Legal Technology

How does an entrepreneur know when to shift the business model--or completely start over?

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Ari Kaplan

Ari Kaplan

Ari Kaplan spoke with Nehal Madhani, the founder and CEO of Alt Legal, an intellectual property docketing software company. Madhani spent four years as an associate with Kirkland & Ellis in New York prior to launching his venture.

This Q&A has been condensed.

Ari Kaplan: How has Alt Legal evolved from its initial mission upon which you founded the company in 2013?

Nehal Madhani: Like any early-stage company, I think we’ve gone through several evolutions over the years. When I left Kirkland & Ellis, I actually started this company as a legal marketplace, connecting lawyers and businesses together by providing efficiency tools that would streamline client communications, as well as client intake. I ran that business for six months to a year and didn’t find it to be a great endeavor for me personally. In 2014, we became a document assembly company, targeting the IP space before expanding to other areas. We found incredible demand in the IP sector so towards the end of 2014 and the beginning of 2015, we became a software company that helps law firms and in-house legal departments create and docket all of their intellectual property filings.

Ari Kaplan: How did you make that pivot and what drove that change?

Nehal Madhani: We ran the legal marketplace and were getting business, but I just didn’t see the longevity of the business model. First, lawyers cannot share legal fees with nonlawyers. Second, once I connected a lawyer and a business together, I was this awkward middleman, who was persisting but not providing as much value as I would have liked. Third, we were focused on small businesses, which have a high failure rate and a resistance towards legal fees, so they were not the best long-term clients. Those factors ultimately led to me shut down that version of the company. In 2014, we started looking at what was working for the marketplace, and it was the efficiency tools that we had built. Along the way I had also done my own IP filings and found that to be an incredibly cumbersome, clunky process.

Ari Kaplan: You always hear that entrepreneurs have to be willing to fail and figure out how to pivot. Was the initial idea something that you built upon, or did you shut it down completely and start fresh?

Nehal Madhani: We actually shut it down completely, which was somewhat sad, because I had actually coded the first version myself. When we shut it down, I asked my co-founder at that time whether we can use any of the code and he recommended that we start over. So we kept the same corporate entity, but from a practical standpoint nothing else continued.

Ari Kaplan: How has Alt Legal’s customer base expanded over the last four years?

Nehal Madhani: Initially, we were a marketplace targeting both law firms and businesses. Once we moved over to IP, the customer base obviously shifted towards IP law firms and legal departments. Over the last couple of years, our customers have developed more complex needs and are becoming larger so we’ve gone from serving solos and small law firms to some of the most sophisticated trademark law firms in the country, as well as public and private corporate legal departments. They are all frustrated with the legacy software that’s out there to support a manual process to manage IP filings. They’re attracted to our automation – that we are able to import data directly from the IP offices – and our modern design.

Ari Kaplan: Where does your automated data come from?

Nehal Madhani: Many of the IP offices provide their data through APIs. It is public and you need to have that information available for companies and individuals to understand what IP filings are out there. For example, before filing a trademark, one needs to know about similar marks, but while the data is available, it is not necessarily ready to be used for automation. We organize, structure, and reconcile the inconsistencies in the data before automating our deadline calculations.

Ari Kaplan: Alt Legal recently announced a new collaboration with Wolters Kluwer. How will that partnership impact your clients?

Nehal Madhani: Wolters Kluwer is exceptional at providing high-quality content and their Trademark Navigator provides statutes, cases and treatises on specific trademark matters. We deliver that content based on the status of a particular filing. For example, if a trademark that one has filed and is maintaining in our software receives an office action, we will automatically deliver relevant content from Trademark Navigator to help address that office action.

Ari Kaplan: How have partnerships of this type contributed to Alt Legal’s success?

Nehal Madhani: We realized a long time ago that we could only do a handful of things well, which is probably true for any company. We look for partners that will bring a better experience to our customers and provide more value. Trademark Navigator provides the content, and we also work very closely and integrate with Clio so that our customers can seamlessly use practice management tools like calendaring, billing, and document management.

Ari Kaplan: Can you share some advice with entrepreneurs who are interested in both breaking in and succeeding in this sector?

Nehal Madhani: I think legal tech is finally hitting an inflection point, where the buying cycles are becoming shorter, with law firms and corporations looking for new technology because they are frustrated with legacy software offering a clunky interface, charging extra for training, and requiring multi-year contracts. My advice for new legal tech entrepreneurs is to identify a specific focus. Start with a niche and begin serving that niche because building a legal technology company requires an understanding of the profession’s nuances, as well addressing all of the ethical requirements with which attorneys must comply. The more niche your focus, the more capable you will be of meeting customer needs with limited funding. Also, be persistent. It takes time to penetrate the market and build trust within the legal community. Being out there and staying committed for the long-term can certainly help fuel success.

Listen to the complete interview at Reinventing Professionals.

Ari Kaplan regularly interviews leaders in the legal industry and in the broader professional services community to share perspective, highlight transformative change, and introduce new technology at his blog and on iTunes.

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