Uncapped #44 | Max Junestrand from Legora

I remember doing this interview in Swedish. There's a saying, like, blod smak, and you taste the blood because you worked so hard. Yeah. She publishes the article in English. At Liguara, we wake up with a metallic taste of blood in our mouths, and people in the company go, holy shit, is Max a vampire, or does he just floss badly? Like, what's going on? It's not like a culture that I think would quite work in San Francisco. Like, I don't know if that's something that you can do. Well, when we open our San Francisco office, they're going to taste the blood. Yeah, they're going to taste the blood. I love it. Well, this is going to be a cool new format. I'm here with my new partner, Chathan and Max. And Max, you're the founder CEO of Legora, which is an amazing legal tech company that Chathan sits on the board of. And so I just feel really lucky to be doing this with both of you. So you guys, thank you for making this happen. Thank you so much, Jack. It's great to be here. Okay, so I want to start with the topic of competition. And Chathan, when you invested in the company, there were already competitors out there. This was, I think it was only two years. It's crazy because Lagor is like, it's a big company already. Yeah, almost 400 people. You know, but the seed was two years ago. And at the time of the seed, it was an early market, but there were competitors out there. And so I actually want to start with you, Chetan. Like, what was in your head at the moment you invested? Were you thinking about the landscape around, like, were you just, Max is so special that I don't care? Like, what was going through your head when you did that? The first meeting that we had was with Max, was with me, Peter, and Max, actually in the other room. and interestingly i had invested in two other legal software companies pre-ai oh wow and so there was a shape of the legal market that i intuitively understood because i participated in the market and so i sort of understood the different kinds of lawyers who buy software do in-house lawyers buy software do law firms buy stuff how they sort of there was an intuitive understanding that i had and there's sort of like two things that happen when you've like sold into an industry before, either you end up hating it or you have some strong bias against it.

So there was always this idea that there's opportunity for AI in the legal market. And there was a player in the market that had already raised at a billion dollar valuation. And when Max came in to chat with me and Peter, the thing that immediately jumped out was the clarity of thought that Max had on why the general foundation models had a lot of room to grow in intelligence and how that was going to be a huge boon for the legal profession over the next couple years and so he had this like very strong viewpoint that there was something about legal data that the general models were going to serve in a very unique way Max since you're here can you like explain like what was what what was that so i think it's it's worth to go back to 2023 and 2024 when i think part of the paradigm was you should train your own models and like the general models aren't great and fine tuning is going to be really important for two reasons we were like fuck that right um one fine tuning doesn't really seem to work at least on the scale that we were operating right to train the new generational model you have to put billions of dollars into And secondly, there was so much application that you had to build on top of the models to make them useful in your environment. And back then, I mean, just solving like basic data compliance, privacy, and sort of great file uploads and like great parsing and great chunking and all of these things, that was where the value was. And there was another part of your experience, which was that you were actually embedded in a law firm. Yes. And so you were studying the shape of like what data law firms had in a way that was, you know, Bill talks about this a lot is like, does an entrepreneur strike you as a learn it all? And it was clear that the early Legora team, when we invested with five people, they were just trying to learn everything they could about how the legal profession worked.

And they didn't have any bias towards it. And so the other thing Max said, which you should share with everyone, is because they were embedded in a law firm in a windowless conference room in Stockholm. Sounds nice. Sounds great. They had a deeper understanding, I think, of how a law firm, like the data model of a law firm in ways that most of us didn't. And I mean, just to take you back even further, when we started, I offered to buy a lot of lawyers lunch on LinkedIn because I wanted to learn. So I would literally cold write them and say, hey, I'd love to meet, I'd love to talk about IP law. I'll offer to pay you your hourly fee and lunch. And they were all too nice to make me pay for lunch. And they'd often end up paying for it, right? But that did, as Chetan put it, I think it allowed us to work with customers from the very beginning. So the founding team at Legora were all engineers The first lawyer didn join until nine months into the journey When you had a lawyer join had you already sort of like set the plan and the goal for the company Like, was that done without experts? And was that important to do without experts? This is actually funny. I mean, the founding, and this is a bit of the Legora untold, like the first reveal, the company formation was in 2020. And there were four co-founders. I didn't know that. And I was not one of them. Didn't know that either. Right. They were sort of working on this intersection between AI and law for three years with the early BERT models. And even a Swedish trained version called Swibert. It was impossible to work with. Not only was it not very intelligent, it was also blatantly racist. Because I've been trained on the Swedish forums. Some racist data there. Some racist data there. When the LLM's 3.5 came, that was when the moment shifted. And so we turned this into a company. Two of the co-founders left. I joined.

And then we basically said, we're going to work in the intersection between AI and law. We don't know what that product is, but we're going to run like hell in this direction. And funny enough, the first lawyer who joined was a sort of soon-to-be customer of ours. So he was the CIO at one of the big firms in Sweden that we wanted to sell into. And he had built an early version of like a GPT plus the document management system. So basically like an LLM that could rag into the existing precedent and data that the firm was using. And he basically said, well, these guys are going to run faster than me. And if you can't beat them, I might as well join them. And that turned out to be a good decision. Are you surprised by like how strongly the legal market has adopted AI? If I had thought, you know, in 2023, let's say, or 24, like what's going to really adopt quickly? Like, I don't know if personally I would have seen it coming that lawyers would be near the top of the list. I don't know. I mean, you've invested in stuff before too. So I guess this is for both of you. But like, has it been a surprise over the last two years, the rate of adoption? Yes, it's been like vivid. But second, and maybe more importantly, the law firm market is very interesting because it's like this perfect equilibrium with, frankly, like pretty low differentiation. like if you need to do a VC deal here in the valley like you could go to any you know the top five firms and you're going to get roughly the same thing if one of them starts leveraging Legora to offer a better service at a better price point faster all of them have to adopt it so the equilibrium like shifts down and then everybody has to move so what happened in the law firm market was as soon as one big firm in a market sort of adopted Legora and went public with it everybody else had to do the same. That's not necessarily the same in the in-house legal sector, right? Like if one big bank says it, like another big bank doesn't necessarily need it. But was there something about the process of the way work got done or the structure of it that