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Justin Kan Raises $10M for New Legal Startup
- neom 9y agoThis is awesome and I'm really happy to see venture dollars being spent on the legal industry. One of my gripes has always been that quality legal is traditionally expensive to obtain because the "quality" part in legal work tends to come from literally practicing law for a long time and knowledge about many things quite deeply. Over time law firms obviously grow in standing and therefore size, increasing costs. This can easily leave a huge part of society under-served. In theory, much of the cost is research by humans, and I presume research by humans garnering key insights could be done somewhat algorithmically by scanning case law for key points. I hope we see more and more automation and ML services applied to the industry of providing council around aspects of the law.
- PatentTroll 9y agoI don't think much legal cost is in research, industry-wide. Most lawyers specialize in one niche and already know all the relevant big cases in their field. More nuanced research isn't all that time consuming really. And a whole big swath of legal work has absolutely nothing to do with researching law, there's a lot more to it. And a huge part of society doesn't need super-experienced lawyers. The under served market needs warm bodies who are qualified to represent clients at some state bar who are willing to work for peanuts. Like, just someone to sit there in a suit and look menacing would help out most of the 'under served.' Large student loans require law school grads to seek the highest paying work possible, thought, so lawyers can't represent poor people.
- neom 9y agoThen why does Cooley or WSGR employe near 1,000 lawyers?
- seibelj 9y agoI have no idea about the existing legal tech space, but this sounds like a really good idea if it doesn't already exist. I hope it works out
- yannyu 9y agoThere actually is a lot of legal-industry-specific technology out there that most people have never heard of. It works well enough for what most lawyers and firms want, but it seems to have hit a local maxima for one major reason: nearly all the software and tools are written around Microsoft Word and the Office suite. Anyone wanting to disrupt the legal industry (in the US) is going to have to deal with MS Word in one way or another. There are hundreds of thousands of attorneys who have worked with nothing but Word and Word-related tools for decades, so someone entering the space will likely need to build project management, collaboration, and communication systems around the Word ecosystem. That or build a product so compelling and easy to migrate to that people are willing to walk away from Word.
- PatentTroll 9y agoI'm actually working on this! Would love to hear your thougts
- yannyu 9y agoI worked on this for a while as well! I talked with a lot of people who deal with contracts regularly (both lawyers and laypeople, in-house and in private practice) and all of them acknowledge there are inefficiencies in the way they work. The desire for better tools exists out there, it's just a matter of figuring out the best way to deliver it. The existence of the MS Word shackles means that an incremental solution is inherently limited by being compatible with the MS Word format, one way or another. Even if you convince one client to move to your solution, everyone else they interface with will still be using MS word, so you must take that into account. Import/export features can smooth the way, but will hold you back on the kinds of features you'll be able to develop. Building an entire suite that delivers a new, improved workflow is more tempting for the client, but then you're building a lot more up-front and limiting yourself to clients that actually have significant legal-related costs to defray. And again, it's still likely that your client will continue to work with people who won't be using their new tool, so will have to resort to MS Word on occasion. And to top all that off, there are a LOT of people that need to be able to use this tool. It has to be built for lawyers, sales people, procurement people, VPs, CEOs, paralegals, customer success, consultants, among others. And even if you're only talking about contracts, even contracts vary widely in length, complexity, and importance. All in all, it's a really interesting space, and I really enjoyed working on the problems there. Someone is definitely going to crack it within the next few years. Would be glad to talk more over email.
- philfrasty 9y agoWhat happened to Justin's Snapchat? Still kicking? Kinda stopped following when Insta-Stories launched. Miss Klaus though <3
- baxtr 9y agoStill up and running :) just watched his latest snap, where he'd basically confirmed the story above.
- justin 9y agoStill snapping some. It's actually much harder to remember to make social media now that I'm out of YC. When I was at YC, there was a defined schedule, so I had lots of free time to mess around on snapchat. Now that I'm back in the startup world, I spend most of my time thinking about and working on my company, and forget to snapchat. Klaus says hi.
- Danihan 9y ago>Now that I'm back in the startup world, I spend most of my time thinking about and working on my company, and forget to snapchat. Shouldn't you have been thinking about and working on YC when you were there?
- justin 9y agoYC is structured by-design to have time you spend as a partner working with companies, and time to do whatever you want. I liken it to being a university professor.
- SmellTheGlove 9y agoThis is a good idea. I hope it gets traction (I'd love to work on this problem as well). As for why some of this isn't done yet: The legal profession is old school. If you want to know where your work is, you can ask for a status memo, and you'll get billed for the time it takes to write it. Or the phone call. Either way. In industries where the product is the billable hour, you'll find things get done the way they've always been done. You'll find small and mid size firms using more technology, but you'll also find that the more highly a company thinks of itself, the more it thinks it needs a large firm (which will bring its legacy processes, because they do work, even if not entirely efficient). Nobody gets fired for hiring Skadden, but then you also don't get to bitch when they do things the way they have for the last 50 years either. They didn't bring in $2.5B last year by accident - they're effective, and are going to be averse to process change if it risks outcomes. If you're working on tech in this space, you also need to be aware of that. It's a tough sell to larger firms. They won't sacrifice outcomes or billables because it's all working really well for them, and they always have a glut of un/underemployed contract attorneys if they just need to throw highly educated bodies at a problem.
- programmarchy 9y agoIsn't this just evidence that the old school is ripe for disruption? If a startup like Atrium can streamline legal workflows, then new school firms don't need to bill for writing that status memo. That should lower prices and attract more customers. Seems like a win/win.
- PatentTroll 9y agoLowering prices on mid-top tier legal work won't attract more customers, demand is largely inelastic. And their customers, who are fortune X00 types, don't really care about the cost. Oh, sure, they bitch and moan about bills and write op eds about how law firms are terrible and the billable hour is bad. But, in the end, like OP says, companies routinely go back to the same crop of biglaw firms. There is no such thing as 'disruption' in this industry, it never has been disrupted.
- 9y ago
- justin 9y agoHello HN! We are excited to be building in the legal space. Raising money is a necessary step, but Atrium LTS' biggest accomplishment so far is the great team of experts we have assembled here. My cofounders are Augie Rakow (former partner at Orrick, where he worked on over 100 financings and represented Cruise through their acquisition to GM), BeBe Chueh (lawyer turned founder who sold her last company to LegalZoom) and Chris Smoak (Amazon AWS, multiple time YC founder, founder of early FB payments platform Gambit). I think our early team is doing a great job of moving quickly and we are looking for more talented people to join that team. Read more here: http://www.atriumlts.com http://www.atriumlts.com
- chrome-style 9y agoI am wondering - why did you decide to raise outside money at all? I assume you would have been able to do the round yourself, save time / effort around the fundraising process and concentrate on product instead?
- faramarz 9y agoIt's market/opportunity validation when you can convince others to share the risk.
- vit05 9y agoProbably because he expects people who are financing to become customers and help tell other friends in the industry how amazing the company is. "It’s not just about the capital, but about getting a funnel of companies and individuals that could be potential customers as Atrium"
- downandout 9y agoI have often wondered the same thing when similarly successful people raise money for startups. With $X00 million in the bank, it would be better to self-finance for $10.5MM that if they truly believe in the business. However, if they believe that the probability of success is very low, I suppose it would make sense for them to use their name to get others to take the financial risk for them. For this reason, as an investor, I would shy away from stratospherically wealthy entrepreneurs looking for money, but SV VC's seem quite willing to give money to people that don't need it.
- joshuaheard 9y agoI built a legal app years ago. One problem I had getting investors is that the legal market is so small. Microsoft dropped it as a vertical years ago. Corporate law is even a smaller segment of the legal industry. VC law is an even smaller segment of corporate law. How big is the market for this product? Edit: I see from their website they claim it is a "$96 billion industry". There are only 1.3 million active lawyers in the U.S. (ABA), so I am curious what this number represents.
- maxxxxx 9y agoIf each of the lawyers makes 100k per year you already have a $100 billion industry.
- joshuaheard 9y agoHow much of that do they spend on software?
- PatentTroll 9y agoAs little as possible. Software is a cost center to law firms.
- crypto5 9y agoIt is a lawyer's fees industry's size, not a legal software industry's size..
- maxxxxx 9y agoFair enough. I have no idea how industry sizes are calculated. I always think they are made up numbers anyway. In any case, an industry where 1.3 million highly paid people work should be a worthwhile market to pursue.
- gnicholas 9y agoMost startups are pitched with a problem statement: our users want X, and here's how we're going to give it to them. This article talks about how lawyers don't do X and how Justin thinks they should — but not necessarily that they want to. As someone who spent 7 years working in biglaw, I can attest that there are many technology-related things that would make lawyers more efficient. For example, the large law firm I worked for ran Windows XP until 2011. This lag is due to (1) the fact that senior lawyers are generally very resistant to new technologies; and (2) the fact that law firms run custom/old software (to do things like format legal briefs to meet the standards of the relevant jurisdiction), which is mission-critical and may not be compatible with software updates. I'm curious to see what Justin is building here, and hopefully some of the other news coverage with elucidate where the demand is going to come from for his new product/services. Perhaps they're envisioning their "user" as corporate legal clients, who are going to pressure their law firm to use his project management software? An indirect model like this might make sense, but it sounds like a tough slog to me. Anyone else know more?
- baus 9y agoConsidering the list of investors, maybe the idea is to drive change from the client side. Basically, "if you don't do business this way, I will take my business elsewhere." Law seems like one of the last hold out professions where business practices are not driven by customer demand or expectations
- gnicholas 9y agoYeah, this was my suspicion. I wish them well — especially now that I see that one of their co-founders was a summer associate with me back in 2006! I'm guessing they have his former firm (Orrick) as a committed beta customer. This would help jump-start demand at other firms, for sure.
- rayiner 9y ago> I can attest that there are many technology-related things that would make lawyers more efficient. I think that's true, but I also think that these "technology-related things" are things that do not exist. Take your example: Windows has not improved in any way that is relevant to lawyers since Windows 2000. What is the point of upgrading? I see many things in my practice where I could see technology making things more efficient. But almost never do I see legal technology that actually addresses that need. For example, the entire legal world runs on PDFs. Court opinions are in PDF form, documents are produced as PDFs, case filings are in PDFs, signed contracts are circulated as PDFs. But for some reason everyone wants to build web-based tools that cannot deal natively with PDFs, or by some miracle manages to be worse than Acrobat at handling them. In another example, client confidentiality is a big deal in law firms. But everyone wants to build web-based tools that upload unencrypted documents god-only-knows where. In a final example: web technology is built on getting good answers to questions everyone is asking. That's the premise underlying Google: if a website is popular as a link target, it's probably a good result. Law is often about exactly the opposite: how do I distinguish my case from all the other ones that go in a way that's bad for my client? In other words, what are the parameters that create the exception to the rule? The techniques used everywhere else on the web are awful for that.
- redm 9y agoFor any legal startup to work, Lawyers either A) have to really want what he's building or, B) have to have it to be competitive against other firms. I think both of these are pretty high bars, especially since Lawyers bill by the hour. Finding a good efficient lawyer is much more about the Lawyers personality, knowledge, and ability and much less about the technology. A good lawyer can solve things very quickly at little cost. A bad lawyer can take the same matter, spend a ton of money researching it, working it, discussing it, etc, and still come out with a poor result. I'm interested to see what he's building, but I won't be surprised if it doesn't upend the legal world.
- arethuza 9y ago"A good lawyer can solve things very quickly at little cost. A bad lawyer can take the same matter, spend a ton of money researching it, working it, discussing it, etc, and still come out with a poor result." Not to be too cynical but given those two options of good and bad lawyers - who is going to be able to charge more fees to an unsuspecting client? Edit: I can't believe that I said "Not to be too cynical" about lawyers....
- redm 9y ago"who is going to be able to charge more fees to an unsuspecting client?" That's my point, finding a great lawyer isn't easy, and I don't think it's related the underlying technology. The tech can make a great lawyer even better.
- arethuza 9y agoI'd love to have some kind of portal where you can actually track activity on your legal work and see billing as it happens. Of course, I can see why lawyers generally resist that kind of transparency...
- pitt1980 9y agoreading between the lines, it looks like that's what's being attempted I'm guessing getting it adopted, you need to acquire large corporate clients who want to demand this sort of accountability from law firms they hire, more than acquiring the law firms as clients
- OoTheNigerian 9y agoHi Justin, Welcome back to the game. What happens to the other products in your incubator?
- mi100hael 9y agoWhy is half the team in their underwear in their PR photo?
- goeric 9y agoAs a startup founder who dealt with numerous legal things on the ops side, there's clearly room for a lot of improvement. While Clerky seems to focus on the startup's side of the problem, it seems like Justin is tackling the firm's side of the problem (that allows company's like Clerky to take their business). This is really interesting to me and I would definitely bet on anything Justin leads. Really excited to see where this goes.
- jonbarker 9y agoWill this be aimed at bootstrapped startups who are trying to get to ramen cash flow positive without the overhead of legal paperwork that still seems somewhat risky for folks who want to test ideas?
- birken 9y ago> And while Kan is still loathe to go into all the details... > Kan promises more to come — including more details about the tech the company is building and how it will begin offering that technology to customers... I like how the only specific details about the company is an alphabetical listing of every single person who invested in it, and then another couple paragraphs explaining to us why that list is somehow meaningful. I wonder where people get the idea that "funding isn't a goal"...
- frakkingcylons 9y agoIs there a story behind the team photo on the home page where everyone is wearing white tops?
- HillaryBriss 9y agoIt looks like someone (Mr. Kan?) stole the shirts right off everyone's backs. I believe it's a subtle message to people who work in the law industry.
- deleted 9y ago[deleted]