per cent higher returns on investment and 12 per cent higher revenue when venture-backed.

Work-life balance and professional support

A second consideration is managing work and home demands, ALTA went on, with 31 per cent of Australia’s female legal tech founders saying that the juggle is an ongoing challenge.

“Founding a business and the challenges of juggling life and family is a challenge and I think women founders carry this burden more than male founders,” said one of ALTA’s respondents.

Another explained: “It has taken me several years to build my credibility in this industry. For many years I struggled with being taken seriously, particularly in light of the fact that I was a mum, worked remotely and flexibly, and couldn’t often network and build business relationships outside of school hours. I started virtual events way before COVID-19 ever happened, primarily because there was no other way [that] I could travel with the family commitments.”

A third explanation referenced by ALTA is that access to supportive networks and mentors can be difficult for female founders, with nearly one in four (23 per cent) saying that building a business support network has been challenging for them.

“There are informal, implicit men’s networks that are hard to crack,” one respondent told ALTA.

Others, ALTA added, reported “[b]eing mansplained to about what I should do, should not do, and why I am doing something wrong”.

Looking ahead

Reflecting on the findings, barrister and founder of Immediation, Laura Keily (pictured, left), said that female founders in legal technology still face multiple barriers to entry, particularly including equality of access to funding.

“In my view, providing education to potential founders on funding sources, as well as educating the VC market on the quality of the diverse founders and businesses available for investment, will assist to drive up those numbers,” she opined.

Immediation welcomes the report and its findings, Ms Keily posited, and said that her business is looking forward to working with WALTA with its campaign “to increase the number, visibility and success of female founders in this very important industry”.

Xakia Technologies CEO Jodie Baker (pictured, right) supported this, saying that Australia’s legal technology landscape has an “impressive line-up” of female founders.

“The risk, however, is that a lack of funding, support and visibility will hold them back from becoming as successful as they possibly could be,” she warned.

“This report calls out the role of all participants in the legal industry – law firms, corporate legal teams, consultants, media, government, educators – to ensure that these women are given the same voice and opportunities as their male counterparts to build Australia’s female-led legal technologies beyond ‘micro’ or ‘small’ businesses.”

Increasing Australia’s proportion of legal tech female founders to better mirror the new majority nationwide that women have in the broader legal profession will have positive flow-on consequences, Ms Baker continued.

“Creating successful female role models in the legal technology space is critical to inspiring the next generation of founders. If the future is in technology, investing in this today is essential to achieving diversity tomorrow,” she concluded.

The Lawyers Weekly Legal Firm of Choice Survey is now open, giving legal professionals the opportunity to confidentially say what areas their firm is responding well to – and where they could improve. The annual survey, which is partnered by Momentum Intelligence, also forms the basis for the Top 25 Attraction Firms ranking, identifying the firms legal professionals most want to work for. To take part in the survey, click here. The survey will close on 15 September.