It’s hard not to feel a sense of déjà vu all over again regarding last week’s much-ballyhooed launch of Silicon Valley-backed, tech-enabled law firm Atrium LLP. But is it a case of those who do not remember the past being condemned to repeat it – the past in this case being the demise of the strikingly similar firm Clearspire?
As I reported last Thursday, Atrium aims to “revolutionize legal services.” It plans to do that in two primary ways. First, it will operate as two entities – the law firm and a separate service provider, Atrium LTS, that will handle all business processes for the firm and build software to streamline the firm’s operations. Second, it will offer its services on a transparent, fixed-fee, all-you-can-eat subscription basis.
Atrium LTS, the service provider, is led by Justin Kan, a Silicon Valley serial entrepreneur who sold his last business to Amazon for $970 million, and is backed by a $10 million initial round of funding. Atrium LLP, the law firm, is being financed by a loan from Atrium LTS and is led by founding partners Augie Rakow, a former partner at Orrick, Herrington & Sutcliffe, and Bebe Chueh, a lawyer who founded a company, AttorneyFee.com, to make the cost of legal services more transparent, and then sold it to LegalZoom in 2014.
The Atrium model bears an uncanny resemblance to that of another firm that likewise aimed to revolutionize legal services, Clearspire, which opened in 2010 and shut down four years later. Like Atrium, Clearspire operated as two entities. The law firm, Clearspire Law, promised high-end legal work delivered efficiently, collaboratively and transparently, at fixed prices. The service company, Clearspire Service Co., supported the firm’s business operations and infrastructure and developed a custom software platform, Coral, to support the law firm.
Like Atrium, Clearspire planned eventually to market Coral to other firms. And, like Atrium, Clearspire was backed by fairly substantial investments, some $6 million all told.
(In 2015, a group of investors said they would resurrect the Clearspire software and market it to law firms and corporate legal departments. Since then, no product has been released, and the Clearspire website shows the same “coming soon” announcement that it had two years ago.)
There is one notable difference in their models. Clearspire operated as a virtual firm with its attorneys operating out of virtual offices and connected to each other and to clients through the Clearspire software platform. Atrium, by contrast, will be very much a brick-and-mortar firm, with its attorneys operating initially from an office in San Francisco and eventually from offices in New York and Los Angeles.
“We’re not a lifestyle firm, it’s not a firm you come to to work less,” founding partner Rakow told me. “It’s a work-style firm. We want to build the platform that ambitious lawyers come to to dominate the future.”
But do the similarities between Atrium and Clearspire bode poorly for its future?
There are any number of theories floating around for why Clearspire shut down. Mark A. Cohen, who was co-founder of Clearspire and managing director of Clearspire Law, and who is now a legal industry commentator and consultant at LegalMosaic, told the Wall Street Journal in 2014 that general counsel at big companies liked the Clearspire model but were reluctant to unseat their incumbent firms.
Cohen told me in a 2015 interview something similar, saying that the firm failed to achieve its economic potential, but that the clients it did retain really liked the model and gave the firm more and more of their work over time.
“I kind of feel like a guy who was a director of a cult film,” Cohen told me. “The film students think I’m a visionary but not enough people showed up at the box office. That doesn’t mean I’m not a good filmmaker.”
But in a 2014 column at the ABA Journal, Patrick J. Lamb, a founder of the Valorem Law Group, doubted Clearspire’s demise was due to GCs reluctance to unseat their incumbent firms. Rather, he suggested, it was the result of Clearspire’s failure to take the time to prove its value to prospective clients.
“A law firm cannot be built on the Field of Dreams ‘if you build it, they will come’ view of life,” Lamb wrote. “That approach may work in movies, but even those with a passing understanding of business development know that something special may earn a try-out, but performance and solutions to client problems are the things that earn more work.”
Others have speculated that Clearspire was simply ahead of its time.
If so, then the timing may be ripe for Atrium. The legal industry is a much-different place in 2017 than it was in 2010. In particular, corporate counsel have much greater respect for efficiency and transparency in the delivery of legal services and much greater understanding of the importance of technology in enabling those. Tech-enabled law firms are no longer viewed as experiments, but as pacesetters.
Another differentiator may turn out to be Atrium’s willingness to do what Lamb said Clearspire failed to do – take the time to prove its value, not just in pricing, but in the services it delivers. In my conversation with Rakow last week, he emphasized that he views Atrium as a high-end law firm delivering high-end legal services. “We’re not trying to be the LegalZoom of law firms,” he said.
And their game plan is to grow slowly. To begin, they’ll confine their practice to representing venture-backed startups. They plan to expand into other areas of corporate practice, and their goal is ultimately “to build the largest multi-practice law firm in the United States,” Rakow said. But they plan to grow gradually, and first to prove the viability of their concept within their current niche.
So will it be déjà vu all over again for Atrium? Time will tell, of course, but the biggest determinant of its success may turn out to be the patience of the Silicon Valley investors who are backing it. Will they give it time to establish its value, or will they want to cash out too quickly for the firm to find a foothold?
Earlier: Revealed: Justin Kan’s Secretive Legal Startup Debuts Today As A Different Kind of Law Firm
Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at [email protected], and you can follow him on Twitter (@BobAmbrogi).
