alt.legal: The First Serial Legal Tech Entrepreneur
So you think you have the guts to quit your cushy traditional legal job and brave the uncertainty of legal entrepreneurship?
So you think you have the guts to quit your cushy traditional legal job and brave the uncertainty of legal entrepreneurship? If you created an idea that made law firms more efficient, could you persuade Biglaw to buy it? And what if you succeeded? Would you retire to the beach and eat bonbons, or would you get right back into the game, firm in your believe that through innovation you can make the legal system more fair and efficient?
With just a week until the first annual Penn Law Legal Startup Pitch Night, it was clear that Penn Law alumnus, Penn Law professor, and serial-legal entrepreneur Gurinder “Gary” Sangha should be the feature of this week’s alt.legal column. I’ve been waiting for this one!
While this column has focused on early-stage founders, Gary has already built a wildly successful legal startup (Intelligize), which helps lawyers – including, today, most of the Am Law 100 — seamlessly research SEC filings. Once Gary convinced dozens of firms to try something new, and Intelligize was profitable, stable and functioning on its own, Gary lived the entrepreneur dream: handing the reins to a trusted CEO, while retaining significant equity.
Not All Legal AI Is Created Equal
Since stepping down as CEO of Intelligize, Gary has lived a more traditional legal dream of teaching business law at his alma matter (Penn Law). He also is a recently appointed Fellow at CodeX, the Stanford Center for Legal Informatics (which I wrote about here).
Despite the wild success of Intelligize and the prestigious and stable teaching job at Penn Law, Gary remained convinced in technology’s potential to reinvent the legal industry for the better. As this article goes to print, Gary is closing a financing round on a second high-tech legal business.
Gary’s second legal tech adventure is as founder and CEO of Lit IQ. While other startups try to wholly automate legal work, Gary focuses on using technology to improve the work lawyers perform. In a nutshell, Lit IQ uses advances in computational linguistics technology to help lawyers draft precise and error-free legal documents, such as patents, contracts and regulations.
While it’s hard enough to build one successful startup in legal, to my knowledge Gary is the ONLY entrepreneur to have launched two legal tech startups, earning him this moniker: “First Serial Legal Tech Entrepreneur.” If you are already in the legal tech scene, you’ve probably heard of or ran into Gary. If not, you should.
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Enjoy our conversation below, which walks through Gary’s alt.legal path to start-up success.
Joe Borstein: So you were getting alt.legal, before it was cool! Tell me about your career track, and how you got to the place where you were ready to take the legal entrepreneurship plunge.
Gary Sangha: Prior to founding Intelligize and Lit IQ, I was a capital markets attorney for Shearman & Sterling in New York City, focusing on initial public offerings. While Shearman was a great firm, I was eager to travel the world, and landed a great job practicing securities law at the Hong Kong office of White & Case — concentrating on international debt transactions.
Intelligize began as a side project in early 2006, while I was working at White & Case. At first, the project was dedicated to my (already tight) evenings and weekends. By 2007 the demands of the startup grew to the point where I had to make the leap all entrepreneurs eventually face – to quit my day job and focus exclusively on the startup. So I resigned from White & Case Hong Kong and moved to the U.S. to run Intelligize full-time. The goal was to develop software to help prepare IPO registration statements, which I believed could be vastly streamlined by technology.
I was, and remain, shocked by how supportive my White & Case colleagues were of my move and my vision. They recognized I was developing a product that would ultimately assist them to be more efficient and effective – that it was a sound vision.
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Even better than their goodwill, my former colleagues even made angel investments in Intelligize!
Joe Borstein: So it seems like it was a pretty seamless transition, with the support and cash of your Biglaw peers?
Gary Sangha: Sure, but my timing was perfectly bad – I started right as the clouds of the financial crisis were visible on the horizon. I started this adventure cash-strapped, and recruiting was incredibly challenging. In fact, I worked almost a full two years by myself before my first full-time hire at the end of 2008.
I raised my first venture round in 2008. Unfortunately, Lehman blew up shortly after. This killed the IPO market and forced me to pivot and focus on all SEC filings, including annual and quarterly reports.
It wasn’t until the end of 2009 that I finally booked my first customers (Cravath, Wilson Sonsini, and Latham & Watkins). That’s right, I worked on Intelligize for almost four years before we got our first customers!
The market was challenging and it wasn’t glamorous but we kept plugging away, ultimately building a very popular set of solutions for corporate attorneys.
Joe Borstein: Can you describe in basic English to a former litigator what Intelligize does?
Gary Sangha: The Intelligize platform is a web-based service that enables law firms, accounting firms, corporations, and others to more efficiently research, prepare, and draft SEC filings, corporate transactions, and various other agreements.
Through powerful searching, filtering, comparing, analyzing, and alerting capabilities, the Intelligize platform is designed to help users reduce the amount of time and effort it takes to meet reporting requirements and move through the SEC review process.
Joe Borstein: Got it. So over time you made a useful solution, but that doesn’t mean you’ll have a successful company. What were the biggest challenges?
Gary Sangha: The biggest challenge was (and is) managing the sales cycle. Law firms can be very deliberative when purchasing new technology and a lot of folks have to give their thumbs up before a firm will buy. No matter how obvious your product is, the sales cycle will be several months. This of course is a big issue for any cash-strapped startup.
On the positive side, one of the pleasant surprises of selling to lawyers is their support of new technology. In fact, most of my product and feature ideas have come from attorney suggestions.
Joe Borstein: Alright, so in 2010 Biglaw finally began to get Intelligize. How big is the business now, and who are your clients? Most important, how did you get them?
Gary Sangha: Today 70 percent of the Am Law 100, three of the Big Four accounting firms, and a quarter of the Fortune 500 are Intelligize customers. We signed them up the old-fashioned way, by pounding the pavement and talking to attorneys directly. Intelligize would not be what it has become if it wasn’t for the amazing sales team built by my former VP and current CEO, Todd Hicks.
Joe Borstein: So in the intro I called you the first serial legal tech entrepreneur. Tell me more about what are you working on now, and why you would go through the pain of entrepreneurship again?
Gary Sangha: There are just so many big issues left to solve, and finally we have the technology and know-how to solve them. When I left Intelligize at the end of 2013 and moved into academia, I connected with the computational linguistics faculty at Penn, and the capabilities in that area seemed to have so many applications to the law.
We wanted to solve a big issue in the legal services sector and focused on something that many lawyers don’t really talk about in our profession – human error. It’s probably not a big surprise to your ATL readers, but the consequences of drafting oversights can be quite severe. For example, from the research we conducted, one in five commercial lawsuits are caused or made possible by poorly drafted contracts. We believed much of this could be avoided by great software.
This formed the basis for Lit IQ. We’re using advances in computational linguistics to help catch potential drafting errors. Our public launch is slated for early next year, but private Beta trials have already begun. Multiple Am Law 100 law firms and Fortune 500 legal departments have been testing the product for us and the feedback is very, very positive.
Joe Borstein: Would you recommend entrepreneurship to other lawyers? Is it crazy?
Gary Sangha: I would highly recommend entrepreneurship except with one caveat. Before you make the jump, ask yourself why you’re doing it. You should do it only if you’re passionate about the solution you’re providing. Don’t do it to make money because it’s obviously very risky and in the long run Biglaw is probably just as lucrative.
Joe Borstein: Thanks Gary — finally, do you have any other advice for lawyers/law students/aspiring entrepreneurs?
Gary Sangha: While startups sound cool and fun, at the end of the day it’s still a business, and you need to figure out how it can make money. I recommend all aspiring legal tech entrepreneurs develop a business plan that leads to their business becoming cash-flow break-even within two years of launch and to have this plan vetted by qualified people that will give unvarnished feedback. (BTW, I’m always happy to help. Feel free to reach out to me via LinkedIn).
Joe Borstein is a Global Director at Thomson Reuters’ award-winning legal outsourcing company, Pangea3, which employs over 1,000 full-time attorneys across the globe. He and his co-author Ed Sohn each spent over half a decade as associates in Biglaw and were classmates at Penn Law.
Joe manages a global team dedicated to counseling law firm and corporate clients on how to best leverage Pangea3’s full-time attorneys to improve legal results, cut costs, raise profits, and have a social life. He is a frequent speaker on global trends in the legal industry and, specifically, how law firms are leveraging those trends to become more profitable. If you are interested in entrepreneurship and the delivery of legal services, please reach out to Joe directly at [email protected].
