The Myth of Fully Automated Legal Tech

Or, How I Learned to Stop Worrying and Love My Attorney

As a firm that routinely deals with forward-facing entrepreneurs creating a start-up: we get it. Start-up entrepreneurs — typically operating on a limited financial runway, and with little experience working with proper counsel — are loathe to think about legal costs and the inherent delays even the quickest-moving attorneys introduce to their process. There is an understandable, but ill-advised, urge to keep legal costs as low as possible and get legal work done as quickly as possible. This is only furthered by founders who are fed advice from advisors/mentors/investors which (not-so-coincidentally) often serves investors’ interest while depriving the fledgling enterprise from helpful and competent counsel.

Many of our clients, particularly the tech-forward variety, recommend a variety of tech solutions for legal work, such as Clerky. Our firm routinely evaluates every piece of legal tech it can get its hands on, but in our experience legal technology can supplement a good lawyer, but can not replace them. We utilize available tech to maximize our efficiency, improve the quality of our work and reduce costs to our client. The best tech can cut out waste, and we are habitual early-adopters.

Nevertheless, the work of a solid transactional firm is more than just filling-in-blanks and checking boxes. Perhaps this is why a recent Oxford University study on various industries susceptibility to computerization found that attorneys only had a 3.5% chance of computerization by 2033. Our ongoing evaluation of legal tech has yielded a constant observation: namely, significant automation works best for large companies with massive amounts of standardization and the ability to be inflexible in their legal approach. So, for example, legal tech is at its most effective for large companies who are dealing with identical contracts/transactions hundreds to thousands of times, with little-to-no negotiation or variation.

However, sophisticated work with a varied client base requires a nuanced and adaptable approach to legal work. Customized legal work in the formation process and beyond, as well as adaptable agreements that are adjusted in negotiations on a case-by-case basis are a must. Applying a boilerplate approaches to the law will take out the short-term sting of legal fees, but will replace them with the far more significant costs that inevitably lay down the road for those companies that eschewed the correct approach to early start-up legal work. In the long-term, significant legal mistakes in the early stages can lead to a very high, often irreversible cost, of errors.

Instead, the best strategy to get quality legal work without breaking the bank is to find a law firm:

  • Whose utilization of tech is part of a larger campaign to increase efficiency.
  • Is not overrun by a significant amount of overhead (while not being shy to spend on necessary overhead to ensure scalability).
  • Is capable and willing to be flexible on your budget and payment schedule at your earliest stages.

Finally, as a start-up, it is essential to engage with a law firm that understands that you may need flexibility in payment, whether that flexibility comes from discounted fees, deferred fees, equity arrangements or otherwise.

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