Atrium as food for the fish in the aquarium?
Atrium.
Atrium, founded in 2017, was destined to be successful. It had to set the tone between how a perfect blend between a law firm and a technology company could look like.
The San Francisco based company had on the one hand a team of lawyers, and on the other hand a team of technology wizards (Atrium Legal Technology Services) that had to develop software tools and a platform for the lawyers, who could work more efficiently to do their legal to provide services. The xenogamy between the two teams was considered as a huge plus factor because they could both make each other better. The two Atriums were established as two separate entities because no external capital is accepted in a law firm.
It sounded very familiar and good: the software would make lawyers more efficient than those in a traditional law firm, so that they could work faster, and so it had to cost less to both the client and the law firm itself.
The office offered customers a sort of monthly subscription to use a platform with access to documents, books and events. By the platform there was also limited access to an in-house lawyer for consultation. More specialized work was possible through extra payments.
The company is founded by Justin Kan, an entrepeneur who sold Twitch to Amazon for 1 billion dollar. Atrium also found investors for the technology leg, which, after an initial investment round of 10 million dollars, even increased up to 75 million dollars (among others by Andreessen Horowitz).
So there was a visionary plan and money. Great combination, right?
Goodbye, Atrium.
Yesterday, Kan announced that the company had decided that the company's software arm, Atrium Legal Technology Services, for which the capital was raised, will be shut down and the investors will be reimbursed. This despite a previously announced pivot in January, where all internal lawyers were already sent out. The Atrium law firm would continue to work as a separate entity.
These are hard times for legal tech companies. Atrium was a kind of example for many of them. Money, an exciting and visionary founder and a new business plan that must be able to convince customers. Yet it must have turned out not to be profitable. Moreover, it is not only Atrium that goes down. Legal Complex recently reported that investments in legal tech companies fell by 530 percent in January 2020 compared to last year and the website points out a lot of broken dreams:
'If we took an honest look at where venture capital for the past decade was allocated, we may come to a harsh conclusion. Most of the money evaporated in broken dreams or products with no fit or it's being used to prop up legacy systems. Yet the funding metric may not be the only 'alarm we kept hitting snooze on.'
Raymond Blijd of Legal Complex recommends many of these companies for a pivot. You can't blame him. Until now, only technology that was able to feed the business model of the billable hours was a success among lawyers.
No food for the fish in the aquarium.
So, what can we learn from the story of Atrium?
1. It is better to try something than to do nothing.
The story of Atrium only proves how difficult it is to bring real change to the legal sector. A sector that has been stuck for many decades in a business model, with a code that is clearly difficult to crack.
In a sector that is told to be reluctance to change, a lot of lawyers probably are already rubbing their hands:
'See? All that exaggeration that the market is changing, that the customers want our services differently and that our business model would be wrong? '
I can allready hear the scorn laughter.
Don't let yourself be fooled. The story of Atrium should not be used as food for the fish that would prefer to stay in their familiar and well known aquarium.
Erin Levine wrote about this:
'I hope Atrium's closure does not serve to stifle innovation when it comes to the delivery of legal services. There ARE sustainable models out there that lead with tech and smart design and are a win for both lawyers and consumers.'
It would also be a shame that Atrium would have a negative effect on investments in legal tech companies, or result in an even bigger tendancy to relax for the sector. I resist to believe lawyers are resistant to change.
Atrium was a beautiful project. Now it's the time to learn from the cracks in the story.
2. A law firm should not build software, but use software.
Brian Inkster (Inksters) is right. Perhaps one of the lessons of the Atrium failure is that you should not try to build your own software from scratch. This cost is too high.
'Law firm's can of course run more efficiently by leveraging technology that already exists and can be bought at relatively low cost. You simply do not need to reinvent the wheel and create your own at fixed cost you will never be able to recoup. '
3. It's not about technology, it's about the customer.
Kan, founder of Atrium, was not a lawyer, and had no past experience in the legal sector. Is that necessary? Maybe, not sure. What is certainly needed is an in-depth knowledge of how the client or customer chain runs through a law firm, first of all to look out for the touch points with the client. This will also provide more insights into the relevance of using technology in work processes. I believe that is the way you can bring innovation and change to your law firm.
Atrium maybe lost the game, but they did score some beautiful points. They realised a lot of change and business too. Maybe the company focussed to much on technology and not enough on the customer? Providing legal assistance is also about building a customer relationship, about talking to each other and especially building trust. Despite all the technological advances in the times to come, I sincerely believe that the next decade will also be the decade of trust.
