One law firm's AI advantage can push its peers to adopt

Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

1. 6:39

   And that turned out to be a good decision. Are you surprised by like how strongly the legal market has adopted AI? If I had thought, you know, in 2023, let's say, or 24, like what's going to really adopt quickly? Like, I don't know if personally I would have seen it coming that lawyers would be near the top of the list. I don't know. I mean, you've invested in stuff before, too. So I guess this is for both of you.

2. 7:01

   But like, has it been a surprise over the last two years, the rate of adoption? Yes, it's been vivid. But second, and maybe more importantly, the law firm market is very interesting because it's like this perfect equilibrium with, frankly, like pretty low differentiation. Like if you need to do a VC deal here in the valley, like you could go to any, you know, the top five firms and you're going to get roughly the same thing.

3. 7:24

   If one of them starts leveraging Legora to offer a better service at a better price point faster, all of them have to adopt it. So the equilibrium like shifts down and then everybody has to move. So what happened in the law firm market was as soon as one big firm in a market sort of adopted Legora and went public with it, everybody else had to do the same. that's not necessarily the same in the in-house legal sector, right?

4. 7:51

   Like if one big bank says it, like another big bank doesn't necessarily need it. But was there something about the process of the way work got done or the structure? of it that allowed Lagora's product to drive so much value so fast in a way that it did force that sort of prisoner's dilemma? I just think the legal sector was so underserved with great software for such a long time that there was this like a lot of built up problems that we could easily solve with LLMs, but they were really hard to solve like pre-LLMs. I also think you guys had a great insight early on, which was that there was like a deference and respect to the customers, that lawyers are really smart.

5. 8:30

   They're extremely well-educated. They're tech-savvy. They're not programmers, but they're very tech-forward. They use, like, the latest software. They use the latest devices. And so they were all going to be playing with ChatGPT and Claude. And so if you showed up with a legal AI product, it had to be better than the foundation model. Otherwise, they were just going to say, why are you deserving of my dollars?

6. 8:53

   And Microsoft Copilot rolled out very quickly. Like, every law firm in the world is a Microsoft shop. Yeah. Yeah. Like everybody works with Outlook, Microsoft Word and, you know, where they store their documents, basically.