
Atrium shuts down, laying off 100 - tempsy
https://techcrunch.com/2020/03/03/atrium-shuts-down/
======
gnicholas
I swung by the Atrium booth at the Startup Grind conference a few weeks ago. A
former lawyer, I was curious to hear their pitch. It was basically: we get you
cheap lawyers, and we help them find new clients.

I asked if all of their lawyers are based in the US, and they couldn't give me
a straight answer. Eventually, when I said "well, of course they must all be
US-licensed lawyers, right?" they said "oh, yeah, they must all be in the US
then."

It was not a confidence-inspiring conversation, and I can't say I'm surprised
that they're shutting down.

~~~
eganist
Legal is a notoriously sluggish industry, one that's almost infuriatingly
incapable of adopting change and technology. Atrium's original pitch was
_exactly_ the opposite of what most legal teams are used to interacting with,
and I can't think of a single biglaw attorney (sorry for the anecdote) who had
faith in the idea or its execution.

The original concept, as a reminder:
[https://techcrunch.com/2018/09/10/atrium-
legal/](https://techcrunch.com/2018/09/10/atrium-legal/)

Now it's easy to say that this should've been obvious in hindsight. (Should've
been obvious to me, anyway; I cold-mailed Justin and Nick years ago looking to
build a specific function within Atrium to address concerns I'd heard on
background about the service offering; I never did hear anything back about
that.) But that said, I can't help but think the original pitch by Atrium was
just too bitter a pill for the most conservative industry in the United States
to swallow. Shoot, lawyers are bizarrely resistant to moving to e.g. Signal to
preserve attorney-client privilege; given this, I have a hard time thinking of
many who would trust ML models with understanding case-law.

~~~
kemitchell
I believed that law was a sluggish, tech-averse industry when I signed up to
join it. But I don't see it living up to its tech-resistant reputation. It's
very easy to blame the customer that way, when you have something to sell. As
a lawyer, a coder, and legal toolmaker, I've been there. But my lived and
observed experience of practice is that lawyers adopt what makes them
competitive.

As a result, they've often been early, broad adopters of general-purpose
office and productivity technology. Sometimes to their eventual detriment
overall, by standardizing on an early generation at the expense of later
incremental improvements. But at the same time, I think US lawyers as a class
are remarkably resistant to whiz-bang pitches of especially law-specific
solutions. It's easy to sell a lawyer some technology that their counterparts
are using to run circles around them. It's hard to sell a lawyer some
technology with a change-the-world, techno-solutionist pep talk.

Anecdotally, I can't say how many times I've attended or watched pitches by
tech-focused people, business managers, or technophile lawyers with very
little practice experience hocking half-baked solutions held up as replacing
or supplanting lawyers in some way. My reliable takeaway from those pitches is
that the founders don't know what lawyers do. When I ask about tablet
ownership, cloud service adoption, security standards, terms of use for
professional ethics requirements, or Lexis terminals in the 60s and 70s, it's
usually a big, blank stare.

~~~
gnicholas
I’m curious to know what firms you’ve practiced at that weren’t tech-sluggish.
Were they run by 55+ partners, or younger folks?

~~~
kemitchell
I'm a "transactional lawyer" who negotiates contracts, forms companies,
handles regulatory issues, and advises on strategy. That's as opposed to a
"litigator" who handles court cases. But I've actually seen practitioners
outside my own specialty who've integrated newer technology much more deeply.
Automated case assessment in some immigration practices, for example.

In my experience, there is some correlation between technology and age. But
keep in mind that 55 year old lawyers were born in 1965, started coming out of
law schools in the late 1980s, and became established in the early Internet
era, before the bubble burst.

Part of what you're getting at might be down to how the role of older lawyers
tends to change, especially in firms. I would say most older lawyers in
transactional fields do far more advisory and strategic work, akin to
consulting or even lobbying, than issue research, contract review, or routine
drafting. If the senior partner's working pretty old school, but all the
junior partners, associates, secretaries, and paralegals under them use their
own tools, that's still a pretty newfangled picture, overall.

Part of it may also be certain specialties that deal routinely with government
bodies, like court systems and regulators, with their own adoption curves. But
don't jump to conclusions there based on standards for consumer technology.
The websites may look clunky, and the interfaces may be pretty retro. But the
databases involved are often functionally complete, resilient, and workable
for the severely outnumbered public servants that use them most.

~~~
Blake_Emigro
I made tools to automate parts of my Canadian immigration practice, (as a non-
lawyer, licensed legal services provider), but that was only increasing my
profit and ability to scale. What I really got paid for was perceiving what
the customer wanted, and matching that with what they could endure / afford /
likely become eligible to do, while reassuring them they could still be happy.
This part could not be automated.

------
burgerquizz
Justin Kan got into a terrible motorbike accident few months ago [1] . He then
went through lot of thoughts on meaningful life and such kind of things in his
tweets later. Would that impact the performance / outcome of Atrium?

[1]
[https://twitter.com/justinkan/status/1191821878567915520](https://twitter.com/justinkan/status/1191821878567915520)

~~~
arbuge
Looks like a bicycle accident, not a motorbike accident.

~~~
eshyong
Still, looks like a nasty injury. That's enough to make anyone ponder life

~~~
dmix
> Broke both elbows, lost a tooth & left a smear of my face on the road

That's an injury that will keep you in bed, giving you a moment to really look
if you're collectively as a company making the best effort on solving the
right product/market fit. Which he clearly couldn't find, nor roll off some of
the law-firm tools they built I guess? But the actual law firm of lawyers they
got together is still running which is good, so it's not a total loss, plus
some money back to investors.

It's difficult to get proper perspective sometimes being a founder, you get
mired in details and fantasy growth possibilities, and startup runners
constantly need re-committing themselves for the tough fight going forward. It
takes balls to finally admit defeat, especially with a solid track record.

So ultimately I wouldn't be surprised if this gave an opportunity to step back
and take some perspective, while he's stuck in bed in recovery mode.

------
robhunter
One lesson that I think is getting buried here - hiring 100+ people when
you're not yet at product-market-fit makes it really hard to try and get to
product-market-fit.

It's a lot easier to experiment, learn, and iterate when the team is small.
Gets very difficult when you're 100+ so quickly.

~~~
Digory
I’m glad someone took a gamble on an MVP that needed 100+ to pull off. We need
more of that — 100 people is still a pretty small organization, even for law
firms. We have lots of problems that need 100+ to solve.

But the ability to pivot was obviously hamstrung. The team necessary for “plan
b” didn’t have much overlap with “plan a.”

~~~
robhunter
"MVP" and "need 100+ people" seem like mutually exclusive things.

In this case, I think the headcount was a bug rather than a feature.

------
Ice_cream_suit
"The legal team seemed like 2nd rate lawyers who constantly made typos on
legal forms"

And

"My experience with this was also negative - seemed like a good idea but post-
sale often took weeks, even months to get results"
[https://techcrunch.com/2020/03/03/atrium-shuts-
down/](https://techcrunch.com/2020/03/03/atrium-shuts-down/)

------
pontifier
I contacted atrium in December to see if they could help me with an
acquisition, but they didn't even want to take me on as a client because I
wasn't big enough yet. I should have guessed there was some trouble behind the
scenes. I ended up just going with my gut, doing my own quick study on
aquisitions, and went ahead with the aquisition without a lawer on my side
looking things over.

I think it turned out ok... time will tell I guess.

~~~
sjroot
I have a similar-ish story. I actually just spoke on the phone with a
representative from Atrium just a few days ago; I was interested in having
some policies written/reviewed. I was particularly interested in their "start-
up" package which seemed to offer general counsel for those looking to grow
their business.

While I would have been happy to pay for this sort of concierge approach, I
was also "declined" for being too small / not needing the specific services I
suppose they were willing to provide. I imagine this kind of interaction with
potential clients is one reason they got to this point.

------
manigandham
Legal industry is already tech-enabled. Templates, digital docs and
signatures, OCR, AI/NLP/semantic processing, collaborative editing, and more
are already used by modern law firms. There's no easy software-based
efficiency left to find.

The major work is still done by humans because of the liability, complexity
and customization of every case. The next step requires a revolution in legal
process, not just more software.

~~~
patentatt
Disagree. I am pretty close to the Biglaw tech scene. While you’re correct
that most firms would say they use all of those things, the actual
implementation and execution isn’t there. It’s not even a nuanced critique, I
mean maybe 1% of amlaw 100 revenue is even touched by anything in your list.
There is a lot of work to be done, and great opportunity in the legal
industry.

~~~
staticautomatic
Agreed. For all their tech initiative claims and hiring of in-house "legal
ops" people and even developers, your typical attorney uses hardly any legal
tech outside of e-discovery or billing.

~~~
manigandham
What else does a typical attorney need to use that would make a meaningful
difference?

~~~
staticautomatic
I can only speak for teams of attorneys, and my experience is mostly working
with litigators rather than transactional lawyers, but among other things:

1) It's shockingly rare to see use of project management tools, even simple
stuff like Basecamp or Notion. When multiple people need to, say, review a
draft of a filing in sequence, they're typically either keeping track of it in
their heads or in a spreadsheet. "Excel is totally adequate for this" is wrong
for a variety of important reasons.

2) Infrequent use of file indexing, even Windows' built in. I see firms using
document management software running old versions of SQL with totally the
wrong kinds of indexes and which usually take forever to find anything or
crash in the process.

3) If they exist I haven't seen them in use, but a lot of teams would benefit
from some middle ground between nothing and e-discovery software for searching
across relatively large but not enormous collections of documents. A
rudimentary on-prem or local CRUD app that could ingest a variety of shit, OCR
it if necessary, dump it into Elastic, and let you FTS it would probably sell
like hotcakes to small and mid-sized firms.

------
minimaxir
This happened less than 2 months after a "pivot to tools":
[https://news.ycombinator.com/item?id=22040238](https://news.ycombinator.com/item?id=22040238)

~~~
gumby
Never really seen a "pivot to tools" work (after I tried it with one company,
and it failed, I started noticing when others tried it too).

~~~
nharada
Why do you think it never pans out?

~~~
itronitron
Using a tool often requires a lot more work than using (consuming) a service.

------
bfung
Kudos to shutting down instead of dredging on. It's never an easy choice, but
giving everyone closure helps everyone to move on.

~~~
idoh
They shut down with 75 million in the bank a couple months after the pivot. I
think there is more to the story.

~~~
teej
They do not have 75 million in the bank. They returned _what 's left_ of their
75 million raised back to investors.

------
hardwaresofton
> Atrium had attempted a pivot back in January, laying off its in-house
> lawyers to become a more pure software startup with better margins. Some of
> its lawyers formed a separate standalone legal firm and took on former
> Atrium clients. But Kan tells me that it was tough to regain momentum coming
> out of that change, which some Atrium customers tell me felt chaotic and
> left them unsure of their legal representation.

It's hard to detect my own bias of course, but this seems like a really
cynical move. I understand the need to improve margins but essentially trying
the _train our processes so we can fire you_ is off-putting and borderline
offensive to workers. For positions closer to the furnace of automation and
jobs that are generally dangerous that people don't take pride in it can be
minimally destructive but law is not one of those professions.

It's preferable to get into businesses that don't screw over anyone, but if
you're going to screw over someone maybe don't screw over smart highly paid
professionals that are providing your core value proposition.

~~~
hef19898
Especially lawyers, who by definition aren't too bad at screwing over others
legally themselves.

------
correlator
Another "AI" hammer looking for a nail to solve bites the dust. I hope those
100 employees land on their feet.

~~~
fastball
I dunno, I still think the legal industry is pretty ripe for some disruption.

~~~
correlator
I think it's ripe for useful tools. No need for disruption.

~~~
fastball
There is a lot to not like about the current state of the legal industry
besides "poor tooling".

------
smohnot
These full-stack “cyborg” businesses are hard; seen them in many types of prof
svcs; accounting, legal, recruiting, r estate, insurance. Very few have
worked, Redfin as notable exception, though it took forever. The expected
operational efficiencies are very difficult to come by.

------
duxup
It didn't really seem like they were doing anything an existing firm couldn't
do efficiencies wise. And maybe already has /has found where it works or
doesn't.

And the customers who want legal help for cheap(er)...just don't seem like the
people who you make money off of.

Any customer concerned enough to know about this service probably wants more
from it.

Anyone that would be a good customer, might never find them / isn't doing much
in that area anyway...

------
choyle
Techcrunch links to the wrong Atrium on crunchbase. Lucky for that company!

------
noway421
It sucks. Not even sure they should've called it so fast, why not keep going
and try to figure it out till the money runs out. Investors would be OK with
that.

I wonder when Justin lost his conviction? I don't believe you can lose
conviction in 2 month.

~~~
tempsy
working at a zombie company that has no traction is not fun for anyone

part of the “challenge” of being a famous founder is you can raise pre
product.

$75M seems insane for a company like that. Burn couldn’t have been that high,
mostly rent and salaries, no heavy computation, etc.

~~~
lmeyerov
100 people x 150k yr = $15M. Add insurance, office, heaaavy marketing, sales
commission, non-frugal everything.. I'm guessing $20-30M over their 2+yrs.
Maybe even more on people bc hiring lawyers.

Weirdly, the investors are happier with that than 5 smaller series A's of
money-making / real-IP companies with existing growth engines. Easier to bet
on nothing vs improving.

I do find the flameout odd, and not isolated to Atrium. Why flameout vs
spinoff a small business for folks who wanted to continue? Same difference to
the investors, but meaningful to the lives of the believers. Worst case, just
OSS for them..

Thinking more: A good comparison is Carta, also in legal, whose funding was
more correlated to revenue and growth.

~~~
manigandham
The end of the first paragraph says: " _The separate Atrium law firm will
continue to operate._ " The legal talent already did spin-off with the last
pivot.

~~~
tempsy
They laid off a bunch of lawyers so no idea who is still working there

------
notlukesky
Let’s wait for the full autopsy but perhaps a better strategy would have been
supplying tools and software to lawfirms, aggregating data and knowhow and
then pivoting to an “automated” law firm as a service.

But hindsight is always 20/20

~~~
ttul
Plenty of software companies make a lot of money selling to lawyers. Clio
([https://www.clio.com/](https://www.clio.com/)), for instance, is a SaaS that
helps lawyers run their practices better. It doesn't try to replace lawyers;
it just saves them time on the bullshit of running a firm. Kira
([https://kirasystems.com/](https://kirasystems.com/)) automates due
diligence, which is a labor-intensive (and hence costly) process that nobody
loves doing, but which does generate a lot of billable hours for paralegals
and support staff.

~~~
spamcast
clio is a good example.

~~~
ttul
Indeed, Clio is absolutely crushing it. They closed a monster $250M round last
September - and this is a company headquartered in Vancouver, not San
Francisco, so the bar for raising that kind of money is truly up there.

------
thindarye
[https://twitter.com/justinkan/status/1066859955804762113](https://twitter.com/justinkan/status/1066859955804762113)

------
bogomipz
The article states:

>"It will return some of its $75.5 million in funding to investors, including
Series B lead Andreessen Horowitz."

Does this simply mean it will return all funding after paying out remaining
invoices and salary obligations? Or is there some significance to the phrase
"some of" here?

~~~
Digory
The $75m was a 2018 series B. Atrium has been spending that money for 18
months, and probably quickly.

So A16Z isn’t getting back anything close to $75m. Just “some.”

Part of this seems like courtesy among the big boys who want to play again. I
doubt Atrium wants to tick off A16z by making dubious claims to the remaining
cash.

------
dustingetz
what if a startup charged $300 per month for all you can eat email legal
advice backed by a rich library of templates? they would instantly dominate
and there are 6M small businesses in the USA alone

~~~
sbilstein
Cookie cutter legal advice is a landmine/footgun for a business. Even Stripe
Atlas will lead you down a dangerous path if you don't check with a lawyer
when incorporating. Don't fuck around with business legalities, it ain't worth
it.

Unfortunately, if you even _think_ about your attorney, you'll be charged for
it but the peace of mind is worth it.

Having a lawyer you trust, is timely to questions, and works fast is just a
layer of stability you need so you can focus on the important parts of a
startup. Legalzoom is garbage in this regard.

~~~
mrosett
It sounds like you have a story here about Stripe Atlas, although I'd
understand if you're not eager to share.

~~~
sbilstein
It’s not a bad service at all and the staff are lovely and have fantastic
events! However, if you incorporate with them have a lawyer review your docs
and ensure you hit all timelines around filing correctly: buying your equity,
submitting 83bs, state and federal stuff.

The product makes you feel like it’s a one click thing but you need to check
in with a lawyer to not forget anything. Most ppl who used Atlas have told me
the same. I do recommend Atlas since you will save some money and you get some
nice fringe benefits.

------
planetzero
One of the worst contracts I ever had was for a small company running a SaaS
for divorce attorneys to help manage their cases.

The main selling point was that it would re-create state forms on the web and
allow an attorney to fill them out, print them, and manage a case.

These forms would change many times a year and they were written using
horrible PHP libraries that required every piece of the form to be drawn using
coordinates. If one thing changed on the page (which happened often), all
coordinates would shift and have to be re-written.

Aside from this, the owner had the first version written by developers
overseas a few years earlier and I was hired as part of the 2.0 team that
consisted of more inexperienced overseas developers and resulted in even more
of a mess than version 1.

Some gems from the owner:

She once put on her Linkedin profile that one of her accomplishments was the
ability to hire developers on a volunteer basis or well below marker value. It
was taken down within a day.

I was finally let go and was told straight to my face that she was going to
hire someone from India for 1/3 what she was paying me.

------
justlexi93
Justin Kan's hybrid legal software and law firm startup Atrium is shutting
down today after failing to figure out how to deliver better efficiency.

------
wheelerwj
wow.... that happened fast.

