The $ 75 million legal start-up Atrium closes its doors and lays off 100 – TechCrunch

Justin Kan & # 39; s startup of hybrid legal software and law firms Atrium closes its doors today after failing to find better efficiency than a traditional law firm, said the CEO exclusively at TechCrunch. The start-up has now laid off all of its employees, who totaled just over 100. It will return part of its $ 75.5 million of funding to investors, including Andreessen Horowitz, the leader of the B series. The firm Separate Atrium attorneys will continue to operate.

"I am truly grateful to the clients and team members who came with me and our investors. It is unfortunate that this is not the result we wanted, but we are grateful to everyone who accompanied us on the journey, "said Kan. He had previously founded Justin.tv which rotated to become Twitch, which then sold to Amazon for $ 970 million. "We have decided to call it up and stop the start-up operations. There will be capital that will be returned to investors after the liquidation", m & # 39; said Kan.

Atrium had attempted a pivot in January, laying off its internal lawyers to become a purer software startup with better margins. Some of his lawyers have formed an independent law firm and have hired former clients of Atrium. But Kan told me that it was difficult to regain the momentum resulting from this change, which some Atrium customers said they felt chaotic and left them unsure of their legal representation.

Other dismissals followed one another, the divisions linked to these lawyers having been abolished. But trying to create software for third-party lawyers, many of which have ingrained processes and older leaders, has proven difficult. Streamlined workflows may not have seemed like it was worth adopting new technology.

"If you look at our original business model with the veritcalized law firm, many of those companies that have this type of complete model will not survive," said Kan. "Many of these companies, including Atrium, have not found a way to reduce operational efficiency."

Disruption of law firms proves difficult

Founded in 2017, Atrium builds software for startups to navigate fundraising, hiring, acquisitions and collaborating with their legal team. Atrium also proposed in-house lawyers who could provide advice and best practices in these areas. The idea was that the collaboration software would make its lawyers more efficient than a traditional law firm so that they could work faster, translating into savings for clients and Atrium.

Atrium's software included Records, a Dropbox-esque system for keeping track of legal documents, and Hiring, which instantly generated job offers letters based on details inserted into a form while keeping track of signatures. The startup hoped that this could prevent clients and lawyers from wasting time rummaging through the messaging chain or missing an approval that could put them in legal jeopardy.

The company attempted to generate potential customers by hosting fundraising workshops for startups, featuring Kan and his stories of Twitch growth. A charismatic leader with nearly $ 1 billion in assets under its belt, investors and founders quickly embraced Kan’s vision and advice. Startups saw Atrium as an ally with industry expertise that could help them avoid dirty sheets or sloppy hires.

But keeping a large number of lawyers on staff has proven costly. Atrium offers software packages and legal assistance for subscriptions, with significant offers such as acquisitions at additional cost. The model relied less on trafficking clients with high hourly rates measured up to six-minute increments like most law firms.

However, the elimination of the busy work for lawyers through its software has not materialized into abundant profits. Rather than continuing, Kan decided to close the business. The independent Atrium law firm will continue to operate under the direction of its partners Michel Narganes and Matthew Melville, but the start of legal software development is complete.