Transition to AI lawyers? Imagine law as an early adopter industry!

https://www.nfx.com/post/legal-and-ai

AI is Reinventing the Legal Industry

Legal Tech has not been the best sector for founders to spend time in over the last 20 years. But Legal x AI is different, and software in the legal sector has taken off.

We started investing in AI-powered Legal Tech several years ago, before the Generative AI boom. There are bigger patterns behind the explosive growth in this vertical, and reason to believe there’s much more value yet to come.

When we first invested in EvenUp, Darrow, ZERO Systems/Hercules, , and others still in stealth, we saw three big differences from traditional Legal Tech.

First, AI x Legal helps lawyers make more money. Law firms that bring “AI inside” experience higher caseloads, more cases won, and faster claim processing.

Second, AI-powered software immediately and obviously improves the day-to-day experience of the lawyer using it. AI does tasks that lawyers traditionally find hard, tedious, or expensive – tasks that feel like eating glass.

Third, there were 10X leaps in workflows to save time, not the 1.5X offered by traditional Legal Tech. Counterintuitively, saving time is always a double edged sword with law firms, because their billable hours business model means they only make money when they take time, not save time.

Nevertheless, the 10X improvement in hours spent breaks them out of that incremental mindset that has been holding them back from embracing software. It helps them generate more revenue through more cases at higher value.

These benefits will repeat across many industries, not just legal. But it’s worth looking deeply at legal because it’s one of the first verticals to really take off with AI.