Using chat to be tea for the first time.
GPT 3 at that point wasn't amazingly good work, probably 3.5, whereas like this is really going to change the way legal work happens. Welcome back to the room podcast season 14. Hi, Mads. Hi, Claude's. So excited to be here. So excited to be talking about everything that's going on in 2026 in tech. There's so much to discuss each season we sit down with some of the most thoughtful people on the cutting edge of the
start-up ecosystem to talk about what it really takes to build and scale in during companies. This season we're diving into the ideas and flexion points and experiences that have shaped some of today's most impactful companies and the people behind them. From next door to the ring founder, we are diving into everything from early product decisions to growing a rapid scale. These conversations offer a window into how great companies are actually built.
And if you enjoy the conversations, which I think you will, make sure to subscribe so you
“never miss an episode. And if you want to stay connected to everything we're building at the room,”
including community events like our annual Inside Summit. You can subscribe to our newsletter at theroompodcast.com. Thank you so much for being a part of the community and welcome to season 14 of the room podcast. Ripley is one of those tools I wish I had even earlier when I was building my start-up drive. If you're building a start-up every minute matters, but it's surprisingly easy to lose hours to onboarding, paperwork, fixing payroll issues or setting up laptops for new employees.
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Ripley's start-up stock for free. Head to rippling.com/theroom and sign up today. That's riplylyng.com/thr-o-m to sign up for six months free today. Focus on what you're building. Leave the rest to Ripley. Ripley.com/theroom. Perkins Kui supports the most innovative entrepreneurs and investors in fast moving and high growth sectors, addressing their myriad of legal needs. But the firm doesn't just provide end-to-end legal and business counseling to it start-up clients. It also
“facilitates introductions to key advisors and sources of capital. Perkins Kui's interactive website”
startup percolator offers access to programs, resources, and rich dynamic content. Design to assist entrepreneurs on their startup journey. To learn more, go to startuppercolator.com and Perkins Kui C-O-I-E.com. Welcome back to the room podcast. Today we're stepping into the future of legal.
Ryan Daniels is the co-founder and CEO of Crosby. An AI first legal service company that pairs
elite attorneys with purpose-built agents to deliver a smarter, faster, and more accessible alternative to the traditional law firm experience. Ryan's path to a founder market fit cuts across multiple worlds. He grew up surrounded by lawyers with his dad as a law professor and his mom, a human rights attorney. He went on the study at Penn, work as an associate at Kooley, before ultimately spending a lot of time thinking through AI policy at a thinktink at Stanford
posed his own legal degree. Years before a tragic PT met any of this film urgent, he was thinking through the moment in which legal work could be redesigned and re-imagined through the agentic experience. Since founding Crosby, he has assembled a team of contrarian lawyers and world-class engineers backed by some of the best firms in the industry with Sequoia, benchmark, and index. Today, they have an impressive client roster of breakout companies
from cursor to clay for whom deal velocity and contract quality are mission critical. In this
“episode, key insights and themes include building trust and a high-stake service business,”
while rethinking the billable hour changes everything at ultimately how to scale legal quality in the age of AI. Ryan, hi, how's it going? Hello again. Good to see you happy Saturday. We're recording this as an attempt to the episode which we had so much fun recording a few months ago, but I was excited to hear from you this week. So I'm exciting news that's coming out just in time actually today at the point of releasing the conversation. So what's been going on with your
company since we last spoke? Yeah, it's such a good coincidence in timing. We are announcing our $60 million series B, which is so exciting and it coincides with the episode. And we were running some numbers last week and the other big milestone that we realized is we have now closed. We're
a law firm. We closed contracts for our clients over a billion dollars in revenue for our clients since our
seed announcement in June. So that's like 270 days. And when we announced our seed and came out of stealth in June, I think we done about 20 or 30 million maybe. So it's just really taken off.
That's incredible.
impact for your customers. And then also on your side. So it tells a little bit more about the raise and how it came together. We'll get to you excited about who's joining you on the journey. Every startup, every company in order to generate revenue needs to negotiate contracts. That's the moment that matters most. And to build an experience that speeds us up. In some cases, we've seen by like 78% it's just like we've just had so much interest from different companies.
As we started to get more publicity with this round we're parting with Lux for the first time. They're pretty deep tech fund. They've a team here in New York. We spend a lot of time with. And so we're doubly done all of the research we're doing. Kind of just trying to basically predict the way two parties negotiate agreement. And so parting with them now really allows us.
“I think to just lean more heavily into the research out of the business over the next”
basically year is going to be a major focus. Incredible. Well, awesome to have them joining the
journey. I've met few of the Lux team members and they're great. It's so fun to see the incredible group of AI native innovators building. And thanks for trusting us at the room with your story. I loved recording original story with you guys and the time it cannot be more perfect. So I can't wait that this is going to be a big part of our launch. Perfect. Well, let's open the door. Let's do it. Ryan, thank you so much for joining us on the room today.
Guys, it's so great to be here. I'm so excited. We're stoked to have you. We love to start at the beginning with all of our guests. So first of all, where did you grow up? And how is that shaped your view of the world? I grew up in Toronto in Canada. And I've been now in the States for almost 15 years. And I'm now a U.S. citizen as a few years ago. So I'm probably now American and Canadian. I, the question of how it shaped my view of the world is a great one. Canada is funny.
“The truth is it's a lot like here. But you also feel like you're from a different place.”
Our words have a slightly different letter. And we have an extra U here and there. It took me years to figure out why that was. But it's not obviously glaringly different. So everything looks just slightly ascans. And I think over time it just makes you question things just a touch. But maybe I'm just over editorializing. That's great. Having any sort of slight shift in world view does make you question how you would think about this or that. And even for me going
up on the west coast and then going to undergrad on the east, there's just like slight differences and how you perceive things. And I believe that I read you grew up in a legal household. Is that correct? Oh yeah. My extended family with our cousins. I think we have seven or eight lawyers. So there's a lot of us. My the story goes back a long time. My grandfather fled to Canada from Eastern Europe, the part of Holocaust. And I think felt that the legal system was an really
important way to have some more agency into society. You can have access to the institutions that governed rules and governed user rights and fundabilities. And this isn't like an abstract thing. We heard this all the time growing up. The legal system is really important. My dad is a law professor. My mom was a human rights lawyer in the net teaching law. So it's everywhere. And then the obvious impact for me is again feeling this really profound sense of the
importance of law and lawyers and judges and how they can truly shape our lives. My grandfather and their family was able to get into Canada based on the ruling of the judge. And so this
is part of our family law. I was always really ambivalent about ending up in law because I loved
tech so much. I had a lot of admiration for it, but I didn't really want to be a lawyer myself. There's definitely a really large value placed on the overall legal system and the ability to
“add structure to our lives. I think oftentimes it's misunderstood. Perhaps in terms of we only see”
lawyers sometimes when you don't want to see them. But behind the scenes, the system is making all of us able to just live our lives peacefully. As we do, it's cool to have that vantage point of the value of the legal system, whether you're in Canada, the U.S. or globally, did that always make you think you were going to become a founder? I always was extremely energized by building things, whether just like a couple of friends, working on some projects, just some
contrarian idea together. I was getting maybe in some trouble as a kid. I always found a lot of joy and energy and like rallying people around some idea. I have a twin brother and the often
reminds me like this was always something you were doing. Whether kid I was very much in the
cult of Apple and obsessed with tech and computers and I was always the IT guy in the family. And so I had these interests, it was just like I liked running after crazy ideas and motivating people around some cause. As I got more into computers, I started really being enamored by just the power of what technology could do. You could take this thing that required a lot of humans and had a huge marginal cost to do before available costs. Now you can just do it at scale
as you have computers do this task. And that always like really wow, we want to see a website do something for the first time. And then in the background of it all was this like, sense that the laws and was virtuous thing you can do. And so they were a little bit incompatible for a long time. No, absolutely. It's hard to marry all of these passions in one place and it definitely followed first the experience of legal, both having gone to pen undergrad and then
being an early employee at a company hired score. But then from there you wanted to stand for law and then had a stand at Cooley. Tell us a little bit about some of these early career decisions.
Higher score was it was not super planned.
her energy range Athena. And the thing the problem that we're trying to solve, the company was about five people. I thought I would do like an internship with them for summer after college and then
move to a big tech job in San Francisco. And I never ended up starting at that company. I stayed
at the company because we just kept taking off. We were working on an AI for hiring concept, back when it was ML and data science. And as a result, the EOC and federal regulators were poking into what we were doing. And I just ended up spending a lot of my time writing these long policy memos into the federal government trying to explain the way that I thought our system should be regulated and how liability should work. And I realized that this is actually interesting stuff.
And there was a thing tank at Stanford that does a lot of AI policy and just tech policy and I wasn't sure that I want to be a lawyer, but ended up fighting myself there and doing some
“that research. The interesting thing, this was many years before GPT-3, I think it was around the GPT”
one day. So nothing was really known. But this thing tank was starting to talk about, okay, we know how policy changes will impact the way software gets developed. At some point software changed the way lawyers work. And it was very theoretical because nothing was really that useful. But like to me, I started to get a really strong sense of looking at the data and actually getting some exposure and different legal jobs and things I was working on. It was like lawyers are, I mean,
like an unbelievably important part of society, especially U.S. society. And it's overwhelmingly manual to work we do. And so yeah, this makes sense at some point probably the technology will really change the way this staple of society works. And technology very much did fast-forwarding, a little bit. This is why you founded Crosby. It was to build an AI first law firm, not just legal software too. I'd love to dig a little bit into what was going on at the time where you said,
okay, I'm going to build this business full time. I'm so passionate about it. And also what the court insight that made you believe selling tools to lawyers wasn't going to be enough that you needed to actually become that full stack law firm. I suspect a lot of people we talked to have this light bulb moment, which was using tattoo BT for the first time. It was almost emotional. I genuinely started seeing these things and it was GPT3 at that point. It wasn't amazingly
the work. Really quickly, you could see. And it made probably 3.5 where I was like, this is really going to change the way legal work happens. And I remember this was I had already left cool where I was corporate associate. But remember at that point realizing I was probably working the same when my parents were more or less, maybe just with email from so many years before. And this was the first moment where I just thought, this is it. The thing that we've been talking about a law school
was really going to happen. And again, I suspect a lot of people had that kind of aha moment, but it was hard to put it back in a box. All I could think about from that point forward was, this is going to change a huge fracture society. And we really positioned to have some legal
understanding. And this is what I want to spend my life doing. And after that, I've never felt
“as such a sense of I can't do anything else. So that's how this started. I left my company. I was”
working on a startup that was working at the time where I was a GC and working in like a handful of issues. And I just started talking to lawyers. And it was really easy with my law school network. I think I probably spoke to a hundred plus over a nine-month period. It was not that many over that many months. And just trying to figure out how are you guys using this? Trying to understand their pockets a lot, they're not obvious that when we were able to focus on. And then to get to
your second question, I started seeing the psychological role that allow for them to their buyers, whether the buyer is a lawyer, whether the buyer is an on-layer at a company. In other words, when people have some sort of legal issue, their instinct is to go to a trusted advisor. That's what lawyers really do, not necessarily to like an AI system. And now I think that will probably change. But like a couple of years ago, when we started working in a company, we were like,
what's just meet people where they are? And the idea was for our fetch. And a lot of the investor who talked, he said, it's a cute idea, but like it wouldn't really work. Let's just be a bit more software-oriented. But the deeper we dug, we learned about this whole market for alternative legal services, which is basically like a sort of alternative to law firms, mostly offshore, and that it's spending a little time in India digging into this. And we saw that it's a bigger market for
legal software and growing four times as fast. So we thought, okay, this is just something
“really interesting. And that's what tip us off to starting our own legal services company. That's”
incredible. And I think as a founder myself, when I was first engaging with legal help, one of the
things that always gave me pause was how many hours is this ask going to take. So there was a high trust relationship, but there was always the question of how is this scope creep going to impact how much I'm paying as a startup with limited revenue, for example. And legal has traditionally operated on billable hours, which always incentivizes inefficiency, but you're changing the game there. What gave you conviction that startups were ready to pay per document, like for a contract,
instead, and that this mindset was in fact changing. At my startup drive, Rippling helped us avoid a lot of the operational drag that comes with scaling a team. With most tools,
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Rippling. Rippling.com/theroom. So I talked a second and go about how we sort of looked at
what were buyers of legal services, what are they doing in the need of legal help? And so then we had this idea, let's start our own law firm, and everything started to come together from there. So one of the things we started to notice was, in order to get really serious about offloading a lot of the work that lawyers do onto different AI systems, and mostly now it's just different agents that were building, we had to have lawyers working with us for us under one roof,
and we had to get really serious about the incentives to actually like month of a month. We go where we changed the way we behave, change the tasks that we do as lawyers, which we're so trained to do and we do really well, to offload onto agents. And the way we thought we could do that is by getting rid of a billable hour, because if you think about it, if you do 10 tasks
in an hour, 100 tasks an hour, you're still building an hour, and bill by the piece of work we do.
And we knew that we'd actually run the risk of being margin-negative on some pieces of work, but the incentive would be really profound for everybody in the company to just rally around the school if we need to find a more productive way to work. That was where we started, and then we started going around to everybody who might want to use this document driven law firm. And we obviously started with bigger companies who have enormous legal budgets, like in the hundreds and
millions of dollars, we were working at an investor's office, and all the other founders they were like, "No, we need this. We'll pay you for it today." And so it was actually a very organic way of finding your place to start, and that's where it happened. When I was running my sales team, back as a startup founder, one of the biggest bottlenecks was contracts for deals MSAs, and I would definitely cut quarters in terms of how airtight our contracts were in order to make sure that the
deal was moving quickly enough. Tell us a little bit about some learned insights around how your customer actually wanted to use Crosby once you had launched that might have differed from your
initial assumptions when you started the company. The first year, it's just so fascinating because
you have this morsel of an idea, and then you expose it to your users, and it's just so gratifying, because you see up your React. Having a really good responsive and thoughtful lawyer at your disposal is truly the difference between hitting a revenue goals this quarter or not. That's basically it. We did a lot of surveys, and that's like the main factor. It's just things slipped. They don't usually die. The other thing that we were less in tune to was we thought, "What is the real downside
risk doing bad job with legal?" And often it comes up in a fundraise. Investors are to diligence, your company, and look at your contracts and realize you guys are not buttoned up. And so I think for us, the big milestones we've had to really prepare for a lot of our clients doing multiple fundraises, and seeing that everything we've done is a good enough quality. A main thing that we've gotten really thoughtful about our last few months that we've learned is these sales agreements,
I would say only about 30 to 40% of the expertise is legal expertise. It's really understanding what are the nuance of like an identification agreement and like the things you can do or limitation liability. And 50-60% is just about all the business context. What is the company selling?
“How does our technology work? Where's the data store like these things you have to answer? And”
then also getting a feeling and it's very visceral for who is your client and what do they care about? Like, either to CEO who's like just get these things signed a matter of what, or is it somebody's a bit more thoughtful and disciplined? And they're in a certain industry where like regulations really matter. So what I think we're really focused on now are building interfaces for our clients to help us get all this context as fast as possible. And so when we go back to
our mission, which is reimagining the law firm, building the best legal service experience that's been imagined before, the best law firm should have a mind-melodic client. You got to new insurance policy to do this to know it that week. If you launch a new feature that has different data requirements, they should know it that week and be able to new vision you're behalf. And so empowering our clients to give us all the information so that we're an extension of their business. We're not
like an external service, but we feel embedded in our company as a mix of agents and lawyers.
“I think that's the thing that we were missing at the beginning where it was a generic contract review”
service. But totally makes sense. The legal space for so many is very foreign, if intimidating. And by design, it sounds serious. Like if things are legal, I want it to be correct. I don't want to go to jail. So even just the energy around legal sometimes feels intimidating. And I love that the specific slice of where you guys are playing is more like the business
Side of legal that feels like a little bit more approachable, but also needs ...
recorder. Yeah, that's totally right. One of our missions is just making legal
feel more accessible and less intimidating. And what I always said to John, my co-founder, he was
really, early at ramp, brilliant engineer who really understood the workflows. And every time we get together and look at some legal tasks, they look it's just English. If you sat here for long enough and read it, it's just English. And I realize that's not exactly, I mean, there's just too many things, but at the end of the day, like if we make things really explicable, and this is what AI is amazing at, it's just like summarizing and adding context, our clients should feel really confident in the
work they're getting. And it should not be a black box. And that's a really big challenge. No, completely recently, I was putting all of my home documents into VZRO so that I could just generively ask VZRO the answers to the questions on all of my legal documents for my home. And I was literally like all real estate agents like need to be offering this to their people. I cannot be in this Google Drive. Like, this is insane. No, truly. On an unrelated note,
like, I needed to write a demand letter. And I just got charging PT to write a demand letter seemed right to me. And so now my bottle X, how do I find a lawyer who will send the demand letter? So it's not something for me. But like what you guys just said is so obviously where this is
heading, right? And the fact that we have, there's been a million, one point three million lawyers in
U.S. And there are obviously things that we learn as a result of going to the bar certification, the same way that you don't want a doctor who's not licensed like cutting into, you don't want a lawyer going to court. But there's just so much that's legal related that we don't have enough lawyers to do, that you don't really need to be licensed to do. And like writing in the demand letter, there's probably like a little nuance. Maybe if things are really complicated. But if we can
do our job right, we should have lawyers on hand when we really need them. But otherwise,
“you should be really empowered. And our job is just getting all the data they're at your disposal.”
And again, in my opinion, the best law from would feel like that. It's really empowering. And you feel like you know what you're doing and you can gain charge. What if the incredible things around founder market fit? Is that you have legal experience? You are a lawyer. Your co-founder was an incredible engineer at ramp. And I'd imagine there's a lot of hesitations by customers around, okay, how accurate is this? Maybe AI generated contract and thus the importance of a lawyer in the
loop, especially in this phase of AI and law. Tell us a little bit more about how you divide and conquer with your co-founder and how you're the goal background to miss really helping you build a better product. John, my co-founder, there's a reason like of all the people we're working together with, we just clicked really quickly. You know, he is this intense empathy for users. And so here now we have a room, like we have about 12 lawyers in this room. And John just like loves learning
all the things that are working on and what they're doing. And I think that came from this incredible product obsession at ramp, just let's just find ways to operate even the things that don't seem like that needs to happen. And that bonds are with us. John would literally watch me for hours reviewing contracts and just say I bet I can do that with AI. We'd compete and we still try to
“do a bit of that. And so I think that like deep concern for our end user, which is our lawyers here,”
as well as our customers, is extremely important. I don't know if I was a rebellious lawyer. I just was questioning a lot of things. And so I think it sent me up really well here to be like, do I really need to do that for like nine months? That just seems like I could figure it out. And I think it definitely allows us to push the limits. And now we've hired much more senior attorneys who I'm actually learning a lot from. But I think we have a culture here of these really
contrarian lawyers. And this is why we want to be in New York. This is by absolute number as the largest concentration of lawyers in the US, maybe in the world. So we find these really contrarian AI bill lawyers who all want to question this status quo. But I think also have a great deal of respect for the fact that law is complicated. And there's a lot of judgment and nuance. And sometimes you do need a lawyer who has 15 years of experience to like really tell us what to be doing.
I love that so many of my good friends have been going through law spares at like two of my best friends, one on Harvard when it's Stanford. And thinking through like some of the things that come to mind, I've seen that too where there's just so much of this decision-making criteria that is actually more gray than you'd think. It's not how I as a non-legally trained person think about law. And I tell people at the time I think law school is still valuable. It's fascinating to look
on a very granular basis. When we review a contractor thing, you get how complicated can this be. It's a sales agreement. We've done almost 10,000 of them today. Why do you still need a lawyer to review things? And we have such a great data set. And there's just still these issues that we've
never seen before where a counterpart is asking for some obscure law in Europe. And we have to think
about it and be like, wait, how would this work here? It happens at least two or three times a day. And our point to our lawyers is, this is all you should be doing. You should really be thinking about the work you're doing. We're out there yet that the promise of that could be their jobs is really
“enticing. And I think that's what gets what we still want to work with us. I think so too,”
because it's a little bit of the thing that's happening with the evolution of the developer experience where a lot of them really boring code that you used to have to write that it's not what true developers love. They love the creativity aspect of how could we architect this? How could we build this differently? And you're going into that space too and locking this creativity for lawyers when
They don't have to be bogged down in the minutiae.
especially when you're being it for a sale. A lot of our engineers play a lot with VZR, which is for our
“lawyers, not our engineers, which is really cool to see them like trying to vibe code. I think”
where LLMs have gone for co-gen is just so far ahead of any other type of work in terms of the way that is improved on different benchmarks. I do think it just provides us a bit of a window into where legal will go. When you look at some of the data, it seems like the service area second only to co-gen where LLMs will have the biggest impact will be legal work. It's just so much unstructured qualitative text that is so rely on humans to parse through and create it and
edit it. So what's really interesting is in the room here, like seeing the engineers, it's just like a sneak peek to where LLMs might go. Like obviously, we talk all the time about LLMs vibe for viewing, like vibe rev on it. And that's like the biggest topic here. But at the same time, we like fight like crazy to hire incredibly good engineers. And the question is if vibe coding is so prominent, like what are we doing? It's like they make extremely complicated calls on our
architecture and how we build things. And so you're totally right. You see just you see where it's going for LLMs. That's incredibly exciting. I don't think we're the only ones who are bullish on this.
“Of course, you've recently announced fundraising from incredible firms like Sequoia,”
being cop, index ventures, and amazing angels, like the co-founders of ramp, the calls and
brothers, and Koolie itself, a law firm. First of all, congratulations on all this incredible
traction. Thank you so much. Yeah, we feel very fortunate. Who is the first person to say yes to investing in you and Crosby? A good question. Early on, when I was just working the idea of Crosby, I was going through all my own network. And I happened to work years ago, at Koolie, with the current GC of Sequoia, who I'm Cindy, high Cindy. And I just picked your brand on a few of the ideas that I've been working on, because I was running down a couple. When we first
started talking to Sequoia and like kind of spending time with them and explaining where the idea had evolved to, they're like, all right, we just need the GC to kick the tires on this a little bit. And it was amazing moment where she gets from the college. I know, I know exactly what's going on here. That was just a great kind of example of total full circle, and Cindy, you've really given incredible feedback and helping stiff direction the company. The fundraiser went pretty
fast for the seed. It was a little over a year ago. That's incredible. And so cool to hear about the momentum during the early days of fundraising. Sometimes founders feel, especially with seed raises, that the fundraiser is an easy part of the journey, but there's so much going on in the background
that is not going as planned. We know founder journeys are not always up into the right. Maybe
it tells a story where something was not going quite as well as you expected or something unexpected happened as you were scaling the business. How good question. I have two things that come to mind. I really should caveat and say, we're so early. I know we all start at pain. We haven't really had.
“We'll start at pain yet. And it will come. We've had some hard days. As easy to go, I think just”
it's been smooth. We don't take it for granted because it won't last. One thing that was a little hard, there were a few months where we weren't totally sure if like AI would upscale cheaper offshore lawyers or even paralegals or the alternative would be like higher really good lawyers and AI can leverage them. And the difference would be like you hire fairly inexpensive, maybe none of them lawyers and just give them a lot of AI tools and then they can do hard quality work versus hiring pretty expensive
lawyers from big law firms and they can just hand off a lot of things they don't want to do and just use to use stuff. This was a pretty open question that we just really didn't know the answer to. But the easiest thing to do was to hire almost a 1099 basis, lower skilled legal talent. Most of paralegals and a lot of folks offshore and then we were building on a tool for them and the quality
bar was just not there and at that time a few of our design partners were like incredible companies
we were just starting to ramp up the volume they were giving us and it was just like the time of it was like poetic because we just onboarded these legal folks, we trained them, we got them our system that we built and like contracts started pouring in and we really wanted to honor or like three hour SLA and so me and this one lawyer on the team were just like I was doing hundreds of contract reviews. I had no time to even like interview other lawyers and he was obvious at that point
that our thesis was wrong because the other lawyer and I who had a bit more legal experience we were way more productive with just like the basic act tools he built back then whereas like the folks that we were onboarding we weren't really seeing the quality improvements from AI that we were hoping to get and so it was obvious that we just had to get rid of that attempt and just doubled down on high school legal talent and really leveraging them but there was like a two month period
there it was just like hoping we could land the plane like not turn any clients, not compromise quality, not compromise SLA but still bring on a lot of lawyers it happened to be the month leading up to my wedding so it was just like a crazy just painful and then we got through it there were a few weeks there were like everybody joking there was a lot of bus factor like I was doing a lot of contract reviews and it would have been bad if I stopped those things happen right where
you're like okay I knew I was doing things that don't scale but this is the next level not scaling and we actually can't hold this off totally which obviously means something's going right eventually but need to lean the plane on the process it sounds like you have right today you have incredible customers household names now like cursor clay other ones unified GTM or
Deal velocity is of course mission credible these companies are not getting t...
without moving quickly legal overall is of course a trillion dollar plus industry with a lot of
entrenched players frankly since the dawn of America celebrating 250 years this year shout out there have been some form of lawyers so how have you guys thought about incumbents in this space of course other legal AI co-pilets and how you're looking at the landscape around you I'm so glad you're breathed up I will say I've been aside I spent a lot of time in law school doing like weird what's called comparative law research where I spent time in other parts of the
developing world working for judges and seeing how their legal systems function and developing oh really strong sense of wow the legal and judicial system the U.S. is unparalleled it's so developed but again like access to the judicial system is even with an enormously go industry is so difficult
“because lawyers are expensive and lawyers are very thoughtful so I think there's a few things I'd say”
one is that truly in dollar amount that we spend on lawyers every year that number is hard to get our heads around there are very few industries that are that big obviously the reason is it's a services spend it's not a technology spend so when you look at terms for you know legal tech it's
about 18-20 billion dollars probably growing maybe closer to 30 now but it's just like a small
fraction but lawyers make it real the interesting question is if we can turn some of the spend on what lawyers do to AI or even a large portion of it that's an enormous aspect here I don't think the top one or two hundred law firms are going anywhere anytime soon in the US I think they're just extremely in French they do extremely complex work that I should think is fairly hot to automate the other thing I'd say is there's this theory like Javans paradox which is the idea that as something
gets cheaper there's more demand for it the price goes up doesn't go down as the supply increases in other words there's probably about 5 to 60 percent of Americans who are not poor enough to
“qualify for pro bono legal services but not wealthy enough to have access to lawyers”
but if the cost of legal services go down they're going to be in the market they're not going to get evicted or fired or get a car so without getting legal representation anymore we just see the market potentially expanding even as the cost of each piece of work goes down I'm actually not familiar with that paradox but it touches on a theme that I've been noodling on so I'm going to throw in like a flyer more like debate question for us which is have you been hearing the phrase like high taste
or like having taste at all has that cross your desk a little bit but we film in I feel like we're talking about it a lot of herself just like in a world where there's this proliferation of AI Slop how do we also have high taste what does that look like and so anyway I'm just thinking about building on that for you all how are you thinking about still having high taste and how you approach supporting legal decisions given oftentimes like the legal advice that you're providing
through the contract where is mission critical parts of people's experiences because it's touching
the revenue pipeline it's funny it's like it's the same everywhere this is why we're human the loop and this is why again to go back to what I talked about a moment ago why we needed to hire fairly skilled and very smart attorneys who have taste and judgment we have one lawyer here just told me like she only uses the word will and not shall it comes up better in a contract people accept it more and it was like so subtle but like it's true about there's this theory in professional services
there's like a book I was reading about this you kind of have three tiers of work and different practice mature over time they go from a place of expertise where like it's a frontier issue that's been dealt with before to experience where a law firm that maybe it's not a brand issue but they've experienced you into efficiency and every type of legal work goes along that curve maybe GDPR is a good one 10 years ago when I was starting in and law like
only the top lawyers could help you kind of sort of GDPR is such a new issue and then we be five years ago you went to a law firm that had some experience and now you can go to like a big for consulting firm and they can give you some advice it's just kind of efficiency based we thought of contracts is like very much an efficiency play if we could just do with more leverage more AI faster and not diminished quality we would win and now I'm realizing within contrast
it actually lays a bit of an experience and even a bit of an expertise element of it which is to say it's taste where we want the company to go eventually so we're working on this is the whole world the company is to simulate negotiations agentically right so if I know all the things you care about negotiation when you're buying my software and I know all the things I care about to just like simulate and show me an audible trail of I would have asked for this
and you'd have responded with that then I would have asked for this we're probably your way from
“a pretty good prototype but like that's what we're working towards and then the interesting”
questions what do you do at the end of that are you just signing the paper no look at that point then the human lawyers come in and then they talk through all those taste issues but that's where things get really interesting okay that's really interesting I didn't think that was what you were going to say in terms of the North Star do you feel like we're going to hit credo efficiency in this future say of being able to negotiate in this way it's where we start a lot there's definitely
like a Pareto efficient use of human lawyers lawyers should be spending their time on the phone talking looking something in the eyes and negotiating things that like really matter for two businesses and not changing 30 days to 15 days or changing Delaware to California these are the
Things where people spend good deal of the hours of their day I'll give anoth...
contract that we review for the most part there's a lot of concern about how our AI tools being used we're just data retention who's liable for who owns the models again this is a frontier issue and it's all in these contracts that we thought we're efficiency based so like you need a lawyer with some judgment on what is a cork in the same five years and we wanted to get it right today there will be a new issue in three years it's not going to change so like this is where the taste comes in
looking forward to that speaking of just the technology side of what you're building of course so much of what you've been able to do has been unlocked by LLMs and so much of the conversation we're having today with our founder of the podcast is what is the edge that you're creating in your own tech stock and what are you deciding to not have to own what are the other providers on top of Crosby that's allowing you to service your end customers so we'd love for you to fill
back the layers on what's in your AI native tech stock delighted to get into that the thing
“that kind of tip us off this idea is we heard about research I think it's Stanford that asked”
two students to do a negotiation I think over like divorce over one person wants child custody for Monday Tuesday one wants Tuesday Wednesday and they would sure get to the best you know they had their bottom lines they would give the same bottom lines to two agents and had them similar negotiation and every single time the agents got to a better outcome for both parties in a few minutes it's a very simple stylized negotiation so when we heard that then yet like a year ago
we're like oh this is it that's where we kind of had this deal let's just do the contracts it's so simple here's that it's hard agents probably just get less emotional and like less about wanting to win maybe instead perhaps that does a lot you two achieve better outcomes we found we ran this like very limited study but now we do a lot more of that if we just have the comments we leave Microsoft word to be like a bit more friendly gentle and like conciliatory like the changes
much more likely to be accepted and you'd be amazed at how angry people can get the comments just a classic thing so yeah totally okay let's just dive in on just how you guys are
actually enabling these amazing experiences for your customers we've taken a really long
bed on the models if the models don't continue there improvements and every few months we really see step function changes then we're just like a slightly better law firm and so
“I think our edge in some sense is being really aggressive in the ways we incorporate models”
and with the agents that we're building can just put in different models and see the improvements we get and so we had a lot of three points there and just like bigger context windows and feeding a lot more information the thing that we're really investing in right now which I think when you look across a lot of the really successful application companies like whether that's CR and Decker gone for support or like cognition for co-gen
is how do you plug in across a company to understand all the context for contract negotiation it sounds simple it's a legal negotiation but we have to plug into a CRM and know who are the can of parties what is the priority of this deal what are the things that we have given on in the past for deals like this and we want to plug into your slack and look at all the context and for sales channels we plug into glean or dust a lot and kind of like learn
little things about the business what are your insurance policies where you're sub-processes we plug into your vana figure out all of the connections in a way that's scalable across every different company in a way that like if we were your commercial counsel working your company we would have scanned through kind of all these things has been a huge unlock for us and I think figuring out exactly how to feed those into the right points is because we feel
as like pretty defensible at the time I think you're teasing this out a little bit but you know if you've spoken a lot about your founding background the incredible things that Crossview is doing I'd love to dig a little bit into the future for Crossbee you've mentioned a vision of a Robinhood like future where anyone has access to high quality legal services maybe Madison and I are using Crossbee for our real estate issues expanding beyond unlocking faster revenue through faster
contracting for sales teams what does that look like in practice over the next few years
the key thing for us is when you look at a lot of the benchmarks for LMS in legal
they're really good at drafting brand new documents based on you've just given much president they're amazing at summarizing and they're pretty good at analyzing if you just say pull out the main deal points and research redlining a contract for some reason and I theories
“is still like not amazing and I think because the precise word you use is so important”
reasonable and commercially reasonable sound similar but they're legally different terms I mean it's a million examples and so like our number one goal is can we build the best e-file sets to build the best redlining service period as a huge race for that I think there's really simple kind of AI redlining tools on the market I've tried them and I'm like it's not quite getting me there so I think that's the one that we're really focused on and we have a lot of
human daily with our lawyers to get that once we've cracked that like of that trillion dollars
amount of lawyers I think there's conservatively by 200 billion that you spend on lawyers doing
contract work contract adjacent work reviewing and negotiating contracts and we think we expand that to be even bigger if you might have just grown your lease in charge but you're not done anything with it like we can give you some insights and so we want to build the best redlining tool and the step from there as I mentioned a second ago is can we simulate negotiations to not just be like a faster law firm but just change when you want to enter a human agreement with someone
Contracts are the connections of businesses like we think of the rails of com...
run on Crosby we should be the striped for your negotiations like it all just happens here
“and we inform that with market insights and benchmarks and all of your business context that's”
where we go and when I say contracts everywhere it's like leases lending life signs agreement we've identified like hundreds of contracts that are super high volume super important and like you know neglected today it was funny when we were going through our M&A process there was this one meeting where literally six lawyers got in a room and we're like debating about a single indemnity clause it was the wildest conversation and I wish Crosby was around so that all of our AI lawyers
could have gotten to the same conclusion much faster all your agents just hang out in a conference
yeah exactly exactly on a personal level you're obviously the founder and CEO as you're
growing the company growing the team how are you thinking of our personal growth as a founder and what are you actively trying to get better at right now every few months it feels like the company really changes and I'm assuming this is a very common experience I actually think
“it's a virtue but I think I live in a constant state of dread and like paranoia I constantly wake”
up in the night terrified of did we get that right how should we fix this and I just like said that's probably a really positive thing what I'm trying to do now is really channel it to be like a really constructive force in the business not come in just be super anxious don't freak everybody out but just channel it's it's very motivating and to drive and I think like coming in and seeing guys on a sort of stable way I like we really need to focus on this because coming from place of
them terrified is better than just coming in like a bowl in a china shop one to month and be like we have to change everything you know the sense of being nimble and like worried and concern paranoia without being flashy and I think I'm trying to thread that needle we'll see if it works I was definitely a paranoid one at times as well and it evens itself out as we come up on time today we'd love to ask you are here a question for the podcast we asked this question
to all of our guests who is a woman in your life that has had a profound impact on you and your career it's so obviously my life it's like the easiest answer ever I've heard founders who are like you got to be single in your company so you can be locked in and focused I could not more strongly give the opposite advice like on the hardest days my wife named as Sandra who's a doctor and doesn't understand this whole tech thing she says like irrational belief in me that is like the
only thing between me not really pushing through and pushing harder and so my strong push for
founders does find that part and that really keeps pushing you it's so amazing couldn't agree more
and Ryan thank you so much for joining us on the room today it was fascinating and we're so excited for you guys thank you so much thank you so much for joining us at the room pod cast if you want more from the room every week subscribe to our newsletter at the roompodcast.com/newsletter while we back next week with a new episode an inspirational guest Tuesday 10 am Eastern 7 am Pacific see you in the room rippling is one of those tools I wish I had even earlier when I was building my
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now with a fully connected platform it lets you get back to their real reason you started your company right now venture back startups can get six months of rippling startup stack for free head to rippling.com/theroom and sign up today that's riplng.com/thoom to sign up for six months for free today focus on what you're building leave the rest to rippling rippling.com/theroom perkenskui supports the most innovative entrepreneurs and investors in fast moving in high
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