A startup that helps businesses save money on legal counsel launched in October and closed an oversubscribed $800,000 seed round in December 2014, according to cofounder Joseph Tiano.
Legal Decoder applies big data to law firm bills, analyzing them for flags that might indicate ways for a client to save money. Most of Legal Decoder's clients--typically large companies with annual revenue from the hundreds of millions to the billions--have between 10 and 50 firms working for them, navigating government regulation, helping issue stock and securities, obtaining intellectual property protection, completing mergers and acquisitions, and so on. "Different firms handle different tasks," Tiano says. Legal Decoder's Legal Spend Authentication platform details how "legal matters could and should be priced," he says.
The monthly subscription fee for Legal Decoder's services starts at $3,000, but Tiano says that the subscription fee is more than made up for by clients' savings. "During our beta phase, paying clients [saved] about 30 percent. Conservatively, we think our technology and data offering can drive about 20 percent savings for our clients. In real dollar terms, a company that spends about $2 million on outside counsel will be equipped with analytic tools and data to trim $400,000."
One simple way to save money is to determine who at the law firm is handling a company's work.
"You want an optimized staffing mix," Tiano says, "which is partners handling 20 percent, associates handling 50 to 60 percent, and paralegals handling 20 percent [of the work]. This mix varies on a case-by-case basis," but it's a good place to start. If a partner at a firm is handling 60 percent of a client's case load, instead of sharing the work with qualified associates and paralegals, investigating why that is happening is one way to begin to cut costs.
The LSA also flags codes that might indicate inefficiency within the firm itself, such as "communication inspecificity." That, Tiano explains, is what happens when a legal firm bills for recurring "emails with client." A client can turn around and ask "who? What did you email?" he says.
Tiano admits that not every task is "priceable" within the LSA. "A Supreme Court First Amendment brief is not commoditizable," he says. "Other tasks are, if you have enough statistical data underlying them." The data running the LSA algorithm comes from "our team of researchers and billing that is in the public domain. The more data [we have,] the smarter the rules engine gets."
After spending 20 years in private law practice and watching the escalating costs of hiring lawyers, Tiano and cofounder Chris Miller decided to level the playing field, launching in October 2014. They have since hired a director of business development, have been working with five beta customers and have proposals out to seven or eight other clients.
Additionally, Legal Decoder's $800,000 seed round was "oversubscribed," Tiano says. "We have a good group of investors in, including a former clerk of the Supreme Court."
Allyson Jacob is a writer originally hailing from Cincinnati, Ohio, and is the Innovation and Job News editor for
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