If I had to guess based on parsing these articles, Atrium went up against incentives in the legal industry and lost. [0,1]
Legal firms bill hourly. Efficiency means less billable hours.
(warning: moving into personal experience and conjecture)
Yes, boilerplate forms for repetitive use cases seems like it should be a thing, but in my experience building businesses, every lawyer I have dealt with has found any reason possible to have custom documents.
It's also not clear they ever found Product/Market Fit. [2,3]
> This week Kan confirmed that the company has completed its fundraising process, raising $10.5 million
> as Atrium goes through its product development phase and tries to achieve product-market fit.
The initial pitch (from your link) contradicts the rationale for the pivot.
The premise they started with was that its hard to sell efficiency enhancing software to lawyers because the billable hour discourages increasing efficiency. The solution was to become a law firm, offering fixed fees to secure business and leveraging the software to increase efficiency and enhance profitability.
> Atrium LLP is trying to solve this by charging fixed pricing for work. It plans on doing this by building models to predict how much work will be needed for different types of projects. Even if the models aren’t perfect at first, it doesn’t really matter: regardless of whether it is higher or lower margin initially, the point is that when are have a fixed price for service, it is your internal incentive to reduce cost over time. That is how the market drives lower cost for customers. When you have buyers who pay suppliers based on cost plus, you get high prices that don’t trend down over time (think government contractors). When you have fixed pricing, costs generally come down over time.
By shifting away from charging for services to selling software, you’re back to the initial problem: law firms don’t want to pay for efficiency enhancing software because the billable hour discourages it.
Most/all law firms have templates they hold internally and modify slightly for their clients. Very few billable hours are going into handing you your standard agreements like NDAs, offer letters, CIIAA, and so on. Your lawyers are really there to help you when things go non-standard, which is inevitably going to happen with any non-trivial business.
I evaluated Atrium out of curiosity when I was looking for a law firm for incorporation purposes. I filtered them out after the first call because they weren’t set up to handle the slightly unusual setup I had, which other law firms had no trouble with.
Yeah I have some limited visibility to a very large law firm. Paperwork you can just script never comes up as a problem and it's not like these organizations would just duplicate effort like that if they could avoid it / save themselves money.
Also I never got the impression that the really profitable customers are shopping for those kinds of efficiencies....
> Yes, boilerplate forms for repetitive use cases seems like it should be a thing, but in my experience building businesses, every lawyer I have dealt with has found any reason possible to have custom documents.
Good lawyers in the Valley should indeed be giving startups the boilerplate for free, not charging for board meetings, not charging for the partner time (not that you’ll get much — or need it) but charging for associate time. This is what I’m used to and expect, whether Gunderson Dettmer, Cooley, Orrick etc. From startups they make the money on the financing even though those docs are mostly boilerplate too. Oh no billable hours until you get a term sheet.
Then if you get big they also make the big bucks, especially on exits.
But it’s not worth chasing the scraps of billing from startups. I mean how much lawyering do you typically need in the first couple of years anyway?
There are a great many things in legal practice that are ripe for automation but the vast majority are junior associate-level tasks at best. Nobody is going to automate a non-negligible portion of a $500+/hr partner's job. The best you can realistically accomplish is automating work that large groups of people billing $150/hr or less would perform in parallel.
Legal firms bill hourly. Efficiency means less billable hours.
(warning: moving into personal experience and conjecture) Yes, boilerplate forms for repetitive use cases seems like it should be a thing, but in my experience building businesses, every lawyer I have dealt with has found any reason possible to have custom documents.
It's also not clear they ever found Product/Market Fit. [2,3] > This week Kan confirmed that the company has completed its fundraising process, raising $10.5 million > as Atrium goes through its product development phase and tries to achieve product-market fit.
[0] https://abovethelaw.com/2017/09/competition-is-for-losers-th... [1] https://abovethelaw.com/2017/10/justin-kan-answers-the-call-... [2] https://techcrunch.com/2017/06/15/justin-kan-atrium-lts-fund... [3] https://techcrunch.com/2018/09/10/atrium-legal/