Technology in the Legal Practice with Nareg Essaghoolian | Corpora Podcast (Ep. 2)

[Music] welcome to the corpora podcast where we sit down with the leading thinkers and professionals to explore the intersection between startup law and technology and discuss the future of corporate legal corpora is your startup's legal dashboard simple enough for Founders sophisticated enough for attorneys we help early stage startups take care of their corporate legal tasks or legal tasks generally from formation all the way to series B by giving Founders the tools they need to take care of the simple stuff themselves such as sending out an NDA or an offer letter and we give attorneys the tools they need in order to take care of the complex tasks more efficiently such as handling price rounds our first product the smart legal drive is already available for private beta it helps startups keep their documents organized accurate and complete in one location and it gives you a heads up in case you're missing something my name is I'm the co-founder and CEO of corpora and is my pleasure to introduce Our Guest today of decrypted law now that I'm going to read your super impressive bio is the co-founding attorney of the Cryptid law LLP throughout his career he has represented startups from incorporation to exit that have raised billions of dollars in Venture Capital he started the equipped law to disrupt the industry using transparent pricing models and Innovative technology nautic great to have you thank you for having me it's great to see you again you're an attorney you've come off as an attorney that is super excited about technology what's so cool about technology and law I think it's because there's such a huge opportunity to create so much more efficiency in law you know when you first start I was an attorney a junior Attorney At a big Law Firm you're maybe not working on the most interesting parts of a deal or transaction you're kind of doing things like signature packets looking for typos making sure every comma and period is in its place and clients are paying for that on an hourly basis and attorneys don't necessarily enjoy doing that either so there's this huge opportunity for something like AI or some other technology that can take that you know mundane boring part of the legal work out and let attorneys focus on what's important which is the main deal points the main negotiations and getting the deal done in closed signs sealed and delivered for their clients and and you mentioned I want to repeat that that phrase because it's super important that these are things that no attorney took the bar exam for exactly no client wants to pay for but clients end up paying for it if that's the kind of Law Firm that they have hired or if it's not that kind of Law Firm term such as the crypto log which is super lean then you end up doing stuff that you don't want to do exactly exactly and clients get that bill and they're wondering how did this Take 5 hours 10 hours 15 hours well it's because attorneys it's their job to keep things organized super clean attention to detail a lot of things that just don't have to do with the law but clients are expecting that type of service from their attorney so if we can automate it make it easier for everyone I think both sides will be happy and you sort of hinted at this so I'd like to explore this further you mentioned AI taking care of the Monday and the grunt work and there's a lot of hype around AI is AI this magic wand that is going to come and replace all our worries all our concerns or does it have limitations you know Goldman Sachs says that 40 of legal tasks can be done by AI what is AI what are its limitations and what are its capabilities yeah I think right now it has pretty big limitations honestly just because of it's new and still progressing we're still getting kind of the I feel like the MVP of AI the minimum viable product but biggest limitation is AI is built on a data set so whatever data you feed it whatever resource it has to learn from that's what it will use to kind of put out output going forward so that's a pretty big limitation because law is always changing business is always changing as the economy you know goes through its ups and downs you know the last 10 or so years was you know great Economic Times now it's a little bit of downturn is AI going to be able to change terms draft things differently because of that there's huge limitations just on that data set input that it has but also it doesn't understand I guess human relationships and business of course you know I'm a transactional attorney so I'm kind of helping two different businesses or two different individuals get a transaction done AI might do something that makes the most sense for the transaction or based on previous transactions but humans have so many different relationships between each other so some things is just not going to understand in that sense what are some of the tools that decrypted law uses today in order to better service clients I I've noticed your LinkedIn post about you talking about that you're exploring AI was a video as well I think you're exploring AI looking at different tools um how do you incorporate AI in your practice and generally what would be your recommendation to attorneys on how they should be going about well with that task yeah I mean we've been trying out a bunch of different things I think a lot of pro products are still making its way to becoming this thing that every attorney should use I've tried things like spell book by rally legal Google as slowly rolling out you know their AI features in the Google you know work Suite or workspace type thing where you might draft emails for you or read and summarize long emails or document attachments for you which that seems super awesome and can save everyone time and then of course you know I'm looking forward to corpora's AI capabilities in the data room so much time is spent when you you initially onboard the client to kind of audit their legal documents um if you know if there's some sort of AI system that can just pop up red flags for you and you you go directly to those and review it that saves everyone time and money so I think the main advice to other attorneys is be on the lookout you know proactively see what's out there maybe there's something that helps you in your practice more and we're slowly getting there I think it's really exciting and I think the ones who aren't on The Cutting Edge of looking for new products might get left behind and as a matter of fact that was one of the motivations for me to leave my legal practice in order to focus on this because this is the future it is bound to be done and either you're among those who are at least either developing the technology or utilizing it first or you're going to be sidelined you're going to be marginalized and you mentioned about corpora's upcoming AI capabilities we have our first proof of concept where you can upload your certificate incorporate for now and it extracts the main information and we're rolling this out towards over 100 document types where you would as you mentioned you know upload your legal documents for the startup these would be analyzed key information will be extracted compared and if there's a red flag having an eye for matters that come up in due diligence for a price round for example this will give you a heads up that you know what this IP agreement is missing or there's no board consent for that stock option Grant or things of that sort yeah that's huge because clients don't really like paying for that legal audit because they I understand it kind of feels like they're paying for their attorney to review things that are already done it's like I'm paying for a pre-service like before the attorney even starts doing any legal work I have to pay him just to become his client basically so to make that pain point you know less painful for everyone I think is attorneys don't like charging for that either but you know it's it's time that's spent true true significant material time that's been going through documents especially if a company's raise the series a they've had maybe one or two previous financing rounds they've probably have some material uh contracts like commercial agreements IP assignments all that stuff you have to go through or else you just don't understand the context and position the company is in right now let me throw out a concept technical debt is a very often used phrase so it's designed that but there's also legal debt as in when a startup doesn't want to work with an attorney they DIY it or they work with an attorney which is simply not competent in startup Affairs at least not Venture back startup Affairs you pile up legal debt and when you go to an experienced attorney suggest yourself and you have to you have to pay them that money in order to review and sort of clear up that legal debt that existed because they didn't work with you from day one so there's some context right there of why that money is important to be paid even even if lawyers don't want to do it and oh yeah clients don't want to pay I think uh something I some message that I try to push on clients especially new Founders is you can pay for a good attorney now which is not that much more expensive than all the self-service diy things you're doing or you can probably pay anywhere from 2x to 5x later to clean it up absolutely so yeah I always recommend you know finding an attorney who knows what they're doing in the service that you're looking for because yeah we also got a ton of clients who are like yeah you know my family friend who you know is a DUI attorney kind of Incorporated my company and now I'm looking for Venture Capital backing and it's like well you know well sorry F's lawyer slow your horses down a little bit let's go back and fix everything so that you know you're basically gonna have to pay twice I don't know if they paid their family friend or not and one thing I noticed not like during my years practicing as a lawyer is there used to be and still kind of is this binary mindset when it comes to whether you should or should not hire a lawyer a lot of lawyers out there say you know what you have to have this top-notch lawyer from day one that has to be involved with all the situations because every aspect of law is bespoke and requires a very uh Personal Touch yeah on the other side you have Founders who say you know know we're Engineers you know we can figure this out we do a lot of hard tasks this is just law we'll put together a few tools and we'll make things happen good enough is good enough the thing is that both approaches are incorrect and complete and there's also a kernel of Truth a little bit in each of them the thing is that Founders aren't the best judges of when good enough is good enough it's lawyers but lawyers also have to be very honest in terms of when is it that it can be very hands-off just give high level strategic guidance and those situations where they really have to get into the weeds and figure out what's going on and provide that bespoke approach yeah I think you know I think there are critical moments at least in my practice critical moments for a startup where it makes sense to have true Hands-On help from an attorney one is an Incorporation two is any time you're dealing with Equity or IP and that Equity part especially if you're raising money I mean I think a lot of people feel comfortable with you know certain instruments that we use in our practice to raise money but they don't truly understand the long-term implications so it makes sense at those critical moments to have an attorney and other times you can maybe Coast or maybe just use the resources online and things like that to figure it out I think of it a lot like tax um you can spend the time and learn the entire tax code yourself of course instead of paying an expensive CPA but is that worth your time and if you mess something up now how much is it going to cost you later I want to switch gears back to artificial intelligence we spoke about its capabilities limitations the question the million dollar question is will AI replace attorneys now that's a very broad question right AI what does that AI look like AI today AI five years from now is it GPT 4 gbt 10 50. and will it replace all lawyers or some of them very broad question you can tackle it as you wish what are your thoughts yes it's really difficult to predict ai's capabilities I mean if it could eventually generate its own thoughts and emotions yeah maybe it could replace attorneys um I think really what it will do is enhance the official NC that attorneys can provide to their clients most attorneys are working on an hourly basis and then again instead of spending time doing those mundane tasks that actually usually take a lot longer than the main critical points can be solved by just using AI to do it so I think you know maybe some very Junior attorneys Who start out doing those mundane tasks just to work their way up maybe big firms won't need as many of them but I don't think AI will replace any attorney really in the foreseeable future you mentioned you ask the question whether AI will eventually develop thoughts and emotions why is this important you know we all think that law is synonymous with reason and emotions are the antonym of reason so why is it important for AI to be able to replace lawyers to have that capacity to feel and to think oh there's so much emotion in Psychology and law I mean you could just think of family law attorneys who deal with divorces and family matters how much you know how high stake emotion emotionally invested their clients are but also just in business and transactions sometimes for example there's a co-founders who get into a dispute and want to separate there is just so much emotion involved and if you plug in the data points into Ai and say you know kind of spit out the terms on how they should separate it would use a lot of you know Market Market terms things that are considered to be standard in today but there's so much emotion involved there's so much context maybe one co-founder feels like that co-founder didn't put in as much work as they should have and they don't deserve Market the other co-founder might even be happy taking the bare minimum because they kind of coasted the entire time and they're amicable to splitting up like AI can't take any of that into consideration you have to have emotional intelligence and kind of have that thought process driving the negotiations um ai's probably going to give you a good starting point so I think right now we're getting really close to that where most things AI could give you a good starting point in the legal world at least transaction a lot you know as as you mentioned this is something that really comes up to my mind as well there's a lot of personally charged points in in law especially negotiations right when it's not just reason it's not it starts with building that trust building that relationship and at the end of the day clients like to have a personal relationship with their lawyer someone they can trust someone they can divulge their secrets to and have this honest conversation with I mean for crying out loud when you call a support center and you're connected to a voice message you want to press that button or say representative representative just to get through to a human voice and if in that instance we want to talk with that human let alone in law it would be the same you know there's you want to build that relationship with a human lawyer now this may change over time at least for now law the practice of law is a very relationship specific Endeavor to the point that when someone hires a law firm they're hiring the attorney that works at the law firm not the firm and so that attorney switches firms they would go with that attorney and leave the firm is that your field as well yeah yeah and I think kind of to add to that is attorneys also kind of tell their client what they need most of the time AI is very helpful if you know exactly what you need at least in this current moment but it has a very difficult time or you can't really trust it giving its opinion on what's right for you um so you know for example for going back to the co-founder dispute it's like what what documents are needed to kind of wrap this thing up I'm not sure if AI will accurately give you exactly everything you need because it doesn't have all of your company's history inputted into its data set your company is unique to the co-founders and what they did so an attorney that human confiding Secrets all of those things is helpful because then the attorney can figure out what you need what's right for you and from that point AI could step in and again give you a starting point on the first set of documents so it sounds like in the near future is going to be a hybrid this practice of law is going to be powered by AI to take care of the grunt work the mundane work that Noah Trina likes to do and no client wants to pay for there's also this very fundamental layer of human thinking and gut feel intuition that is going to be provided by the lawyers at least the way we know AI today right we're talking about gpt4 we're talking about the large language models that are available today it will enhance lawyers but probably not replace them entirely in the future things may change um but that is for for today that's uh that's my feel as well there's a lot of disruption to happen in this space um the way I like to think of it is Corporate attorneys do four fundamental tasks they we create documents negotiate documents analyze documents advise document advice on the law and AI will impact all four respects but it won't replace lawyers entirely now not one question is whether AI will replace lawyers the other question is should AI replace lawyers now let's assume that AI is this magic wand where GPT 100 it can feel it can think it has all the emotions that humans have artificial general intelligence is the effect of life we are past the point of Singularity as they say yeah should AI replace lawyers do we as Humanity want that to happen that's a great question it's uh really deep in a sense I can imagine that same question applying to you know doctors or any other type of Professional Services and it's it's hard to say I think there are some pros and cons and I think some of those discussions have came kind of came in the past in the form of should like an algorithm replace certain judges in courtrooms because there is always some sort of ethical implication and dilemma of having emotion having an emotional attachment having preferences and things like that so it's like maybe in certain situations AI could remove that kind of factor out of you know negotiation judgments things like that and kind of make it more fair for everyone rather than you know sometimes you hear about injustices and things like that based on people's buy season you know maybe I can remove that and fix that so replace some some attorneys some decision makers some judges things like that juries juries yeah yeah um you know I I think it's very difficult you know to say but maybe maybe I think there's potential yeah yeah I wonder if in that case we should have 12 AI serving on the jury of one could suffice and play 12 roles or whether the number 12 is to be done away with altogether yeah I mean it would be crazy I I don't know how people feel about it but people grow accustomed to things over time you know it might be crazy the first five years but 40 years down the line everyone's just used to that being the norm yeah yeah I I can't see it happening I I still have my strong reservations uh onto that happening because I was writing about this recently in a in a blog post that will come up soon um that lawyers the practice of law is as old as time employers have been around for as long as there has been human coexistence one of their first tribes formed there had to be law or Norms um religious have been oftentimes in order to make people live together in peace lawyers have been The Gatekeepers of that status quo and making sure that things are as is and people live peacefully now that's a very important role that that helps people survive and unless AI can neatly and seamlessly fill in that role then we shouldn't be very careful about letting that happen that being said um again I I lead a legal tech company which is building AI lawyers so I'm I'm very bullish on the possibilities but we have to be very mindful about the downsides as well yeah yeah I mean we're already hearing about you know Sam Alton and the open AI guys talking about introducing regulation in the US because there is that true fear that things could go horribly wrong but I like to be an optimist I think um people Reign it in um will use it as a tool that'll bring many many efficiencies but phone caused too many problems of course there will be some bumps in the roads but I don't think it'll be as dire as some people predict it to be shifting gears once again um decrypted law is experimenting with alternative fee structures transparent pricing flat fees um and this is all very important for the practice of startup law could you please talk a little bit about this and what sets this type of new law approach or part and also let me leave in a third question what are some questions that startup founder should ask their attorney or their prospective attorney as they go about finding the right attorney for them yeah yeah so decrypted law started because you know I was working at a previous firm and a huge pain point for clients was the example of you know they would call me after they get the bill and be surprised out why it's so much and they'll say something along the lines of you know I love working with you guys but every time I give you a phone call or email it turns into this like huge bill that I get in end of the mail that end of the month that I'm super surprised about and I felt like that didn't makes sense because it cut off the communication between a client and an attorney and it led them to diying a lot of things and costing more later to fix it so what we did was we give a transparent fixed fee price up front for most things and we also offer like a subscription service where it's unlimited communication with your attorney and certain mundane tasks that are very you know everyday type things for a startup that they probably shouldn't be paying eight hundred thousand dollars an hour for and you know that has been super successful a lot of people are surprised at you know they're kind of like what's what's the catch but there isn't much of a catch I feel like a lot of the overhead at other firms is unnecessary and that kind of leads into the future where I think AI is going to totally make all that overhead obsolete like there would be no reason to have so much service staff so much business development marketing teams all of that yeah I'm kind of like rambling now but very good but that's kind of the vision it's built for the future and I think a lot more firms will be following this model as they integrate more advanced technology into our practices um as far as what people should look for or founder should look for in a startup attorney is one you want to look at their experience and make sure this is actually a practice area that they've you know been practicing in have represented companies and Venture capitalists it's good to have both sides and you know maybe ask to be introduced to a client or two get a testimonial because um there are a lot of attorneys who may want to break into the space but don't really understand how Nisha really is um another item you know or attribute that they can look for is that is this attorney kind of on The Cutting Edge trying to make things more efficient which is what we're trying to do all the time um looking at new technologies that we can use because again who wants to pay for your attorney to kind of make sure every comma and period is in place right kind of more want to get the deal done and lastly kind of all folds into one is just being practical about those things you know get the big things right um bring the most value for your client rather than you know running up the bill doing the things that you know the client doesn't care about um a lot of times people Peg that to their Prestige and reputation and I think over time people are caring less and less about Prestige and more about the Practical things in life and all excellent points and the founder has to really Vibe with their attorney right yeah feel comfortable someone they like and Trust of course that's like a given uh I thought I'd try to give more like lesser known things yeah all all spot on and and that likability part goes both ways right you want you yourself want to like your client and you want your client to like you too because you know when you do a price round you have to have that very honest conversation at times and you want to make sure that whatever you say is accepted the right way and you guys can have that talk oh yeah yeah they're especially during a priced round it's really like six weeks of almost like living with that person you're you're every day you're talking to your attorney through those you know six weeks and I I don't think most first-time Founders expect that and they're really surprised on how much of uh you know time commitment it is from both parties during that time ladies and gentlemen my guest today was naraki sagulian co-founding attorney of the Cryptid law he is also an attorney ambassador of corpora check out his profile at corpora.us attorneys nautic so great having you thank you thank you this is great yes awesome [Music]

2023-07-06 22:55

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