Legal Technology with Justin Kan
Imagine that you are a lawyer.
Your work involves managing files with dense, technical text. Your co-workers collaborate with you to accomplish a complex goal that can be broken down into smaller pieces. Your work has formal specifications, but there are degrees of freedom in how you express an idea. In all of these ways, the job of a lawyer is similar to the job of a software engineer–so why don’t lawyers use tools to improve their workflow?
As a software engineer, you have project management tools like Asana that improve collaboration. You have APIs like Stripe that reduce the time spent on a complicated implementation. You have tools like linters and source control that prevent you from making fatal errors. All of these tools save you time.
At many law firms, lawyers do not have incentive to save time. They are paid based on billable hours, not individual milestones. Historically, this hourly billing made sense–lawyers have been around since long before computers. The amount of work that might go into a legal task was hard to predict before you had computers to log data, sort documents, and standardize communications.
In contrast, a software engineer has always had the ability to automate work. That’s why (in most cases) we are not rewarded based on our time spent solving a task. We are paid based on hitting our KPIs and our milestones. With the legacy of hourly billing, lawyers can look at repetitive, administrative tasks as opportunities to make more money.
Justin Kan has been building startups for a decade, and in that time he has interacted with lots of lawyers. From incorporation to fundraising to selling his company Twitch, the interactions with lawyers consistently seemed less transparent and less efficient than would be optimal.
For an engineer like Justin, the natural inclination here was to build software and sell it to lawyers. But there would be so much resistance–you would have to convince the lawyers to change their pricing model to fixed-pricing, which would give them the incentive to buy software and work more efficiently.
Instead, Justin teamed up with a few entrepreneurial lawyers who were willing to start a new law firm from scratch, and use software on day 1. The software company is called Atrium Legal Technology Services (or Atrium LTS for short), and the law firm that uses the software is Atrium LLP. Both of these companies are very new, and were publicly announced a few months ago.
The two companies work side-by-side in undecorated office in downtown San Francisco. When I took the elevator up to see the company, the elevator doors opened and revealed two paper signs pointing to opposite ends of the office. On the Atrium LTS side of the office, engineers were writing software to extract the meaning from documents.
Today, lawyers at old law firms are paid hundreds of dollars an hour to fill in document templates by editing a text document. As the Atrium LTS software gets better, document preparation will be done through web applications, with the variable names disambiguated from the parts of the document that never change from client to client.
On the other side of the office sat Atrium LLP. The legal team was dressed a little more formally than their engineer counterparts, but there was nothing close to the formality of a traditional Silicon Valley law firm. Far from the decor of a Menlo Park law firm, the office space was actually more spartan than most well-funded startups, signaling to the employees that this is an unproven business strategy, and there is a ton of work to be done to validate it.
This sentiment was echoed in my conversation with Justin. It’s possible (even plausible) that Atrium LLP could become the biggest law firm in the world, but the road to getting there will take patience and steady execution. I enjoyed hearing Justin explain the motivation for starting Atrium LTS, and look forward to covering the company in the future.
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