Atrium fires lawyers, Pivot explains to the legal department

<pre><pre>Atrium fires lawyers, Pivot explains to the legal department

Atrium, a $ 75 million legal advice startup, doesn't want to be the next company to implode, as the tech industry is tightening its belt and companies are chasing margins rather than growth through unsustainable economies. For this reason, Atrium fires most of its internal lawyers.

Atrium will now focus on its software for startups that take care of fundraisers, hiring and working with lawyers. Atrium plans to expand its consulting services for startups. In addition, the long-standing network of professional service providers who support customers in navigating their daily legal work will be further expanded. Atrium's dismissed lawyers are offered jobs as preferred providers in this network if they start their own company or join another.

"It is natural for us to create a sustainable model," said Justin Kan, co-founder and CEO of Atrium tells TechCrunch. "We made the difficult decision to restructure the company to enable new business services to grow through our existing network of professional services," Kan wrote on Atrium's blog. He did not provide exact numbers, but confirmed that more than 10 but fewer than 50 employees were affected by the change. Atrium had 150 employees as of June.

The change could make Atrium more efficient by hiring less expensive lawyers. However, it could weaken Atrium's $ 500-a-month membership, which includes some of the services provided by its internal lawyers that may be more difficult to reach for clients through their professional network. Atrium is now also required to demonstrate that its client and attorney collaboration software can survive on the market if companies pay for it rather than bundling it with its attorney's services.

“We are making these changes to make Atrium a sustainable model that provides high quality services to our customers. We do it proactively because we see the writing on the wall that it is important to run a sustainable business, ”says Kan. "That is exactly what we are doing now. We do not expect any impairment to customer services. We are still here."

Justin Kan (Atrium) at TechCrunch Disrupt SF 2017

Atrium was founded in 2017 and promised to merge software with human lawyers to provide faster and cheaper legal services. Its technology can help automatically generate fundraising contracts, job vacancies and cap tables for startups, while machine learning is used to recommend procedures and clauses based on anonymized data from its customers. It also serves as a dropbox for legal purposes and organizes all of a startup's documents to ensure everything is properly signed and teams work through the latest versions without rummaging through email.

Atrium's $ 500-per-month membership offered this technology, as well as limited access to an in-house attorney for advice and access to travel guides and events. Customers could pay additional costs if they need special help, e.g. For example, when concluding a takeover contract or accessing the fundraising concierge service to help you develop a pitch and host investor meetings.

Kan tells me that Atrium still has some internal lawyers who will help it comply with all existing membership contracts and focus on advising services. He would not say whether Atrium receives equity or just cash for advice. The membership plan may change for future clients, so the lawyer's services are instead offered through his professional network.

“What we noticed is that Atrium did a really good job with startups to build a brand. They often wanted lawyers … advice on starting my business, setting up my sales and marketing team, and on good terms for my fundraising process, "said Atrium. "While we sat down to see what worked and what didn't, we focused on helping founders with their superhero story, connecting them with the right providers and consultants, and then helping them with our internal quarterback, what you need specialists. "

LawSites first reported on Saturday that Atrium had fired in-house lawyers. According to a source, Atrium lawyers learned about the changes just a week ago and tried to alert Atrium customers to working with them when they leave the company. An Atrium customer said he wasn't surprised by the changes because he got so much legal advice for just $ 500 a month. They suspected that Atrium lost money in the time of lawyers, which was much cheaper than that of competitors. They also said that these cheap legal services and not the software platform are Atrium's main attraction, and they are not sure if the technology is valuable in and of itself.

One concern is that Atrium may not know quickly which services need to be translated into software if there aren't that many lawyers in the company. However, Kan believes that third-party lawyers could be clearer and more direct about what they need from legal technology. "I think that a real market for the software you create is better than an internal market," he says. “We get feedback from external companies we work with. In a way, I think this is the most valuable feedback. I think there are a lot of wrong signals that can appear when you are both an employer and a supplier. "

Correcting the course before it got bigger was critical for Atrium, as fundraising problems with startups with poor economic results were a result of the WeWork debacle and SoftBank problems. Atrium had collected a $ 10.5 million Series A in 2017, which was led by General Catalyst together with Kleiner, Founders Fund, Initialized and Kindred Ventures. In September 2018, it generated a huge $ 65 million Series B, led by Andresseen Horowitz.

It would have been impossible to make even bigger rounds if Atrium had offered advice with lawyers well below the market price. Now it could be a better position to attract funding. However, the question is whether clients will stay with Atrium if they get less access to a lawyer for the same price, and if the collaboration platform is useful enough for outside law firms to pay for it.

Kan had had heavy pivots in the past. He had a camera strapped on his head to create content for his live streaming startup, but wisely focused on the 3% of users who watched video games. was sold to Twitch and eventually sold to Amazon for $ 970 million. His on-call personal assistant, Exec, had to switch to cleaning in 2013 before being shut down for economic reasons.

Instead of denying the inevitable and waiting until the last minute, Atrium Kan tried to make the difficult decision early.