A Product Market Fit Show | Startup Podcast for Founders
00:09:29 · Nick Fleisher, Pablo Srugo
It was centralizing intake across all these different sources, finding the right lawyer in the legal department to work on it, and asking questions using AI with the business user to gather all the context before it hits the lawyer's plate. And like, we realized that was quite an unmet need. Like there were some intake point solutions, but none that were using Gen AI like that. And so we started rolling that out, you know, on the side with some of our friends. [00:09:54] S1: This is what year at this point, like when you actually decide that you want to build a solution for this? [00:09:59] S0: This is early last year. So 2025, early 2025. And over the summer, we're still at McKinsey. So call this May, June into July of last year. We were testing it on the side with our friends. And McKinsey Legal can come at me and be mad about that. But we had a lot of friends who were lawyers. And so we would ask them, hey, could you like implement this on your smaller legal team within a broader legal department and just see how it goes? There were two really interesting things that happened. One, like people started using it to just track and manage work. And we realized like legal teams never really had their version of Jira or Linear. [00:10:37] S1: Crazy. Like they don't have a CRM?
00:10:37 · Pablo Srugo, Nick Fleisher
[00:10:37] S1: Crazy. Like they don't have a CRM? [00:10:39] S0: No. So the first part was, okay, this is becoming from intake to like managing work. What we then realized is, to the point you just raised, they don't have a CRM and they don't have a single place to just manage all the context behind what's been going on. And so it expanded from just doing intake to actually the data that we have in Slack and Teams, Drive, SharePoint, all these places were integrated, is super rich for the legal team to be able to get the context on anything they're working on. So we went from just saying, let's do intake and work management to actually we're just a context engine or a CRM for the legal department. So when that request hits my desk and it's a sales agreement I need to review, we know everything about the counterparty, we can tell you who worked on the last negotiation, how it went, and we can then use that to help you answer the questions or review the new contract. And that's where the tool started to evolve from like intake front door to a real legal context engine, which is where clients are starting to get, you know, are getting more value today. [00:11:38] S1: You might not have an answer, but do you have a sense of why? Like there's plumbing businesses that have CRMs, right? Like how come a legal massive, massive business worldwide wouldn't have like a tailor-made CRM or even like a Jira-like, you know, internal kind of collaboration platform?
00:11:55 · Nick Fleisher
[00:11:55] S0: Some law firms use like Salesforce and CRMs, not very successfully. And I think part of that on the law firm side is because you also have, and it was similar to McKinsey, you have partners who kind of run their own businesses. And so to get them all bought in on like this one shared unified instance is like really hard. On the corporate legal side, like where we work, which is like we only work with in-house legal departments, right? The Fortune 500s all the way down to legal teams that are two or three people. The problem there is they're just takers of the software of the rest of the business. Like historically, like a legal department is like this back office function. It's already a big cost. Why would we give them their own hub for managing work? In the early 2000s into like 2010s, like a market did get created or grew pretty significantly, which is contract lifecycle management. And I would think of this as like V1 of the legal CRM, which was, here's a place that the legal department has that is not part of the rest of the company. And it's where they store and manage their contracts. The problem with that is twofold. One is it's only looking at contracts, right? Legal teams do a lot more than contracts. Like they answer complicated questions. They work on HR matters. They work on many different things. And two, it's very point in time. So it's just looking at contracts that are like executed and signed versus like what are all the communications and processes that we're doing that lead up to that, right? So it's not actually the most helpful resource for AI because we're only looking at a snapshot of the data of the legal department. And so we kind of think of like what we're building now, this legal relationship management tool as like the second wave of contract lifecycle management.
00:13:32 · Pablo Srugo
[00:13:32] S1: Why do you focus only on in-house?
00:13:33 · Nick Fleisher
[00:13:33] S0: Twofold. One, when I was at McKinsey, a lot of my work was with law firms. And I just think they're a really tough market to not to sell into, but to expand into. And what I mean by that is it's easy to get into a law firm through the head of innovation. But to actually get usage at scale in a law firm is really hard because you're going to every partner in every practice area as if it's its own business. And I was just like, I don't want to do that. I think second, like on the in-house side, it's a massive market, right? Like it's just objectively a bigger market in terms of count of lawyers and amount of work to be done. And two, legal is our starting point. We plan to expand on the in-house side. If you imagine like everything in a company that's important goes through legal at some point, right? Whether it's a sales deal, procurement, hiring someone, firing someone. We are now this like context layer that tracks all of those decisions as they go through legal, which is very valuable for other departments and other parts of the org. And so like it's a great in or wedge into broader corporate and enterprise work. And so for us, it was just a more attractive space in market. I think the one other thing I'll add there is like a lot of our team comes from this role, which has been born over the last call it five or 10 years called legal ops, which is in corporate legal teams when you reach a certain size, you usually hire someone that's like your head of legal operations. Think of it as like rev ops, but for legal. These are the people who historically implemented those contract management tools and like did all that work setting that up. It's a very strong community and market and they are like unbelievable stewards and champions of new technology, but they are really fed up generally with contract management systems. That just felt like a great opportunity to like really get close with that community and build something that actually works for the legal ops role.
00:15:19 · Pablo Srugo, Nick Fleisher
[00:15:19] S1: So the bigger play is almost thinking of legal as the ultimate source of truth in a company, because anything that's above a certain bar of importance is going to make its way there. And only if it makes its way through there, does it become reality. Everything else is just kind of an idea that hasn't been really executed yet. [00:15:35] S0: Yeah, I think long term, like the biggest value we have is, you know, whether it's through our UX or through API or MCP, like accessing this context layer that we build on top of your legal department. [00:15:46] S1: You know, I mentioned before, like we had a wordsmith here on the show. A lot of what you're talking about, you know, they sell it in-house as well. They're trying to be like that front door. Is that a direct competitor to you or are you thinking about things in a pretty different way?