00:16:09 · Alex Rampell
[00:16:09] S1: Yep. Well, I kind of think of if you look at your average law firm where they don't really know AI, and actually, this is kind of an interesting kind of take on on the world of of AI enabled applications in general. Like, what was the software stack for law before? Well, if you're a big firm like Wilson Sonsini, probably the most important thing is, like, your your time tracker. Right? That's right. Your billing by the hour. If you're in contingency law, it's like, well, your time matters, but you're not billing your customers on that. You probably need to have, like, a... You know, each case, here's how much money I'm spending on the case. But, like, I imagine your primary tool was Microsoft Word, and there wasn't... This is how, like, VCs would have, like, gotten this industry wrong before, which is like, oh, well, the software market for plaintiff law is small. They all buy Microsoft Office. Yeah. Microsoft Office is kind of expensive, so, therefore, like, the software spend is, like, in the tens of billions of dollars a year or something, you know, seemingly comically small. But wait a minute. The outcomes that they deliver is in the hundreds of billions of dollars a year. They can't deliver more outcomes because they're really constrained on labor, and they can't hire labor for 12¢ an hour because it doesn't exist. So it turns out the software market is kind of like this shadow labor market, and it's, like, massively bigger than anybody would have expected. And and, like, it's always just a weird thing because it's like you can't say the software market is small because you're a you're a legal software company.
00:17:43 · Jay Madheswaran, Alex Rampell
[00:17:43] S0: Mhmm. [00:17:44] S1: But people know Harvey or they know, like, corporate loss or, like, you know, e discovery tools that have been around. But I imagine, like, what was the main software stack before Eve entered? Was it just Microsoft Word? Or, like, what what what was in order for me to go into business? I graduated from law school, I wanna be in this particular sub sector of
00:18:03 · Jay Madheswaran
[00:18:03] S0: the field, what was my software stack? This is the unfortunate thing about plaintiff law and institutions is historically, plaintiff law really didn't need more than a cell phone email address. Honestly, even Microsoft were. Some people on the solos would not buy it for cost reasons, No. Other It's because if you think about it, you actually don't do that much redlining. It's a trust boundary situation. So your one side is kind of opposition to the other side, so you're not really collaborating in the same way that you are when you're doing contract review or something along those lines. So that was kind of it, And no software really solved their core problem, which is exactly what you mentioned. They're labor constrained. That is the core of how they do anything at all. And because they have labor and they're good at managing their labor, they found a way to solve, and every problem to them looked like solid labor, and that's how they've grown up. And as a result of that, what ended up happening was a lot of resources on software went towards defense institutions, because that's where the budgets were. For Harvey, really any company, honestly, legal software companies today, vast majority of them are on the defense side, because that's where the budgets are. And that's what's easy to build for, easy to get money for. And on the plaintiff side, these are small businesses that are watching their pocketbooks every month. If you're not driving outcomes for them from day one, you're out. You're not getting renewed, they're gonna curse you out. Anything they can do, they're going to come after you. And that's what's made things so difficult. But what we realized is, well, their core problem is, we know what their incentives are, they want to represent more people, they want to win, and we can do that now. The beauty of software today is once you do a task manually, even tasks that include crunching new pieces of data and transforming it, that's kind of what AI is really good at, you can now encode it as a process. That is a fundamentally new shift that has never happened before. That's what they were trying to do with people operations, but never worked, because every single case is still different enough that you can't do it. It's still bottlenecked on hiring smart enough people to be able to handle it.
00:20:27 · Jay Madheswaran, Alex Rampell
And now one smart person can actually handle, like we talked about, 500 different cases of very different facts, very different situations, and how do you even keep that in your brain? Like, it's hard. But now you don't have to. And I guess one of [00:20:42] S1: the things that a lot of founders are thinking about right now at the application layer is like, uh-oh, maybe I'm roadkill from the big guys. Right? Like, the labs that produce the intelligence, maybe they're gonna go tackle Myspace next. And I'm I'm toast, and there are many ways of defending against that. But defending kind of sells it short because if you're able... Like, if you have a network effect or if you have data that actually nobody else has, you can deliver better outcomes. So, you know, who cares if everybody uses ChatGPT or or Claude behind the scenes or on their own. But maybe talk about, like, I'm sure you've thought about this a lot. Why is Eve better than just raw intelligence, and how does it get better, because it does, the more practitioners that use the product?
00:21:28 · Jay Madheswaran
[00:21:28] S0: Yeah, we're betting on these models getting better and better. And our value is exactly that. If you have thousand Albert Einstein's to work with, to do litigation, or the best attorney ever to do every single task, we would take it. The problem is if you drop Albert Einstein into a law firm today, he will not be productive for quite some time. And that is a general problem that Eve is solving. And why won't that person be productive? Well, it's due to a number of things. I think one is in plaintiff law, the vast majority of data is actually non scrapable. About less than a percent of cases actually settle and get turned into case opinions. Vast majority settle pre demand or pre litigation, And some even before that, right, where it's actually just negotiation of, hey. This is how I was wronged. Please fix it. And to
00:22:20 · Alex Rampell, Jay Madheswaran
[00:22:20] S1: make that concrete, it's like, I'm in a car accident. I'm not at fault. You know, the adversary, if you will, like the other side's insurance company is like, oh, you weren't that hurt. We'll give you a dollar. Right? They always try to, like, deny, deny, deny. Like, rule number one of of an insurance carrier is deny. Rule number two is deny. You know, it just goes on. Those That's are all the rules of insurance carriers. So now I hire a lawyer and... To actually get what I'm owed because I actually am injured and my car is actually totaled and they just don't wanna pay me. You get a settlement. Doesn't go to case. It doesn't go to actual trial, but you know That's right. Right, that GEICO actually did pay $29,000 and that's very, very useful information, I assume. [00:23:01] S0: That's right, because insurance is the one that's dealing with 100,000 different [00:23:04] S1: laws. They have the shared community, they know all the cases, because it's sharded across all the different local firms, they don't know exactly GEICO's every single move. That's exactly right.