00:36:40 · Jay Madheswaran, Alex Rampell
[00:36:40] S0: you will, to become very, very large institutions? I think the transformation that's going to happen is a lot of these law firms are going to look more like software companies. I think they're going to finally participate in the software revolution that's been happening for the last thirty years they've been left out of. And if you kinda deep dive, you'll understand why. Let's say you have a $25,000 settlement. The attorney gets maybe a third of that, Let's call it 8,000 for simplicity. And of that 8,000, about half of it goes towards labor spend, 30% goes to marketing, and the rest maybe is profit. That's kind of the business Because as it exists of that business, it is so difficult to reinvest back into servicing your next client better. The only way you can really do that is by hiring a better attorney today. What changes is now they can actually accrue a database and dataset that is unique to them, that gets them results that is better than their competitors for a subset of law, and this is specialization. And historically, this industry already been through that. Like thirty years ago, there was your neighborhood lawyer that handled everything, from employment cases to IP to what have you. [00:38:00] S1: Exactly, exactly. And and now what
00:38:00 · Alex Rampell, Jay Madheswaran
[00:38:00] S1: Exactly, exactly. And and now what [00:38:03] S0: we have are specializations of practice areas. You have someone that's really good at IP, someone that's good at employment, and now it's getting even more specific. Right? Like someone that's good at, let's say, nursing birth defects or or something along those lines. And I can anticipate that to go even another level, where now someone could get really good at soft tissue injury cases that involve x and y fact patterns. And it... Advertising for those cases might be a lot more cost effective than some other larger firm like Morgan and Morgan just showing their billboard everywhere. [00:38:36] S1: So get good at something locally and then expand That's right. Just across the entire country because you have such high confidence around that one field. That's exactly right.
00:38:36 · Alex Rampell, Jay Madheswaran
[00:38:36] S1: So get good at something locally and then expand That's right. Just across the entire country because you have such high confidence around that one field. That's exactly right. [00:38:44] S0: And so I think we're gonna see that type of specialization, and I think we're also going to see the opposite, where some of the large... We're also working with some on the scale of Morgan Morgan. Like, some of them actually are coming together. So those ones that got us big are actually going around buying other law firms, because they realize with Eve, they can very quickly consolidate what used to be a very painful reintegration process, now can be done on exactly what the client wants, which is, hey, the client wants a legal outcome, and Eve is made just for that. So by doing that, they get to largely work away from a lot of the change management, workforce changes, operation changes, because Eve handles a lot of that for them, they can speed up their time to making that acquisition worth it. Well, the funny thing is that there's this movement underway to outcome oriented pricing. [00:39:37] S1: So like software, SaaS used to be per seat per month, and I used to joke it was like the tall, grandi, venti model that software is selling. It's like you go to, like, any SaaS company's website. This is why, you know, Claude can clone them all so readily. They all look the same. It's like $79 a month, $99 a month, $1.29 a month, you know, tall, grandi, venti. And it was per seat. And look at a company like Zendesk, which had $2,000,000,000 of ARR when they were
00:39:37 · Alex Rampell, Jay Madheswaran
[00:39:37] S1: So like software, SaaS used to be per seat per month, and I used to joke it was like the tall, grandi, venti model that software is selling. It's like you go to, like, any SaaS company's website. This is why, you know, Claude can clone them all so readily. They all look the same. It's like $79 a month, $99 a month, $1.29 a month, you know, tall, grandi, venti. And it was per seat. And look at a company like Zendesk, which had $2,000,000,000 of ARR when they were [00:40:00] S0: last a public company. [00:40:01] S1: They were taken private by Permira and Hellman and Friedman, and now they're like, uh-oh, how many seats do you need? Maybe zero. We need to deliver outcomes. So everybody in the software world is kind of... Like, in a lot of AI companies, we deliver outcomes. We charge for outcomes. The interesting thing is that the form of law that you focused on was always outcome oriented from the very beginning. But you have other types of law that are not outcome oriented where I guarantee all the clients would much, much, much prefer that it [00:40:28] S0: was outcome based. Right?
00:40:28 · Jay Madheswaran, Alex Rampell
[00:40:28] S0: was outcome based. Right? [00:40:30] S1: I mean, sometimes it's tricky. Like, I have a trust in a state attorney at McDermott, Will and Emery. She's very, very good. She's, like, so expensive. Like, I guess my outcome... The outcome is my death, so I don't know if I want that. But, you know, you you would prefer to just say, like, there is a fixed cost, but there's often this data... You know, in in their defense, the reason to charge by the hour is not so much to rip off the client, but there's data asymmetry between what I want in my head and how I articulate it. Maybe the the the scope of the project is changing over time. But, you know, other forms of law, I would argue they probably should look more like plaintiff's law. They should have outcome oriented pricing as well. Mhmm. Right? Or, like, immigration law, that should be outcome oriented. But, like, everything should be outcome oriented pricing, but it's hard because there's a data deficiency, if you will, in terms of, like, how... Will I win this case on behalf of the defendant? But I guess, like, how do you think other forms of... Like, you could probably expand well beyond plaintiff law. I don't know if you agree with me. But, like, how do you think about just, like, law in general changing? Because I kinda feel like plaintiff's law was ahead of everything that we're seeing right now. It's like everybody wants outcomes. Nobody wants to pay for the ingredients or the inputs. This was the only kind of field probably of business where it's like it was always outcome oriented, but kind
00:41:45 · Jay Madheswaran
[00:41:45] S0: of shouldn't other parts of law work that way? That is our exact belief as well. So the hard part has been, it is hard. When you're on the defense side, or even the plaintiff side, the question around a new case, is it ten hours of work, one hundred hours of work? In many cases, you really don't know until you take it on. And for plaintiffs, that is why we had to go so deep into each practice area, into achieving outcomes. And we were doing what is now coined long horizon agents last year. That's just what was needed to drive results, and now it's getting better and better to actually drive legal outcomes. And ultimately, I think what is needed for democratizing of law is from a set of facts, you need to know how much compute resources you need to arrive at a outcome. And that happens through both aggregation of, and better usage of data, and better usage of actually running the compute to achieve set outcome. And so we're doing both. So that is why we're laser focused on outcomes, and we want to drive outcomes. And eventually, this David versus Goliath thing is happening everywhere. It's not just big law or in house legal, those are just where the budgets are. So they actually can write basically a blank check for an interim period of time. And the forcing function around how much is this actually worth in outcomes to me is not known. You know this, when you go fundraise, you might get hit with an 100 ks check. What is the exact outcome of that? It's very hard to know what the value of this, but that is the only way they can price today. And that's because they don't know what the expected value of their work actually is.