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Atrium Failed, But Another Start-Up is Pairing Lawyers and Code

Sept. 24, 2020, 8:50 AM

Welcome back to the Big Law Business column on the changing legal marketplace written by me, Roy Strom. This week, we look at the next start-up trying to automate the work lawyers do. Sign up to receive this column in your inbox on Thursday mornings.

Justin Kan, the tech entrepreneur who sold a video game business to Amazon for nearly $1 billion, got a lot of attention for his foray into the legal industry. He wanted to make lawyers more efficient by pairing them with software engineers. His startup, Atrium Legal Technology Services Inc., announced in March it would shut down.

“We took a swing at something big,” Kan wrote on Twitter.

Robert Reynolds is next up to the plate. He hasn’t sold a business to Amazon. But the former Seyfarth Shaw partner at least has a track record in Big Law innovation. He was one of the recipients of a 2013 award from the Association of Corporate Counsel recognizing his old firm’s project automating workflows for Nike’s legal department.

Since 2015, Reynolds has more quietly been building his own start-up taking on arguably the toughest task in legal disruption: building software to augment and automate the work lawyers do. It’s a goal that has bedeviled others like Atrium, and even the language he uses to describe his business can be hard to grasp—something he’s well aware of.

“When you set out to create a technology ecosystem with CPCs running on top of it, it’s a bit harder to explain than timekeeping software,” he said. (He has also built his own timekeeping solution.)

But now, he said his Portland, Ore.-based Tangible Global Inc. is ready to start scaling its growth. He has plowed more than $7 million of his own money into the business, mostly spent building a software “operating system” that serves as the core of his service delivery plan. Tangible has annual revenue approaching $10 million, Reynolds said, and he’s discussed funding with venture capital firms.

He said Tangible has been growing revenue by 20% a year, mostly by adding sales to existing clients, which his website describes as a “multinational footwear and apparel” company and a “Fortune 50 athletic lifestyle” company, for example.

Last month, Tangible hired former Seyfarth partner James Clough to build out what some might refer to as a mergers & acquisitions practice. Reynolds calls it a CPC: “Commercial Practice Center.” Clough will provide the white-glove service clients expect from Big Law partners while the company’s software will direct and track the work of staff and contract lawyers or other professionals.

Reynolds is recruiting partners from Big Law firms to build out CPCs in other areas of the law for Tangible, which got its start building automated workflows for technology-related procurement transactions. That’s the practice Reynolds worked in as a Big Law partner and which he helped automate for Nike while at Seyfarth.

“I looked at that and said there is a business here that I want to create,” Reynolds said.

Reynolds has spent most of the $7 million and much of his time building out software that he likens to Tangible’s operating system. The next step is to create more of the apps that run on top of it—and underpin the CPCs.

Those apps function as workflows that lawyers will help software engineers build in new practice areas. He said the company already has CPCs in practices including technology sourcing, real estate, and data privacy.

“It’s two types of problems to solve. One is the [operating system] and the other is the application,” Reynolds said. “We’re trying to take stuff off of that lawyers’ desk. We’re not trying to sell her tech. We are trying to sell her a clean desk.”

Tangible also helps clients build “self-help” workflows through a partnership with Autto, an English-based “no-code” automation tool designed for in-house lawyers. Tangible has invested nearly $1 million in Autto, Reynolds said.

Reynolds is looking to hire Big Law partners with relationships at major clients that would benefit from Tangible’s software-and-staffing approach. Reynolds thinks those partners can add $2 million to $3 million each in revenue “at very nice gross margins.” He said partners have been more receptive to his pitches than he expected, partly because of the general upheaval in the Big Law market caused by the pandemic.

Building software workflows that understand and track the work lawyers do in specific practice areas has proven difficult.

Reynolds said Atrium was attempting to solve a similar problem as Tangible. He said Atrium’s “mission” was important and he was “disappointed” when it shut down, partly because the excitement Atrium generated helped bolster his company’s own case for success.

But Reynolds thinks the repetitive legal work that Tangible aims to help clients accomplish is more easily automated than the legal services venture capital firms require and that Atrium was trying to displace.

“So much of doing this well, in my experience at least, is being able to find pattern that you can design a workflow to accommodate. And then automate that,” he said. “And it takes volume. It takes recurring activity to make that happen and to create the economics that make it worth automating.”

Worth Your Time

On SPACs: I wrote this week about the rise in special purpose acquisition companies, and the Big Law firms that are cashing in on the hottest way to take companies public.

On the New Bonus Wars: Debevoise & Plimpton joined the ranks of law firms handing out special bonuses ranging from $7,500 to $40,000 as a thank-you for their work during the pandemic. The coronavirus bonus trend began earlier this month with announcements from Cooley and Davis Polk.

On New Practice Groups: Pillsbury Winthrop Shaw Pittman is launching one of the legal industry’s first dedicated hydrogen practices as the energy sector moves toward cleaner energy and lower carbon emissions, Meghan Tribe reports.

On Contract Tech: Venture capital dollars have been pouring into companies that offer contract management tools, writes Sam Skolnik. Covid-19 could further accelerate the trend as legal departments struggle to address the many contracts implicated by the pandemic and the changes it’s brought to businesses.

That’s it for this week! Thanks for reading and please send me your thoughts, critiques, and tips.

To contact the reporter on this story: Roy Strom in Chicago at rstrom@bloomberglaw.com

To contact the editors responsible for this story: Rebekah Mintzer at rmintzer@bloomberglaw.com; Chris Opfer at copfer@bloomberglaw.com

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