Let the computers do the legal busywork so attorneys can focus on complex problem solving for their clients. That’s the lucrative idea behind Atrium LTS, Twitch co-founder Justin Kan’s machine learning startup that digitizes legal documents and builds applications on top to speed up fundraising, commercial contracts, equity distribution, and employment issues. For example, one of its apps automatically turns startup funding documents into Excel cap tables.
Automating expensive legal labor has led to a rapid rise to 110 employees and 250 clients for Atrium including startups like Bird and MessageBird. Atrim only came of stealth a year ago with a $10.5 million party round before going into Y Combinator last winter. Today it announces its raised a $65 million round led by Andreessen Horowitz.
In characteristic dude fashion, Kan tells me “I’m pretty stoked about that because of having more resources for Atrium.” The venture firm’s partner Andrew Chen taking a board seat and famed co-founder Marc Andreessen joining as a board observer. “I wanted a visionary who’s always going to be pushing us to build something really big” Kan says. YC’s Continuity Fund and Ashton Kutcher’s Sound Ventures are also joining the round
With the massive new funding round, Atrium will be able to develop more internal tools it can use to crank out client work faster than its traditional competitors. “We can ultimately be this platform on top of which you’re building these legal business and eventually other professional services and software services” Kan explains,”They’re all sitting on top of the platform that understands legal documents.”
In more Atrium news, Y Combinator’s leading partner Michael Seibel will join the startup’s board too. And it’s acquired Tetra, a YC artificila intelligence startup that had raised $1.5 million to analyze voice, “to help us build our platform that understands and structures data” Kan tells me.
What Kan didn’t initially mention is that two Atrium’s co-founders, CTO Chris Smoak and legal partner BeBe Chueh have left. He later admitted that had transitioned out of the company several months before the new funding. “BeBe wanted to spend time working on family (she just got engaged); Chris and I disagreed on his job role” regarding the definition of the CTO position, Kan tells me. He’ll now be running Atrium with remaining co-founder Augie Rakow, formerly of mega-law firm Orrick, and Kan’s long-term business partner and former McKinsey analyst Nick Cortes.
Justin Kan (Atrium) at TechCrunch Disrupt SF 2017
The law firm business model has left the door open for disruption by technology companies like Atrium. “Law firms generate revenue from hourly billing, and lack an incentive to vastly improve efficiency” Chen writes. “Many law firms dividend out all their profits at the end of each year, making it hard to invest in the expensive investment of building software. Software is hard to build inside a software company, much less a law firm”.
But Atrium is an engineering company with a legal clientele. It takes the most common and time-consuming activities — often related to ingesting mountains of documents — and builds machine learning workarounds. Atrium’s lawyers can focus on advising their clients on what to do, rather than burning the midnight oil doing it as they look for tiny quirks in the paperwork. The legal services get faster, cheaper, and more predictable so Atrium can offer upfront pricing.
For now, Atrium’s tech is limited to a narrow band of use cases. But “over $300 billion is spent per year in the enterprise legal market” Chen writes, so there’s plenty of room to grow now that Atrium is well capitalized. They’ll have to convince big corporations to ditch the old way and let computers lend a hand. Luckily, Atrium isn’t a SAAS company forcing clients to use the tech themselves. Done right, they shouldn’t even know it’s machine vision software, not junior associates, pouring over their docs.
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