Why AI Could Turn Small Law Firms Into Billion-Dollar Businesses

Historically, plaintive law really didn't need more than a cell phone email address. That was kind of it. No software really sold it a core problem, which is labor constrained. Most people think of AI is like, "Oh, you're going to fire everybody and cut costs." And it's like, "No, actually, if I use EVE, I make a lot more money for my firm." People can't pay $506 an hour on a blank check for how or long the case might take. What EVE is aimed to do is really handle that whole thing end-to-end. One firm in LA went from managing about 100 clients per attorney to 500. Wow. That is a type of thing that is possible. Why is EVE better than just kind of like raw intelligence? If you drop Albert Einstein into a law firm today, he will not be productive for quite some time. That is a general problem that EVE is solving. And why won't that person be productive? Well, it's due to a number of things. One is millions of people have legal problems that lawyers simply can't afford to take on. AI could change the economics. In this episode, A16Z general partner, Alex Rampel, sits down with EVE founder and CEO James Modeshwaran to discuss how AI could expand access to legal representation. Jay explains how EVE handles work from client intake through settlement, allowing some attorneys to manage five times as many cases without simply adding more people. They also discuss what happens when AI agents start handling thousands of steps across a case. Why lawyers could spend more time on actual advocacy and what the legal system might look like when agents increasingly negotiate with other agents. Hi, everyone. I'm Alex Rampel, partner at interest in Horowitz, and I'm very happy to be here with Jay from EVE co-founder and CEO. And everybody knows a lawyer, right? Everybody knows law. But most people, I think especially in Silicon Valley, when they hear law and legal, they kind of think about corporate law, like really big, supposedly white shoe. I guess this is the term law firm is where you go to Harvard Law School and you build $2,000 an hour. But there's like another side of law, which actually is bigger, more distributed. And I guess we would call that plaintiff law. So like every time you drive on 101, you see all these billboards and maybe kind of talk about what is EVE, what form of law and legal AI do you focus on and maybe a little bit about the industry in general because I feel like most Americans are familiar with it, but they don't necessarily realize, especially for people I think here in Silicon Valley, they've heard of Wilson Sincini, but they haven't heard of Morgan and Morgan, right? And Morgan and Morgan is probably a lot more profitable than Wilson Sincini. But like what is plaintiff law and also kind of maybe explain EVE in your own words? Absolutely. One, thank you for having me here, Alex. Always fun to talk about EVE. What EVE is is legal AI for real people, right? Like people like you, me, not institutions, not in House legal, not the people that already have all the resources. But how do we actually provide legal services to people that otherwise can't afford it? And this is how the plaintiff law industry really came about because what ended up happening was you talked about how Wilson Sincini might charge $2,000 an hour and that's really the business model. Lawyers times are expensive and you're trying to point lawyers towards more and more expensive time. The same is true for most lawyers. They have a lot of bills to pay. And today legal work, the more work you put behind it, you can represent your facts better. You can get a better outcome. That is the state of world we live in today. To account for this, lawyers understand people can't pay $506 an hour on a blank check for how long the case might take. So the plaintiff industry came about on working on contingency law. So what this means is they only get paid when they win the case for the client. And this is what's allowed them to even have any sort of leveling playing field with people versus institutions. And what Eve is aimed to do is really handle that whole thing end to end of how do you represent a client all the way from the very first call to getting them a settlement? How do you do that end to end thing purely with AI and give that to lawyers to then amplify the outcomes that can actually provide? And that's what Eve is doing and think about giving David a slingshot to take down Goliath. That's what we're doing. So what I find fascinating about this is you really, I kind of think about Econ 101 where you have a supply curve that goes up into the right. And what does that mean? Because remember, there's price and quantity. So here's quantity and here's price. So as the price goes up, right, then the quantity supplied goes up, right? If I can make $100,000 by doing something, wow, I'm totally in. But the demand curve is the opposite direction. That's right. So price and quantity go this direction. So the demand, the number of the units that I want, actually, this is quantity, this is price here. So price goes down, quantity demanded goes up considerably. And if I think about applying this to law, like what if I have $1,000 of damages, right? I can call a lawyer even for contingency, right? They might not want to take my case because if they take a third of the outcome, it's like they want a bigger case and it's going to require a certain amount of work. And AI really, it kind of liberates these market failures to a certain extent. Because you mentioned kind of giving David a bigger slingshot. A lot of times, David, just number one, if I have $1,000 of damages, I certainly can't pay $1,200 an hour for a lawyer, so like I'm out for that, will enter contingency law. The problem is that the settlement might not be big enough, so the lawyer might want to serve me, but he or she has paralegals that they have to pay and so on and so forth. But if the software can do the work, now the market opportunity is so much bigger, right? You can actually deliver justice for a lot of people that otherwise, they weren't priced out of it because how are you priced out of contingency? Well, it's not really in the interest of a lawyer, they want to serve a thousand customers that they get, but they can't. They have to focus on the biggest ones to the detriment of the smaller ones because, again, it's kind of the right of that equilibrium point, and I don't know if you agree with that or how you think about that. That is exactly right. I think that is the actual market problem we have today, which is if you go back to first principles, if you're a person, you deserve a great lawyer to represent your case. And you usually only need a lawyer when your back is against the wall, right? The best of us, the worst of us, comes out this time and we don't have the skill sets to represent ourselves. That's why this whole profession exists. That's why the legal system is about third of our government. It's for this reason. And today, what's happening is because lawyers still need to get paid, it's still bottlenecked on legal work. Today if a lawyer doesn't make at least 5,000 fees off a case, they do not take it on. That is the market dynamics today. And even at the 5,000, they're losing money on a lot of cases. They're really banking on a few cases paying out very large, they're not even guaranteed to win period. That's exactly right. So they already take that. That's the contingency aspect. But it's kind of like even if I win, I lose because my costs are carrying the case are going to be higher than the actual potential outcome even if I win. I mean, think about like most people here have been in a car accident, fender bender of some sort. If it's below the deductible, no lawyer in America will touch that case. Right. It's just not economically worth it. Even if the deductible is $3,000, $4,000, to an individual, that is a difference between a paycheck being gone versus not. Right. And there's no representation they can get for that. And the reason is actually from their side, we have to understand from their side too. Right. So let's say you've been getting harassed at work and your employer could stop it. Like in hospitality industry, let's say you could tell your customers, hey, don't harass my employees and change processes to make that happen today. That doesn't happen because when that person gets calls, the lawyer on the other side has to pick up a call, feel that call. That's about 30 to 45 minutes of work. And then after that, go do legal research because in employment in America, pretty much everything is at will. And you have to tie a problem to like a protected class of some kind. And it's called causes of action. So you have to tie it to a cause of action and that work requires them to go spend 10 hours to go research your case law, research facts, go back and forth and ask them more follow the question, see they qualify. And while they spent all that time, they might still realize, hey, this doesn't even make me $5,000. So that is why 96% of cases on the labor and employment site, for example, gets rejected. Right. So you can never find anybody who can represent you can't you come out of pocket in many cases. That's exactly. So you just kind of take it unless something really egregious happens. And that is the current state. And it's all bottlenecked on legal labor. And this is what Eve is meant to do is to how do you now take that 10 hours is now immediate with Eve. A call comes in. Eve actually answers the call and automatically uses his insights on the law firm to know whether or not this is a case the lawyer has to take on or not. And then hit the ground running with a demand or the initial preliminary work done. Right. And that completely changes the economics of that type of case. And we're still at the very beginning stages like what's happening is Eve is getting more and more capable of handling outcomes and to end over a very long horizon. These cases take six months a year to launch and through them probably a thousand actions back and forths that are happening. And as accuracy of Eve is getting higher and higher, this long horizon becomes possible. So the more this becomes possible, even more complicated work gets. to more ties down to a constant case. So now all these people without representation, get representation. And if you really asked yourself, like how many times in your life, if asking for legal help wasn't a friction point, would you have asked it? That number is way higher than we think. - Yeah. So it's a funny story, this true story. I was in blue bottle, a little coffee shop in Los Altos and I was explaining Eve to somebody probably nine months ago. And I was explaining it because most people think of, A.I. is like, oh, you're going to fire everybody and cut costs and it's all about cost savings. And it's like, no, actually, if I use Eve, I make a lot more money for my firm. And it's not because I'm cutting costs. It's like I can take on more cases. It's actually revenue expenditure. So I'm explaining this as an outsider investor can, so not as well as you probably would. And at the end of this, I mean, we were talking about many topics, but Eve came up and this guy comes up to me. It looks a little angry. He has a big dog and I'm kind of afraid of big dogs. And he's like, what was that company we're talking about? He's like, oh, is he going to get mad? He's like, I'm a trial attorney. I want to try it. Oh, great. So I got you a new customer there. Thank you. But the whole point is that you expand the revenue opportunity. But maybe kind of walk through like, what do the dynamics? Because everybody is driven on 101 or I 95. I 95 is the quarter that goes from Florida all the way up to Maine or something. You know, up and down the Eastern seaboard. And it's like, I've driven almost all of that. And it's like, I feel like half of the ads are for trial attorneys, plaintiff law. So they're obviously advertising their misuse. They want to get called. It's like, hey, I have this accident or I have this issue. But what do the economics look like? So like I spend all this is why again, I think Eve is so fascinating. Because I have to turn down 90% of the leads that I'm getting. I assume, right? Or like, what do the numbers look like? I spend money on a billboard. I get lots of inbound. How many of those turn into cases? How many of those cases turn into revenue? Maybe kind of like a before and after? Because you're not a cost savings play for lawyers. You're a revenue expansion play for them. That's from the legal side. But what do the economics look like for a law firm? When most people drive by, they see the face. And they forget about the people behind them and the amount to work every single call actually takes. That's what happens today. That's what Eve is there to help with. And the math on the law firm side is very simple. The more people you represent, typically speaking, the more money you make. But because you can take on more people and you honestly are denying and not taking on many cases because they're too expensive to take on, the demand from their perspective is not really constrained. It's really the supply of labor. Do I have enough people inside to actually service that problem? And to make things more complicated, different firms here are in different realms of problems, where the bottleneck keeps shifting, right? So a small firm might just have one attorney that has a case manager or some sort of office manager that feels initial call and just notes it down and then the lawyer then responds back in their free time. They're kind of running chaotically, running around. And then there's a next level, which is they find a way to systematize it. They have an intake team of call centers somewhere. That intakes it. And now that becomes a new bottleneck. So now when you increase your marketing spend, let's say you looked particularly attractive in that billboard and a lot of people are calling it. Suddenly, now that team is overwhelmed and you're limited again by how many people you can represent. And this is the daily challenge these small businesses are dealing with. It's their small businesses. They're not massive enterprises. They want to represent individuals. And everyone here went to law school, not business school. They want to be there for the people. So we're basically consolidating all of that into the e-platform such that they are getting pulled in only for what they need to, right? Like they're lawyer insights. They're particular insights on how do they take this case, e-case raising the floor. How do I take it from this floor to the next level? And that is where I believe really all lawyers spend time talking to their people and helping get client outcomes. Well, and this is kind of the market failure point to a certain extent, which is I could serve all 5,000 leads that came in. If only I could hire a paralegal for 12 cents per hour, or whatever the token cost of it, but it's like, I can't. So I would just, there's no labor market that could actually function. But with AI, now I can. I mean, do you have anecdotes of just like kind of before and after it's just like, you know, like the hair club for men, it's like, you know, here I am before, here after I have a nice head of hair. But like, what's that for kind of your best customers that you work with? I imagine the revenue transformation is pretty significant. Yeah, one firm in LA went from managing about 100 clients per attorney to 500. Wow, right. And that is a type of thing that is possible. And they went to their credit. They worked really hard to achieve this. They utilized EVE up to the max of all the way from intake, take fielding the call, doing qualification, automatically, removing all the relay problem that they have of passing things from one attorney to another to a case manager. All that is now handled with an agents in EVE. And all the way to settlement where it's actually briefs before they go to a mediator discussion that actually tells you, here's what you need to focus on. Here's what the settlement outcome should look like for cases like this that we worked on. And here the tactics used before that got to you here. And that is what the future looks like. It's truly moving the case forward continuously. And you're helping making it do a better job than it could do by itself. That is, I think, the future of law, right? Where you as a lawyer are really going to look more like a almost a data scientist and engineer engineering something to be better and better. And that is a shift the top law firms on EVE mentally kind of go through. Yeah, well, I kind of think of if you look at your average law firm where they don't really know AI. And actually, like this is kind of an interesting kind of take on the world of AI enabled applications in general. Like what was the software stack for law before? Well, if you're a big from like Wilson Sincini, probably the most important thing is like your time tracker. That's right. By the hour, if you're in contingency law, it's like, well, your time matters, but you're not billing your customers on that. You probably need to have like, you know, each case, here's how much money I'm spending on the case. But like, I imagine your primary tool was Microsoft Word. And there wasn't, this is how like VCs would have like gotten this industry wrong before. Which is like, oh, well, the software market for plaintiff law is small. They all buy Microsoft Office. Yeah, Microsoft Office is kind of expensive. So therefore, like the software spend is like in the tens of billions of dollars a year or something seemingly, comically small. But wait a minute, the outcomes that they deliver is in the hundreds of billions of dollars a year. They can't deliver more outcomes because they're really constrained on labor. And they can't hire labor for 12 cents an hour because it doesn't exist. So it turns out the software market is kind of like this shadow labor market and it's like massively bigger than anybody would have expected. And like, it's always just a weird thing because it's like, you can't say the software market is small because you're a legal software company. But people know Harvey or they know like corporate loss or like, you know, e-discovery tools that have been around. But I imagine like, what was the main software stack before Eve entered? What was it just Microsoft Word? Or like, what was in order for me to go into business? I graduated from law school. I wanna be in this particular, you know, subsector of the field. What was my software stack? You know, this is the unfortunate thing about plaintiff law and institutions is historically plaintiff law really didn't need more than a cell phone email address. Honestly, even Microsoft Word, some people in the solos would not buy it for a cost-resistant typewriter reasons. No, it's because if you think about it, you actually don't do that much readlining. It's a trust boundary situation, right? So your one side is kind of opposition to the other side. So you're not really collaborating. Yes. In the same way that you are when you're doing contract review or something along those lines. So that was kind of it. And no software really solved their core problem, which is exactly what you mentioned. They're labor constrained. That is the core of how they do anything at all. And because they have labor and they're good at managing their labor, they found a way to solve in every problem to them look like solid labor. And that's how they've grown up. And as a result of that, what ended up happening was a lot of resources on software went towards defense institutions because that's where the budgets were. For Harvey, you know, really any company, honestly, legal software company today, vast majority of them are on the defense side because that's where the budgets are, right? And that's what's easy to build for, easy to get money for. And on the plaintiff side, these are small business that are watching their pocketbooks every month, right? If you're not driving outcomes for them from day one, you're out. You're not getting renewed. They're gonna curse you out. You know what? Anything they can do, they're going to come after you, right? And that's what's made things so difficult. But what we've realized is, well, their core problem is we know what their incentives are. They want to represent more people. They want to win. And we can do that now. you know, there's once the beauty of software today is Once you do a task manually, even tasks that include crunching new piece of data and transforming it, that's kind of what AI is really good at, you can now encode it as a process. That is a fundamentally new shift. That has never happened before. That's what they were trying to do with people operations. But never worked because every single case is still different enough that you can't do it. It's still bottlenecked on hiring smart enough people to be able to handle it. And now, once smart person can actually handle, like we talked about, 500 different cases of very different facts, very different situations. And how do you even keep that in your brain? Like it's hard, right? But now you don't have to. And I guess one of the things that a lot of founders are thinking about right now at the application layer is like, uh-oh, maybe I'm roadkill from the big guys, right? Like the labs that produce the intelligence, maybe they're going to go tackle my space next. And I'm toast. And there are many ways of defending against that. The defending kind of sells it short, because if you're able, like, if you have a network effect, or if you have data that actually nobody else has, you can deliver better outcomes. So, you know, who cares if everybody uses chat GBT or clod behind the scenes or on their own. But maybe talk about, like, I'm sure you've thought about this a lot. You know, why is Eve better than just kind of, like, raw intelligence? And how does it get better? Because it does, the more practitioners that use the product. Yeah, we're betting on these models getting better and better. And our value is exactly that, you know, if you have 1000 Albert Einstein's to work with, to do litigation or, you know, the best attorney ever to do every single task, we would take it. The problem is, if you drop Albert Einstein into a law firm today, he will not be productive for quite some time. And that is a general problem that Eve is solving, right? I think one is in plaintiff law, the vast majority of data is actually non-scrapeable. About less than a percent of cases actually settle and get turned into case opinions, right? vast majority settle pre-demand or pre-litigation. And some, even before that, right? Where it's actually just a negotiation, oh, hey, this is how it's wrong, please fix it. And to make that concrete, it's like, I'm going to car accident, I'm not at fault, you know, the adversary, if you will, like the other side's insurance cameras, like, oh, you weren't that hurt. We'll give you a dollar, right? They always try to like deny, deny, deny, like, rule number one of an insurance carrier is deny, rule number two is deny, you know, it just goes on it. That's right. That's all the rules of insurance carriers. So now I hire a lawyer and to actually get what I'm owed, because I actually am injured and my car is actually totaled and they just don't want to pay me. You get a settlement, it doesn't go to case, it doesn't go to actual trial, but you know, that's right. That Geico actually did pay $29,000, and that's very, very useful information, I assume. That's right. Because insurance is the one that's dealing with 100,000 different law firms. They have the shared community, they know all the cases, but because it's a chart of the cross, all the different local firms, they don't know exactly Geico's every single move. And, you know, they even have ominous sounding software, like Colossus, which tracks, you know, they try to basically say, a broken thumb, this is how much we think it's worth. Which is a hard thing to do for their defense, like it's a hard thing to do, but they are doing that, but also saying, this is how much we can get away with giving them away for. And irrespective of that individual's actual need of their particular situations. And that's what the legal system is meant to fix. That's what it's there for. And what now is happening is, and this is the interesting bit in the challenge, is if you go and Google, how do you write an amazing demand letter for, again, state farm for soft tissue injury cases? Like that today exists nowhere. Even for a new paralegal that is joining a plane to firm, this is something they have to learn. And on top of that, it gets more complicated because when you're in local jurisdiction, the local environment, like the court systems, your opposing counsel, they all behave a little differently. And that context matters too. So what Eva's doing is, it's turning this historically, incredibly difficult to utilize, multi-attribute, multi-dimensional information that is basically, what is the best thing I can do at this particular moment to improve the outcome of the case? And that same question is repeated thousands of times during the case. And a human brain is just not capable of kind of keeping all of that in mind. And but AIS, right? And that is the type of data we help build for law firms, and they're seeing the immediate value from it. And the first place where they see value is, of course, intake. Who do I even take on? Who am I good at representing? And maybe start there and keep getting better. Right. And I imagine, because these aren't giant firms, right? Like if I'm a lawyer in New Jersey with a four person for attorney practice, and over there, there's another lawyer in Arizona with the seven attorney practice, but their counterparties tend to be state farm and Geico and whatnot at the limit. It's actually fine to share information. I guess, how do you think about data? Because this is always hard for companies when you're getting off the ground. It's like, no, this is my data. But there's also, there's a give to get, I assume. It's kind of like, I work with a dental AI company. And it's like, well, the dentist in Iowa can't serve patients in Florida, but they want to learn from the collective actions of each other. But I guess, how do you think about, just data sequestration and whatnot? Does that ever become an issue or how do you think about using it? We've largely followed the rules of engagement that already exists in this industry, but we've amplified it, but softer. That's kind of our stance. So the rules of engagement is, for their own cases, they want to be very private. Like that is important by law. It's attorney-client privilege. And we don't train on that data ever, right? However, what attorneys also do is to share this knowledge, they actually travel, they attend CLE, and they share tactics each other on how they vent up against state farms X and Y defense. Because state farm repeats that defense across the board. And not picking on state farm. Anyone is fair game here. But that is what they're already doing. So we hire owner attorneys and track success rates of cases for a platform. And we want to help, if you're using EVE, you should have more success. That's what we track. And we have this product called Auditor, which actually analyzes every single case through every single page overnight, and looks for situations that a perfect attorney would catch every time. And across the board, unfortunately, vast majority of cases have, almost every single case has missed information, right? And now that's no longer a thing. Yeah. And maybe talk about the future of where were things go. Because on the one hand, I can imagine a world where it's like, one of these days, Geico is going to get a little bit smarter. And they're probably going to, like you see, they're denied, denied, denied plan. That's how they got smart before, right? Because they realized it is an adversarial system. Like, you know, I lost my house in a fire, and I'm going to claim I had a Picasso in there. And then they're going to think that I'm claiming that I have a Picasso. They're just going to deny the claim. So each party is kind of fighting each other. But they're going to get superpowers. I mean, you see this playing out a little bit with mues and all the consumer agents, where I want a reservation at this restaurant that's impossible to get. And they have a human answering the phone. I can deduce them now that I have to pay one penny per hour or something. And then eventually, they're going to realize that they're getting DDoS and they're going to prevent that. So, you know, I guess on the one hand, like how do you think about, you know, your adversaries here, not your adversaries, but like your client's adversaries. How are they adapting to a world where it's like, you know, it was great for Geico where they could say, "Hey, you have $2,000 of damages." The consumers like, "Yeah, I did have maybe $2,500 of damages." But it's like, they never really had a worry about that before because of the quantum. And now, unfortunately, for them, but fortunately for the Davids of the world, like people that are actually aggrieved and have been victims, now they can fight back and you're powering that. So that's kind of one thing. But also, you mentioned long horizon agents. Because, you know, what does the practice of law look like? When a lot of the stuff can actually be done by AI, you had, I think you framed it as like the, the attorneys are almost like the data scientists of the future. But, you know, maybe talk about, like, what does the adversary, or the adversarial process look like? You know, what are the skate farms and Geico's using? Potentially as a result of you entering the scene, but also like, how big, big question, but how does law evolve and emerge just given that, you know, you're kind of manipulating words and finding facts and doing all this kind of stuff where like the humans are not as important. They obviously have an important role of shepherding the case to completion, but like, what does the AI do versus not do? Yeah, I mean, ultimately, my framework for thinking about this is, ultimately, when you have an individual, they're going to need representation. Whether that representation, like, who does the work on the representation? You can assume it's 99% AI, maybe 99.9% AI. There's always going to be that little bit that is the human touch, right? And we do believe that people are going make a positive difference to the outcomes of the case. And that is exactly what you have, right? So like what you have on the on the defense side or really institution side is what's always happened, which is they have more resources, they have more money, they have more time. It's actually another weapon they have, which is quite powerful. Individuals are in in debt to pay their fees. And that is a very powerful tool they have. And that is that is a strength they're working with. And they're trying to rely on centralization and soundization. On the defense side, you have a attorney that is fighting your case and pushing them to get to litigation. And I think that is going to be what's happens. I think a lot more cases are going to have teeth. And all the routine back and forth, I think is going to happen through agents talking to agents. I think that's, you know, it's a crazy future role, but I think that's what we're headed to. And the difference maker is what does the attorney understand about that client, that set of facts, and their local environment of who they're going up against locally in that law, in that defense forum. And they're using that insight to make a difference for their client. And I don't think that ever goes away. It's, in fact, something we're seeing already where many customers on Eve are actually choosing to spend more time on their trial work because it actually enables that. Previously, going to trial took down entire firm. Suddenly you're just spending all your time doing trial, trial prep, interviewing juries. You want things to settle. Exactly. It's more of a settlement motion. And instead, I think things are going more into real advocacy. How do I actually make our point known? How do I, you know, my client is against back of the wall. They're doing bad things, they're doing good things. How do I represent them in what actually matters for them? I imagine this is kind of the data science side of what you're doing as well with this giant data set. There's probably never been accumulated before. He says, you mentioned all these things. It's so bespoke. There's no communal repository for all the settlement amounts. But I've seen this with litigation finance a little bit where if I'm a lawyer, if I'm a trial attorney, and I'm not getting paid by the hour by you, my client, well, where do I pay myself and my staff and my office rent and everything else? Well, there are companies that will show up and say, I will fund this case. That's right. And I'm funding this case because I'm counting on you winning it. And they'll do all sorts of clever things. Here's the judge. And here's this. They're using data. So outside of, I think those guys have been very data science forward. But historically, this data just never really lived anywhere. And now that it does, you can make smarter decisions as an attorney. I'm like, do I take it to trial? Or do I accept the settlement? Or do I push back? Oh, Geico offered me $12,000. Should I push back and fight for 15? Should I take it to trial and try to win 100? Like, how do I make those decisions? Which is why we can help them make the best decision every single case. And no one of optimal outcome has been achieved. And it's still, I would say it's still the attorney's responsibility to push it even further. And I think that is what I meant by data science like work. Because they're using the power of software to do work. You never even thought to do to improve the outcome. And I mean, where do you think this is a very broad question, of course. But like, where does the legal system go? I was having some some trouble with Wells Fargo. And I'm like, you know what? I've tried like, for four hours to do this, I'm just going to sue them. So I went to Codex, you know, Chad G.B.D. I was like, sue Wells Fargo. Four hours later, it had sued Wells Fargo. It actually found a process server. I got the notice of, like, we're going to court, but you know, the date is in February, like another kind of similar vein is happening with patent law where before it's so much work to go file a patent. Now it's less work to file a patent, but you still have the US PTO, which is the bottleneck. So I guess, I mean, if you were to prognosticate like, where does the legal industry go? Now that AI is becoming table stakes and you're delivering, you're part of that table, obviously for plaintiff law. But if you think about the entire practice of law in general, like, how does it change if you were to fast forward five years? What does it look like? What's similar? What's different? Most likely, I think it's inevitable that you're going to have to create systems where not everything goes to court system. And this already is a framework that is used in law, right? Like, I mean, for some types of, uh, veterans of fair cases, that goes through a different committee for even labor and employment that goes through EEOC in a lot of cases before it goes through. Uh, and, you know, employers have figured out different ways to mediate and have arbitration that doesn't necessarily go through the court system, right? And this is, this is the framework that actually naturally evolves. And I expect that to happen more and more. And I think that tweak that's going to happen is that for some pockets of it, we're probably going to go through some version of like ADR automated dispute resolution where AI enabled mediators or central parties that have a neutral view of both sides are going to use AI to really speed up how they come up with judgment. And I don't think that judgment will really be replaced, but what they will get is a set of facts that shows historically, here's how this happened, here's how this happened. And it's up to them to remove the biases that might exist. And I think we're just going to spend more and more time on that side of things. Do you think the small law firms get bigger? Because that would be the other thing. It's like, if I could only handle 100 cases per attorney, now I can handle 500, but in the future, maybe 5,000, you know, why do I limit my office to like a very, very small New Jersey location? You know, maybe I should go more broad. And you're going to have kind of larger, almost like corporate, like law entities. And like, I think the biggest trial attorney firm is Morgan and Morgan, is that right? And they have billions of dollars in revenue, but your average firm is quite small, but you could imagine powered by Eve and with all the changes that we're talking about, it's like the small firm could actually become a billion dollar revenue business. It's kind of like venture outcomes versus kind of like what you would call lifestyle business. You were a VC once upon a time, you know, that term. Some of the majority of term for like, you make profits. But how do you think, like, is that a reasonable take that like some of these small guys can actually, I mean, obviously you can't go public as a law firm for now, maybe an Arizona or something you can. But do you think there's a chance for some of these local mom and pop stories, if you will, to become very, very large institutions? I think that transformation that's going to happen is a lot of these law firms are going to look more like software companies. I think they're going to finally participate in the software revolution that's been happening for the last 30 years. They've been left out of, right? And if you kind of deep dive, you'll understand why. Let's say you have a $25,000 settlement. The attorney gets maybe a third of that. Let's call it 8,000 for simplicity. And you know, like all that 8,000 about half of it goes towards labor spend, 30% goes to marketing, and the rest maybe is profit, right? Like that's kind of the business as it exists today. Because of that business, it is so difficult to reinvest back into servicing your next client better, right? Like the only way you can really do that is by hiring a better attorney today. Right. What changes is now they can actually accrue a database and data set that is you need to them that gets some results that is better than their competitors for a subset of law, right? And this is kind of specialization. And historically, this industry already been through that. You know, like 30 years ago, there was a, you know, your neighborhood lawyer that handled everything, you know, from from employment cases to IP to. Exactly. And now we have our specializations of practice areas. You have someone that's really good at IP, someone that's good at employment, and now it's getting even more specific, right? Like someone that's good at, let's say, nothing bird defects or something along those lines. And I kind of anticipate that to go even another level where now someone could get really good at soft tissue injury cases that involve X and Y fact patterns. And it advertising for those cases might be a lot more cost effective than some other larger firm like Morgan Morgan, right? Just showing their billboard everywhere. So get good at something locally and then expand that's right across the entire country because you have such high competence around that one field. And we're, so I think we're going to see that type of specialization. And I think we're also going to see the opposite where some of the large, we're also working with some on the scale of Morgan Morgan, like some of them actually are coming together. So those ones that got as big are actually going around buying other law firms because they realized with Eve, they can very quickly consolidate what used to be very painful reintegration process now can be done on exactly what the client wants, which is hey, the client wants a legal outcome. And Eve has made just for that. So by doing that, they get to largely work away from a lot of the change management, workforce changes, operation changes because Eve handles a lot of that for them. They can speed up their time to making that acquisition worth it. Well, the funny thing is that there's this movement underway to outcome oriented pricing. So software SaaS used to be per seat per month. And I used to check it was like the tall, grondi, venti model that software selling. It's like you go to like any SaaS company's website. This is why you know, cloud can clone them also readily. They all look the same. It's like $79.99 a month, $129 a month, you know, tall, grondi, venti. And it was per seat. And like look at a company like Zendesk, which had $2 billion of ARR. when they were last to public company, they were taken private by Premier and Helmut and Friedman. And now they're like, "Uh-oh, how many seats do you need? Like maybe zero. We need to deliver outcomes." So everybody in the software world is kind of like in a lot of AI companies like we deliver outcomes, we charge for outcomes. The interesting thing is that the form of law that you focused on was always outcome-oriented from the very beginning. But you have other types of law that are not outcome-oriented where I guarantee all the clients would much, much, much prefer that it was out-combased. Right? I mean, sometimes it's tricky. Like, I have a trust in a state attorney at McDermott-Willen, Emory, she's very, very good. She's like so expensive. Like, I guess the outcome is my death. So I don't know if I want that. But, you know, you would prefer to just say, like, there was a fixed cost, but there's often this data in their defense. The reason of charge by the hour is not so much to rip off the client, but there's data asymmetry between what I want in my head and how I articulate it, maybe the scope of the project is changing over time. But, you know, other forms of law, I would argue they probably should look more like plaintiffs law. They should have outcome-oriented pricing as well, right? Or, like, immigration law, that should be outcome-oriented. But, like, everything should be outcome-oriented pricing, but it's hard because there's a data deficiency, if you will, in terms of, like, will I win this case on behalf of the defendant? But, I guess, like, how do you think other forms of like, you could probably expand well beyond plaintiff law? Kind of a few agree with me, but, like, how do you think about just, like, law in general changing? Because I kind of feel like plaintiffs law was, like, ahead of everything that we're seeing right now, it's, like, everybody wants outcomes. Nobody wants to pay for the ingredients of the inputs. This was the only kind of field probably of business where it's, like, it was always outcome-oriented, but, kind of, shouldn't other parts of law work that way? - That is our exact belief as well, right? So, like, the hard part has been, it is hard. You know, when you're on the defense side, or even the plaintiff's side, the question around, in you case, is it 10 hours of work, 100 hours of work? In many cases, you really don't know until you take it on. And, for plaintiffs, that is why we had to go so deep into each practice area, into achieving outcomes. And, you know, we were doing what is now coined long horizon Asians, like, a last year. That's just what was needed to drive results. And now it's getting better and better to actually drive legal outcomes. And, ultimately, I think, what is needed for democratizing a flaw is, from a set of facts, you need to know how much compute resources you need to arrive at a outcome. And, that happens through both aggregation of, and better usage of data, and better usage of actually running the compute to achieve set outcome. And, so, we're doing both, right? So, like, that is why we're laser-focused on outcomes, and we want to drive outcomes. And, eventually, this David or Skoliath thing is happening everywhere. You know, it's not just in, you know, big law or in-house legal, those are just where the budgets are. So, they actually can write, basically, a blank check for interim and period of time. And, the forcing function around, how much is this actually worth an outcomes to me? Is not known, right? Like, I mean, you know this, like, when you go fundraise, you might get hit with, like, 100K check. What is the exact outcome of that? You know, like, it's very hard to know what the value of this, but that is the only way they can price today, right? And, that's because they don't know what the expected value of their work actually is. - Well, that's the asymmetry as well. It's like, I don't know. It's like, okay, you need to hire a lawyer for your series C. Man, what does that mean? Well, it could be, like, very, very simple. It could be very complicated. So, it's very hard to have a flat rate. That's right, because they could get burned and, well, they can't get burned in the low direction, right? It's like, I charge you $25,000 as I spend an hour on this, but they could get burned. If it's like, I have to now spend 4,000 hours of attorney time, I could lose money on this, which, of course, every single firm day. Oh, we, well, actually, like, as you know, in corporate law, these are loss leader products, and then you try to make it up on the M&A or IPO or something, but obviously a little bit different than plaintiff law. How do you guys charge? How did you, because I imagine you had a, it's not like on day one, when you started the business, you knew exactly what you were going to charge for, like, what type of customer I imagine you were thinking has evolved on this as well. Absolutely. So, I mean, from, actually, weirdly enough, from day one, we started probably with the, with the, you know, what was it, tall, grandei, venti? Tall, grantei, venti, venti model. That's what we started with, because we didn't know any better, right? And then as we dug into it, we realized, like, what they care about is outcomes. What they care about is how do I serve more clients? So that actually forced us to be outcome based from very early days. No, we're talking like a year and a half ago, which is pretty funny. That's early in today's world. AI talk, like dog year is time's a hundred years, exactly. But that is, that is kind of what happened to us, right? And there's so much room to grow, where now that, you know, we talked about that, that value diagram of a third goes to attorneys, half of that is labor, that is half, they don't have to spend anymore, right? So how do you actually turn that into something more useful? And that way, the best way to get more useful work is actually to spend it weirdly on more tokens and more work that Eve can do to make more money for your firm, right? And that is kind of the cycle we're in today. And a lot of the market dynamics that is helping us is exactly this, like we actually believe the billable auto model. I don't think it's going to die completely, but I think it's going to be on the way of the seat-based pricing model, where for some subset of law, that is probably the best way you can charge for the work, 'cause it's very difficult to know value until an outcome many, many years later. But for a lot of it, that's not true anymore. You know, for a lot of it, you actually know what the outcomes are. And you should be able to take your work down to an amoractized amount and deliver that back, right? And that is what we are betting on, right? And this is why we focused on delivering legal outcomes from day one and to end. And doing that in such a way that it is as simple as a lawyer saying, here's this client I got in, give it to Eve, Eve will pull you in when you're needed, and you're good to go. We've talked about how plenty of attorneys, like they're supply constraint, not demand constraint, or many of them are, 'cause they have this infinite influx of clients that they can't serve because the math doesn't really work in terms of cost versus, you know, CAC versus LTV, the old fashioned thing for any business applies to them as well. You know, where are your constraints? Like what kind of holds you back from growing faster? I mean, you're obviously growing incredibly fast. What are your rate limiters? What do you need as inputs to grow faster as an output? You know, it's really fascinating because a lot of the legal benchmarks, like even benchmarks that you share, publicly that anthropic, open AI, many of whom we're working very closely with are working on, care a lot about like almost single outcome, right? Like here's a task, did it kind of do mostly okay? And the world is now moving into agentech work. For us, the only thing that ever mattered was the agentech outcomes, right? So like now that is getting more and more. The end outcome here is today, we're still at the point with technology and processes where there's still a decent amount of human touches needed per case. But by doing more in our work, we've been drastically reducing that month over month. And in our industry, we need to do that per case type, right? So like for every single case, we're learning that like a science. Like how do you actually resolve this case? And how do you build a mini attorney brain that is capable of crunching all these data points to that resolution and driving it across the board and working with all the tools they have access to, including cloud and whatnot to drive that outcome? And that is a really hard problem, right? So we're largely limited by engineers at this point. Like we have a limitless number of things to do to drive this forward. And the other fun part is we have demand. The moment we are able to deliver on, let's say, moving vehicle accident cases end to end. The amount of value that gets unlocked for the world from that is in the hundreds of billions of dollars. And that's just one sub-time. Oh, so that's a great question. Have you had a fully autonomous end to end case? It's like, answer a phone, onboard client, you know, get out, get check from Geico. You know, like, has that happened end to end? Or like not yet, but we're close. That is what, that is why we need the engineers, right? So like to put things in perspective, a single case has probably 10,000 back and forths. 10,000, something like that. Because here's how you think about it, right? A client comes in, let's say it's a PI case. Now we have medical records. So now you have to actually outbound call insurance companies and healthcare companies to get hold of the records that the clients already had, right? So like, that is actually, that takes two weeks today. And with the eve outbound agents, where we actually have voice AI that can do the outbound call. And funnily enough, that's an area where we're already seeing agents talking to other agents and learning how to get past each other, which is hilarious. And that is like one step that's needed, right? And then from there, you have to then create a document and actually have a conversation with the other side. So all of this are tasks we are completing end to end. So today, there's a little bit of touch required where someone makes an outcome better or does something a little better. But exactly what we're building right now is how do you actually drive this whole thing end to end? And we are seeing early signs of that, where it's actually live in some customers. And if you've seen going back to the defense set and their colossus of information. Have you seen their. reaction just in general change. So as an example of that, it's like, uh-oh, these guys contacted me with this. I always need to settle because they probably have like pretty firm rules about this. They don't just like randomly make it up as you go. I would assume because they're dealing with this tens of thousands of times if not more per year. So if I'm Geico, it's like, oh, you demanded this much. Well, my first attempt is going to settle here, but like if their costs go down, maybe that changes, right? So have you seen any change in reaction of your, you know, not your counterparty per se, but of your client's counterparties? I would say largely still, uh, the defense side very much still works on hourly business model. So they haven't quite caught up to the same pace as our attorney. So like, there's a lot of, I guess, pricing asymmetry here. What defense used to do for this one, one law firm that we're working with is they'll wait. And they push out, discovery request dates until a day before Thanksgiving or a major holiday, right? And then send discovery there because they would know the person would go on vacation and be stuck with all this workload over that vacation. And they wouldn't do a good job at it or would rush it. And now what they use, they, because of such a repeated tactic by them, they created an agent on Eve to respond the same day. So the next time this came through, like they responded immediately with the responses and the defense were like, what is going on? Yeah. Yeah. The tactics don't. And like we're seeing, there's so many variants of that that is happening now, which is causing defense to realize, wait, is this, this is what happens when the other side has resources, right? Oh crap. Right. And that's, that's what's fun to see. Well, Jay, this is a fantastic conversation. I learned a lot. Didn't realize there were 10,000 touches every time you went through a case, but really fascinating and delighted to be your partner and bring Eve to the next 10,000 firms. Thank you. I mean, we still have so much more to go. We've probably helped a couple hundred thousand clients a day. And we have hundreds of millions of touch. And I would love to be making a difference in their life every day. So if that's of interest, please come join Eve. Awesome. Thank you. Thanks for listening to this episode of the A16z podcast. If you liked this episode, be sure to like, comment, subscribe, leave us a rating or a review, and share it with your friends and family. For more episodes, go to YouTube, Apple Podcast, and Spotify. Follow us on X, A16z, and subscribe to our sub-stack at a16z.substack.com. Thanks again for listening, and I'll see you in the next episode. As a reminder, the content here is for informational purposes only. Should not be taken as legal business, tax, or investment advice, or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16z fund. 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