AI & Law: Product Ideas For Startups In LegalTech

LegalTech startups must have a clearly stated solvable problem

by Dr. Lance B. Eliot

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Key briefing points about this article:

  • This is a continuation of an earlier article about the twenty key factors for a LegalTech startup
  • In this piece, the focus is on two of the foundational factors: (1) the problem, (2) the solution
  • If a LegalTech founder cannot clearly state the problem and proposed solution things will falter
  • An example used herein discusses a startup proposing a contract life cycle management system
  • Use these insights to ensure that your LegalTech startup has sharply devised its vision


In this series about what you need to know to be able to viably start a LegalTech firm, I previously outlined the twenty overarching factors that a savvy attorney-to-entrepreneur ought to carefully consider before making any ill-conceived leaps into a startup foray (see

Of those twenty overall key factors, I’ll herein address closely these two, considered the most foundational and vital factors to first wrestle with:

  • Identify a solvable problem
  • Offer a viable solution

Believe it or not, those two key factors are oftentimes poorly stipulated by a startup founder and thusly renders the startup entirely suspect and unlikely to gain any traction.

Investors will not invest in a vacuous realm whereby the entrepreneur cannot distinctly and clearly state what the problem is and nor is the entrepreneur able to proffer what their proposed solution is. Likewise, rallying troops to your budding new venture, such as attracting top-notch software engineers and other specialists will be problematic if you cannot definitively indicate the legal-realm problem and what the envisioned solution portends.

As a former top executive at a major Venture Capital (VC) firm, and now an angel investor that also serves as a pitch judge at various startup competitions, I routinely get pitched on LegalTech related new venture proposals that sadly miss the boat and fail to make abundantly clear what problem is being solved and how that problem can viably be solved.

This seemingly would be an obvious consideration to address, and it might be surprising to realize that many startup-focused lawyers do not somehow put those two factors at the forefront of their aims and aspirations. Instead, there is a tendency to concentrate on the structure of the new business, its cost model, its project revenues, and so on. The thing is if there is not a fundamental problem being solved by whatever the business is going to foster into the marketplace, the odds are that no one is going to ante up the dough to buy or subscribe to the product or service envisioned (and, likewise, few if any investors willing to put coinage into the endeavor).

Eye-Opening Example

Here’s a quick example.

An eager and savvy attorney makes a pitch that a contract management system will be the basis for their startup venture and has already lined-up some ace programmers to write the code. Financial charts are shown with forecasted revenue that goes skyward.

It is tough to hold back from immediately asking pointed questions, torn between allowing the enthusiastic budding entrepreneur a chance to proffer their dream, and yet not wanting to waste time on something that might have minimal legs to stand on.

What’s wrong with the new venture idea?

First, there is nothing stated about the problem being solved.

Sure, we can likely assume that a contract management system is going to solve some smattering of problems, but it is up to the entrepreneur to make that case. Presumably, the problem has to do with being more efficient or effective at handling, crafting, and fielding legal contracts, though this should not be a submerged aspect and ought to be at the top of the heap of reasons for the new venture to even exist.

What evidence exists to showcase that without the proposed solution, a contract management system, there is an outsized pain-point or stay-awake-at-night problem that needs to be solved?

In a sense, the cart has been placed in front of the horse, emphasizing the solution prior to clarifying and making the case that there is a problem that needs solving.

Let’s assume that the attorney realizes the mishap and recovers by listing off a dozen solid reasons underlying today’s mismanagement of contracts and how much wasted time and effort goes toward coping with legal contracts in a manual or paper-based mode.

Okay, you might say that there is now a notable problem in hand, including that there potentially is some form of solution to the articulated problem (side note: sometimes, a problem can be identified, but there is no reasonably solvable way to tackle it, such as saying that world hunger is the problem and for which there is not a likely practical solvable means for a startup to entirely “solve”).

By establishing clarity about the problem, the next aspect to address is the proposed solution.

It is likely that for most problems there is a slew of possible solutions, out of which the attorney-to-entrepreneur has opted to choose some particular solution. Offering just one selected solution begs the question about what other solutions might exist and why none of those would be a better candidate for the new venture to concentrate on. If the entrepreneur has not considered other potential solutions, that’s a red flag and suggests that they might get blindsided by something else that can solve the problem in a better way.

Also, if the proposed solution seems overly magical or unrealistic, this too can be a red flag.

Of course, there is also the consideration that the solution might already be in existence, and the attorney has failed to do their homework properly by figuring out how their solution will be able to eclipse those same solutions already being peddled.

In the case of a contract management system, I think we all already know that there is a boatload of such systems. The good news is that this suggests that indeed such systems are solving a known and accepted problem, else those systems would presumably not be selling and the firms providing them would go out of business.

The bad news is that unless the attorney-to-entrepreneur has some means to standout amongst the crowd and get their proposed contract management system to be sought over others, the me-too facets and competition by already entrenched entities will be the death knell for the fledgling startup.

Novelty Via Infusing AI

One path toward making a novel or innovative play in LegalTech involves infusing Artificial Intelligence (AI) into such systems. Potentially, the addition of AI could be a differentiator that makes a newly proposed LegalTech solution a possible game-changer.

Be cautious though in making outrageous claims of what AI will be able to achieve in your proposed solution. Admittedly, some make hyped assertions about AI and seem to get away with it, though one would anticipate that ultimately their ploys are bound to backfire and leave a tattered reputation in the trail of what might be a new venture disaster.

If an attorney is trying to brainstorm about what AI might bring to the table, it would behoove that outside-the-box thinking to make sure that you have knowledgeable advisers that know what is practical with AI, along with being able to see the trends coming down the pike in the next several years.

Another consideration is the chicken-or-the-egg conundrum.

The odds are that any AI addition is in fact additive, meaning that you need to have the underlying conventional LegalTech that serves underneath or aligned with the AI. Thus, continuing the contract management system example, a proposal to use AI such as Natural Language Processing (NLP) to readily allow legal teams to access and modify contracts is a relatively substantive benefit, as would be the use of Machine Learning (ML) to be able to piece together new contracts based on prior ones, but all of this capability presumes that a contracts database and access system underlies the AI facility.

In short, do you build the contract management system first, and then plop the AI on it, or do you craft the AI first and then look around to either augment an existing contract management system or opt to build one from scratch. It is the proverbial chicken-or-the-egg challenge.

The answer is that it depends on a variety of other factors and there is no single “right answer,” such that it is up to the founder of the startup to indicate what approach they recommend and how they came to that pivotal recommendation. Sometimes it makes sense to derive the chicken first and then produce the egg, while in other instances the egg is devised first and the chicken arises thereafter.

In terms of the range of possibilities in LegalTech, take a reflective look at the work efforts in your law practice and those of your fellow legal professionals, and think introspectively about what automation might be able to do and how it could solve demonstratively thorny problems.

LegalTech Problem-Solution Product Spaces

As an exercise in LegalTech startup ideas formulation, I often list these kinds of tasks that arise in the practice of law, and use these to spark ideas for potential problems and viable solutions:

  • Case Management
  • Contracts
  • Courts and Trials
  • Discovery
  • Documents/Records
  • Intellectual Property (IP)
  • Law Office
  • Lawyer and Client Interaction
  • Legal Assistants
  • Legal Collaboration
  • Legal Research
  • Legal Workflow
  • Legal Writing
  • Professional Conduct
  • Other

All told, in this brief exploration about getting your startup dreams into shape for the real world, keep in mind that you need to showcase clearly and succinctly the nature of the problem that you’ve singled out, along with making apparent why it is solvable, and then tie those facets to the vision of what a viable solution would look like.

This is a powerful one-two punch that will put your entrepreneurial spirit into gear and serve you well when aiming to get your new venture off the ground.

For more details about the LegalTech problem-solution product space of opportunity, see my book entitled “Artificial Intelligence And LegalTech Essentials” available on Amazon at this link here:

For more details and vital explanation for each of the foundational twenty factors for undertaking a start-up, see my book entitled “How To Win a Startup Pitch Competition: Successful Insights from a Topnotch Judge for Boosting Your Startup” available on Amazon at this link here:

For the latest trends about AI & Law, visit our website

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Copyright © 2020 Dr. Lance Eliot. All Rights Reserved.

Dr. Lance B. Eliot is a renowned global expert on AI, Stanford Fellow at Stanford University, was a professor at USC, headed an AI Lab, top exec at a major VC.

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