Why Are Lawyers Leaving Money On The Table?

Law’s slow integration of AI, as explained by Kira Systems CEO Noah Waisberg.

Kira Systems CEO Noah Waisberg

I last interviewed Kira Systems co-founder and CEO Noah Waisberg back in 2019 after Kira had just closed a $50 million round of venture funding. I caught up with him again following the publication of his new Wall Street Journal bestselling book, AI For Lawyers: How Artificial Intelligence is Adding Value, Amplifying Expertise, and Transforming Careers. Waisberg was kind enough to share with me his thoughts on the emergence of AI tech in the legal space, as well as a retrospective on 10 years of managing and growing one of LegalTech’s most intriguing platforms.

Minding The Gap

I asked Waisberg what it is about AI that seems to so scare lawyers away from using it. In his view, it’s primarily a disconnect of incentives between attorneys and their clients driven “100%” by pricing. Kira’s own product is targeted towards due-diligence attorney teams, who, like most lawyers, operate on a billable-hour model. Fewer hours working means fewer hours billed. Using tools to perform the same task more efficiently literally cuts into the attorneys’ bottom line. This incentivizes law firms to, in Waisberg’s words, make “junior corporate lawyers spend vast amounts of time doing work that they hate and that they aren’t that good at.”

Waisberg posits that, properly deployed, AI tools can effectively bridge the gap between clients’ need for services and attorneys’ need to be paid.

 For Want Of A Nail

Waisberg gave me an example from his own company’s focus, due diligence. “If you’re helping someone on, say, a [$50 million to $100 million] acquisition deal, your partners would probably review somewhere between 50 and maybe 200 contracts. And they’re probably reviewing them for change of control on assignment, securitizing for the buyer, that sort of stuff. If you’re working on a bigger deal, you might review more contracts. The thing is, the company you’re acquiring for [$50 million to $100 million] probably has several thousand contracts, which means that you’re only reviewing this little small pool of all the contracts that are there.”

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Normally that works out, because most of those thousands of contracts are either unaffected or immaterial. Reviewing every single one would be cost-prohibitive for most clients, and if all high-priority, material contracts are reviewed, the risk of major headaches and liability is small. But there’s always a chance that some tiny, overlooked contract or term unexpectedly leads the acquiring party to experience massive, uncapped liabilities.

Doing More With More

It’s here that Waisberg sees AI as a value-add for attorneys and clients. Rather than doing the same task in less time, AI tools can allow a law firm to offer its clients much deeper scopes of due diligence review for similar prices, in some cases higher. The clients get substantially more value and protection for their dollar, while the law firm both earns a solid fee and differentiates itself from the competition.

Waisberg told me anecdotally about a managing partner who spoke to him after starting to use AI in his practice. Per the partner, “I used to bill 200 hours for due diligence on a project, and my clients hated me for it. They’d pay me 150 of those 200. Then we started using Kira, and expanded the scope of our diligence and helped them a bit more with integration, which they highly value. Now we bill 300 hours on a project, they pay us the full 300 and they’re happy to do it.”

“If people get comfortable with the economics,” Waisberg says, “they figure out a way to get comfortable with everything else.” Bottom line, AI can be a powerful tool for attorneys looking to bring their clients value while also keeping billable rates high. The trick is getting creative and aligning those incentives, which is less about the tool itself and more about the attorneys wielding it.

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Mistakes We’re Glad We Made

With Kira approaching 10 years since its founding, I asked Waisberg what mistakes he recalled making along the way, and what advice he would give to today’s entrepreneurs.

The biggest pitfall Waisberg cited was arguably aiming too high too early. Straight out of the gate, Kira was trying to create an attorney-facing product that would analyze any one of the infinite types of complicated contracts attorneys find themselves reviewing. They chose both an insanely difficult problem to solve and an insanely demanding client base to target.

“I had no income. I had a negative salary,” Waisberg recalled. “It was a tricky, tricky time.” Waisberg didn’t say he would have changed strategy if he’d known then what he knows now. “Some big screw-ups that you do just take you on the path that makes you who you are… . I don’t know that the journey would have ended as well, even if we made better decisions along the way.”

To entrepreneurs looking to build a business today, Waisberg credits his company’s success to old-fashioned perseverance. “It’s a startup. Stuff is constantly breaking, and you’re fixing it. It’s just part of the process.”

No Excuses

I couldn’t let Waisberg go without asking what Kira ended up doing with the $50 million investment it had just secured the last time we spoke. “Nothing extravagant. There’s no golden pool table in our office,” Waisberg said. “We hired more people, spent more money in sales and marketing.” Sound fundamentals may be boring, but who said boring was bad?

Sound fundamentals have been Kira’s path to effecting radical change in the industry, and they can be ours, as well. As attorneys we have more tools at our disposal than ever in the history of our profession, and we have no excuse not to use them. It’s Artificial Intelligence, not rocket science. Let’s do our jobs better, bring our clients more value, and just maybe make some money in the process.


James Goodnow is the CEO and managing partner of NLJ 250 firm Fennemore Craig. At age 36, he became the youngest known chief executive of a large law firm in the U.S. He holds his JD from Harvard Law School and dual business management certificates from MIT. He’s currently attending the Cambridge University Judge Business School (U.K.), where he’s working toward a master’s degree in entrepreneurship. James is the co-author of Motivating Millennials, which hit number one on Amazon in the business management new release category. You can connect with James on Twitter (@JamesGoodnow) or by emailing him at James@JamesGoodnow.com.

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