I last interviewed Kira Systems Co-Founder and CEO Noah Waisberg in 2019 after Kira just closed a $ 50 million venture finance round. After the publication of his new bestselling book AI For Lawyers in the Wall Street Journal, I caught up with him again: How Artificial Intelligence Adds Value, Expands Expertise and Changes Careers. Waisberg was kind enough to share his thoughts on the birth of AI technology in the legal field, as well as a 10-year retrospective of the management and growth of one of LegalTech’s most fascinating platforms.
Closing the gap
I asked Waisberg what about AI that seems to keep lawyers from using it. In his view, it is primarily a disruption of incentives between lawyers and their clients, which are 100% driven by pricing. Kira’s own product is aimed at due diligence legal teams who, like most lawyers, operate on a billable hour model. Fewer hours worked mean fewer hours billed. Using tools to perform the same task more efficiently literally translates into a win for the attorneys. This is an incentive for law firms, in Waisberg’s words, “to get young corporate lawyers to spend a lot of time doing jobs that they hate and are not that good at.”
Waisberg believes that AI tools, when used properly, can effectively bridge the gap between the needs of clients for services and the needs of lawyers.
For lack of a nail
Waisberg gave me an example from his own company’s focus, due diligence. “When you help someone, we say a [$50 million to $100 million] Acquisition contract, your partners would probably consider between 50 and maybe 200 contracts. And they probably check for changes of control on the assignment and certify such things for the buyer. If you’re working on a larger business, there are more contracts to review. The thing is, the company for which you are purchasing [$50 million to $100 million] probably has several thousand contracts, which means you are only reviewing this small pool of all the contracts that are out there. “
Usually this works because most of those thousands of contracts are either unaffected or negligible. Reviewing every single contract would be prohibitive for most customers. When all material high priority contracts are reviewed, the risk of serious headaches and liability is low. However, there is always the possibility that a tiny, overlooked contract or term unexpectedly leads the acquiring party to experience massive, unlimited liabilities.
Achieve more with more
Here Waisberg sees AI as added value for lawyers and clients. Rather than doing the same job in less time, AI tools can allow a law firm to offer their clients much deeper ranges of due diligence at similar prices, in some cases even higher. Clients get significantly more value and protection for their dollars, while the law firm both earns a solid fee and stands out from the competition.
Waisberg told me anecdotally about a managing partner who spoke to him after he started using AI in his practice. The partner said, “I used to be billed for 200 hours for due diligence on a project and my clients hated me for it. They would pay me 150 out of those 200. Then we started using Kira, broadened the scope of our diligence and helped them integrate a bit more, which they really appreciate. Now we charge 300 hours for a project, they pay us the full 300 hours and they happily do it. “
“When people get used to business,” says Waisberg, “they find a way to get used to everything else.” The bottom line is that AI can be a powerful tool for lawyers looking to add value to their clients while keeping billable prices high. The trick is to get creative and match those incentives. It’s less about the tool itself and more about the lawyers who use it.
Mistake We’re glad we made
As Kira approached 10 years since its inception, I asked Waisberg what mistakes he had made along the way and what advice he would give to today’s entrepreneurs.
Perhaps the greatest danger Waisberg cited was that she was aiming too high too soon. Kira immediately tried to create a product for lawyers that would analyze each of the infinite types of complicated contracts that lawyers review. They chose both an insanely difficult problem and an insanely demanding customer base.
“I had no income. I had a negative salary, ”Waisberg recalled. “It was a difficult, difficult time.” Waisberg did not say that if he had known then what he knows now, he would have changed his strategy. “Some of the big mistakes you make just set you on the path that will make you who you are…. I don’t know that the journey would have ended even if we had made better decisions along the way. “
For entrepreneurs looking to start a business today, Waisberg owes his company’s success to old-fashioned persistence. “It’s a startup. Things keep breaking and you fix it. It’s only part of the process. “
I couldn’t let Waisberg go without asking what Kira had done with the $ 50 million investment she had just secured the last time we spoke. “Nothing fancy. There is no gold pool table in our office, ”said Waisberg. “We hired more people, spent more money on sales and marketing.” Solid foundations might be boring, but who said boredom was bad?
Solid foundations have been Kira’s path to radical change in the industry, and it can be ours too. As attorneys, we have more tools than ever in the history of our profession, and we have no excuse not to use them. It’s artificial intelligence, not rocket science. Let’s do our job better, add more value to our customers, and maybe make some money in the process.
James Goodnow is the CEO and managing partner of NLJ 250 Fennemore Craig. At 36, he became the youngest known executive director of a major US law firm. He has a JD from Harvard Law School and two corporate governance certificates from MIT. He is currently attending the Judge Business School at Cambridge University (UK), where he is working towards a Masters in Entrepreneurship. James is the co-author of Motivate millennials, which reached number one on Amazon in the category “Business Management New Release”. As a practitioner, he and his colleagues created and operated a technology-based company Practice of the plaintiff and business model. You can connect with James on Twitter (@JamesGoodnow) or by email at [email protected].