And you're growing also at a very significant clip.
No, it's not exponential. No, it's a sustained 50% quarter over quarter for the last seven quarters.
50% quarter over quarter. Last seven quarters. Yeah, that's pretty darn fast. So I think we actually just became as of the close last week on Tuesday one of the fastest enterprise company with a direct sales motion to grow from one to 100, 150 million ARR with one quarter.
Amazing. And so people, I mean there's a couple of things in life that people really hate and paying lawyers is like way up on the top of the list. With your tools obviously you got your contemporary and Harvey and people... it's just a small company in the states and then you also have I guess Claude and other folks also want to be in your business so this is a big prize to take I don't know 80% of what we pay lawyers for and compress it by 90%. Like what is the realistic power law here in terms of making for startups in the audience your legal bills dramatically drop in costs?
Yeah. And I'm seeing it already in the startup space. I had a one firm, one startup that hit a million in revenue.
They had closed multiple rounds of funding. Multiple obviously large number of employees, a decent couple dozen employees. They didn't have a corporate lawyer.
No. And I said, 'Whoa, whoa, whoa, whoa, whoa, whoa. You think I had a million dollars in revenue? Like, somebody should review the contracts?' And they're like, 'ChatGPT, bro.' And I'm like, 'What about the cap table?' They're like, 'ChatGPT, bro.' And I was like, 'Okay.' And HR. And they're like, 'Same thing, bro.' And I'm like, 'Okay, it's going to be a fun diligence target one day.'
Well, that's what I said. I said, 'Hey, you know, when you do the series A, they're going to ask that like some of this stuff be reviewed. Do you guys have like IP assignments?' They're like, 'Yeah.' I'm like, 'How did you know to do IP assignments?' First-time founders are like, 'We asked ChatGPT.' And I'm like, 'Okay, wow. I just turned into an uncle like I guess.' Yeah. So, so take us through what you think is happening out there. This is not uncommon, right? What I scenario...
But a seed-stage startup operates very differently from, you know, one of the biggest banks in the US. And so the way to think about the market or at least the way that we like to is you have this enormous bucket of legal services which today is being done manually. It's a trillion dollars every year into legal services which is very fragmented.
But the software spend into legal technology is about 40 billion. So it means there's 4% software, 96% service which is bananas. The software piece should be much bigger than that. And so the software piece naturally will grow into the service revenue but also legal is a very supply constrained market. The demand for legal services is much larger than what there are lawyers or legal services available. And so many of the legal service providers are now using technology to serve new use cases, new market segments and to actually package new products and you will not make...
What's an example of that like?
So an example of that is actually they started serving startup founders directly with a sort of software platform that you just log onto the platform, they pumped it full with their material and their precedent and then you have the startup material there and they've embedded workflows that reviews the contracts.
And what I think is interesting by that is it starts to break this model where you charge out associates for very high hourly rates and you have a billable hour model. And actually, if you look in law firms, the way that that business model works is you overcharge for the associates and you actually undercharge for the partners. I don't know if they're under charge. I mean, I got a bill recently and it was 1,800 an hour, right? But for a senior person, I think the associates were 800.
Well, you know, at Kirkland it can go up to 4,000 an hour. But the thing is when a Kirkland, if so, let's say, you know, 30 minutes of a Kirkland partner's time when it really matters can be worth a lot more than that.
Like a lot more than that. If it's bet the company litigation or you avoid a pitfall that would have costed the company tens of millions of dollars, well worth it. Yeah.
Right. Exactly. And but the only way they know how to price that is to overcharge for the associates.
But as you're saying, the enterprises are looking at this and they're going, 'Huh, we're spending a lot of dollars on legal services. Let's take this in-house.' And...
Absolutely. I mean, we're doing this partly at Legora. We acquired four businesses so far this year. We did the diligence in-house with our own tool and the fastest transaction we did was 12 days from LOI to closing.
Because your motivation as the founder is to get the deal done, right?
The motivation of the lawyer is to not have you sue them if they mess up the deal, right? And to make as much money as possible, which means to drag it out, which means their incentive is to even if they don't say it explicitly, it is to drag it out. Your incentive is to close it as quick as possible. Yeah.
Yeah. And so, you know, I think a lot of law firms are also experimenting with different pricing models where you do a fixed fee for a transaction or for fundraising. In litigation, you can take a part of the success fee when you win the deal.
Or win the case. And so, I think it's just very interesting how, you know, one of the biggest industries in the world now is being completely transformed and reshaped as a consequence of the tech.
And are those law firms feeling like they're being disrupted or this is a huge opportunity and did that switch at a certain point in time or has it switched for them?
There's a lot of anxiety and a lot of fear and you know these law firms are enormously profitable and big businesses. Kirkland Ellis turns around $10 billion a year.
How many lawyers do they have?
Four or 5,000. Wow. I mean, per partner, they make between 5 and 10 million every year in profits. And so, when something like AI comes along, that poses an existential threat and existential opportunity. And that's actually a big part of my job to help articulate with the leadership teams that we work with because we will only be as successful as our customers are. And so we actually have a very unique role at Legora as well which is called the legal engineer. So in the same way that Palantir has forward deployed engineers, we have forward deployed lawyers and their job is to sit down with the Kirkland partners and help them transform their business from a pre-AI to a post-AI world. And it's sort of like document management and PCs were but 20 or 30 years ago when they were printing out and keeping drafts in a library in a storage facility and they had to sort of walk them through and handhold that.
Absolutely. But I think the difference, right?
The difference is those were, you know, mild productivity gains.
Yeah. This can do a lot of the work and so it's really reshaping what it also means to be a junior lawyer going into this occupation.
What does it mean? Are those jobs going to still exist? Are a lot of the lawyers who are coming out of school going, 'Oh my god, was this a good idea or a bad idea?'
The job will exist. The tasks will be different, right? In order to have a partner-driven model, you need to bring people up the ranks, right? In the same way as you do with software engineers. You need to have junior engineers so that one day you can have senior engineers who know what they're doing. But the way to get there is very different. The way of getting there today will not be lock yourself in the physical data room, read through every single document, mark the errors, and you know, go fax it, right? It's also no longer just look in the virtual data room and control F. It's orchestrating the agent that would be doing that work.
And when you look at that work, you have a global backdrop. Attorneys obviously very famously localized, right? And is this going to create attorneys who can operate across borders in a way that didn't exist? And you're starting to see that and is that something that's built into the product? So when you're doing even in the United States, it's a state level certification obviously. And doing a non-compete in the Northeast is very different than doing it in California.
They're not very enforceable or enforceable at all in California as people know, but they're quite enforceable if you're in Boston.
Yeah. So talk about that. Because that seems to be a place where there could be massive gains from AI.
100%. And it's really two things. I mean the data that Legora sits on top of is on one hand side the firms and enterprises own data, their precedent, their organizational data and secondly we do the hard work of gathering all the cases, all the legislation, all the regulatory updates for every jurisdiction in the world and that is very painful but once you start to do that at scale it builds a real data moat. And so in the system if you are the GC of a company in California and you just landed your first customer in South Africa, right? Legora can be adapted to the local legislation in South Africa. And we actually had a case of this where, you know, instead of having to call a lawyer who then knows a lawyer in that region who will respond to the query, they can get an 80% accurate response immediately that they can start working off out of. And the better that gets the more interesting things I believe you can do because this data has really never been structured before and there are so many people who are working with setting policy and building regulation and this is an enormous inefficiency in society.
And LexisNexis has been a juggernaut and the legacy player in, you know, all the case law and regulations. They have a massive data moat. They but they only make a couple of billion dollars a year. And if you put your revenue and Harvey's revenue together, you guys are probably already just that the two of you, you're both making hundreds of millions of dollars. So they must be looking in their rearview mirror at you like the Tyrannosaurus Rex in Jurassic Park and going, 'Holy shit. Like, are they coming for our business?' And then here you are on stage saying, 'Hey, we're doing all the manual hard work of getting that information into our what I assume is a proprietary language model. We'll get to that in a second.' Are you going to just try and buy LexisNexis? I know it's part of a larger enterprise. Or are you just going to kill it?
