I have been following Fastcase since 2011 when I wrote a blogpost, highlighting their innovative approach to legal research which included visual timelines and a feature called “foresight” that identified relevant precedent without relying on keywords. Fastcase was the brainchild of co-founders Ed Walters and Phil Rosenthal, former big law associates who were driven by a passion to “democratize the law.”
Since 2011, I have written an astonishing 49 stories on my blog tracking Fastcase’s various upgrades, acquisitions and alliances. Acquisitions include: Casemaker, Loislaw, Docket Alarm, Judicata’s “Legal genome,” TopForm, Next Chapter and Law Street Media. They expanded business intelligence, legal treatises, expert witness profiles, and corporate content by entering alliances with a host of companies, including Courtroom, Insight, JurisPro, the ABA, TransUnion, James Publishing , The Practicing Law Institute, Littler, Wolters, Kluwer, and Association of Immigration Lawyers and Matterhorn.
A year ago this month cast Fastcase merged with vLex, the international research platform. I was really excited to talk to Ed Walters, Chief Strategy Officer at vLex and get his take on the vLex merger as well as the state of the legal tech market, advice for entrepreneurs and teaching robot law to next generation of lawyers.
O’Grady: It is a year since Fastcase merged with vLex. Has it been a win-win for both companies?
Walters: Fastcase was very successful as a 24-year-old bootstrapped company. We had not gotten a lot of outside financing, and we had grown Fastcase incrementally and responsibly as a profitable company. At the beginning of 2023 it was pretty clear, that we were coming into an age where “speed to market” and artificial intelligence were going to be more important than ever, and candidly, we just didn’t have the resources to compete as an independent, slow-growth company.
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So in the merger, each company brought strength to an area where the other was not particularly strong. We also had been selling into different markets, so the combined organization has a much larger client base and the largest repository of legal materials in the market. I don’t think that Fastcase could have created tools like Vincent AI independently.
I’m happy with how quickly we’re developing new tools right now. The Vincent AI drafting, research and summarization tools are all incredibly useful.
What do you regard as the greatest achievement in year one of the merger?
I’m really proud of the way the teams came together. In the first year, we’ve worked together to build Vincent AI, one of the strongest Generative AI workflow and research tools in the market, rolled it out in 10 countries, finished the Cert citator in Fastcase, and launched vLex Labs. Behind the scenes, we’ve unified all of the back-end subscription and billing, legal and compliance, customer service, phone, e-mail, and sales operations. It’s really a lot for one year!
O’Grady: How is the market responding to the combined offering from Fastcase/vLex? vLex’s international law comparison functionality must be particularly interesting in-house legal departments and law firms with cross boarder practices.
Walters: I think you’re right about in-house counsel. Global corporate legal departments are definitely subscribing to Vincent AI – when they are able to scale their work, or speed up analysis, or create great first-draft transactional or litigation documents, the savings go right to their bottom lines, so they have been very enthusiastic about Vincent. They’re both growing pretty quickly; I don’t know if one is growing faster than the other. Both AmLaw 200 and Fortune 500 legal departments are lined up to try Vincent AI.
O’Grady Do you have any big releases in the pipeline?
Walters: One big enhancement that is in the wings is the completion of our Cert citator. In 2020 we acquired the technology stack from Judicata. Our team has been working for the last several years to enhance and extend that technology from California law, which Judicata pioneered, to state and federal courts nationwide. Like updating judicial opinions and statutes, citator is another “deep” challenge in legal publishing – you can’t solve it by just throwing money at the problem. So I’m really proud of our team. It’s a vast and monumental achievement; watch for an announcement about that soon.
O’Grady: One of the things Fastcase did bring to the table was Docket Alarm analytics platform. In my experience, American lawyers are always looking for comparable tools around the world. Do you anticipate that you will expand Docket Alarm’s litigation analytics globally or are there other cultural or legal obstacles to doing this?
Walters: I think the biggest challenge is a tech challenge – and the tech challenge still exists in many local courts even across the U.S., where they still collect filings in paper. There are still administrative obstacles. We have been able to leverage e-filing from federal and many state courts. The ambition is to have Docket Alarm become a global product and there are definitely challenges to doing that, but I think the biggest challenges right now are probably technological and not cultural. Docket Alarm technology will work really well in other jurisdictions around the world if the data is available.
O’Grady: Looking back at the founding of Fastcase in 1999 there really wasn’t a lot of outside investing in legal tech at the time. What challenges did you face “bootstrapping” the company? What Qualities enabled you to survive?
Walters: The first thing I really want to say here is that I personally got so lucky to start Fastcase with Phil Rosenthal. I didn’t know Phil particularly well – we were in different groups in the firm. I was a softball-playing, beer-drinking, take-out-the-summer-associates litigator. Phil was a very careful, diligent associate who worked long hours dealing with nuanced patent prosecution science and nuclear technology areas. Phil has a compass set permanently to “true north.” Fastcase would never have been successful without him.
We faced some really hard times. We founded the company after the first “dot com” crash when most of the early internet commerce companies went out of business. No one was investing in Internet software in 2000 and 2001 and 2002. Phil and I went without a salary for years, we were maxing out credit cards, we borrowed all the money we could. We faced a second financial challenge after the 2008 mortgage crisis, but we kept working to build the business.
“Relentlessness” is an attribute that we didn’t fully appreciate when we started the company, but it’s an essential attribute of successful companies. No matter what Phil and I faced in the founding years, we would keep on going.
O’Grady Artificial Lawyer posted an article this week quoting a Gartner estimate that the legal tech market is going to reach $50 billion by 2027. Does that align with your view of the market?
Walters: I think that estimate might even be low. The Thomson Reuters Legal Executive Institute had sized the U.S. legal services market at $453 billion and this was probably almost 10 years ago. That is the legal spend on lawyers in the U.S. and so that in itself is kind of a very narrow view. And that’s based on the 20% of people who get help with their legal problems – but there’s 80% of people that don’t, and that’s just in the U.S.
I’m spit balling, but if you include the unserved 80%, the latent market, the true size of the U.S. market is closer to $1 trillion, and the global legal market is going to be another trillion and a half dollars, for a global legal services market of $2.5 trillion. So if 10% or even 5% of that market could be served by legal tech, that points to a market of $250 or $125 billion over time.
An estimate of $50 billion for legal tech is sort of like sizing the transportation market by looking at how much taxi cabs could expand their fares in 2005. There was a huge latent market that Uber tapped into. It was a technology that created an entirely new market by reaching people who had not previously been served.
O’Grady: Is there still room for “Bootstrapped” startups in the legal tech market?
Walters:I think that there’s a great opportunity for startup companies to both do good and do well.
In this era of generative AI we are probably somewhere near the peak of the “hype cycle.” It will have some sort of a crash in the future and that will create an opening for even more bootstrapped startups.
I’m grateful that startups today don’t have to suffer quite in the way Phil and I did, It’s easier to raise money for legal tech. I mean legal tech wasn’t even a category when we got started. We faced a lot of objections when we launched, with investors asking, “Why do you think lawyers are going to use the Internet?”
O’Grady: Could Generative AI trigger the emergence of a legal tech singularity? Since generative AI can perform so many tasks, and the costs are so high, will law firms move toward selecting a single vendor for their AI tech stack?
Walters: “Single tech stack only.” That’s a really interesting question. I have to think a little more about that. But if that happened, Microsoft and Google might be competitors for that positioning as the single tech stack. (Although the legal market might be too small for Microsoft or Google?)
O’Grady: What potential changes the legal market do you see coming from Generative AI?
Walters: Generative AI could be a lever that opens up a much larger market for legal services. There will be opportunities to do the work that law firms currently do, differently and faster, and in a way that leans toward fixed prices. Generative AI could allow us to create a whole bunch of new services that we couldn’t offer in the past – new ways of serving people who have not been served in the past and serving them at scale.
I’m thinking of the Netflix/Blockbuster dynamic. Netflix didn’t want to sell more videotapes in new stores at a lower price. They recognized that the market for movie services was vastly larger than the videotape market.
There is an opportunity to create new services that meet the demand for legal services in a different way and unlocking a whole new market that’s much bigger than the one we have known.
O’Grady: You have been teaching The Law of Robots at Georgetown Law, so I’m wondering, do you see any changes in the type of lawyer who is coming into the practice of law? Do you see law students who are engaged and excited to practice law in a new way coming into law schools?
Walters: I love that question. I started teaching the Law of Robots at Georgetown law in 2014 and then at Cornell Tech in New York City in 2018. When I started teaching The Law of Robots, the class was about how law deals with algorithms making decisions, about self-driving car accidents, or holding AI responsible for libel or copyright issues. In the beginning, it was kind of a science fiction class, a sort of “what if?” class.
Today it turns out to be a contemporary history class. We are addressing these issues in a very real way. The difference is really stark. When I started teaching the class it was kind of an interesting thought experiment for students. Now I’m watching students in the class aggressively looking for ways to use software to solve legal problems. My class at Cornell Tech is cross listed in the computer science and business schools, and there are a lot of entrepreneurs in the class. We have very smart law students and engineers and businesspeople who are thinking about these problems together.
When I started teaching the Law of Robots it was the only class that dealt with those issues at Georgetown. Today there are 17 classes at Georgetown Law dealing with AI this year. Next year an 18th class is being proposed, to teach a whole class about using generative AI using Vincent as the model.
The attitude in the Academy has changed vastly, and students are more excited than ever to use software to solve all these problems.
O’Grady: So what advice do you give to potential entrepreneurs if they have an idea for a product?
Walters: I tell people who are starting these companies the most important attribute is probably relentlessness.
It is easy to underestimate the value of “luck” and timing. You have to also work hard and get a lot of things right, but luck plays as bigger role than most entrepreneurs want to admit.
Casetext had a great product but they were also lucky in being funded by Y Combinator and Sam Altman, which led to them having early access to GPT-4 and getting ahead of the legal market in developing a GenAI product.
Success is a mix of intelligence, hard work, ethical business decision making, team-building and in many cases being in the right place. But relentlessness is important, too. You have to still be in business the day luck knocks on the door!
O’Grady: vLex recently announced the launch of vLex Labs. Is this a play at addressing the “Build vs. Buy” dilemma law firms are facing with Generative AI? Everyone is going to have Generative AI in the future. The challenge will be: How do I distinguish my firm’s use of Generative AI from the rest of the market?
Walters: If you look back at the merger press release a year ago what you’ll see is us saying that generative AI foundation models will become a commodity. Gen AI modules can be exchanged. Internal law firm data is not a commodity. Law firms have specialized knowledge.
This was the point of my book Data-Driven Law, law firms are some of the biggest companies in the world with no assets on the balance sheet, and one of the assets that is unvalued inside of law firms is the internal data and the expertise that is locked up in that data.
vLex Labs is a co-development studio. The vLex tech stack includes all kinds of APIs, global data sets, vector databases, structured docket data, and more. So the idea is that we can help law firms combine their differentiated internal expertise with public law and AI tools from vLex to create unique value for their clients. Not just a chatbot, but a way of transforming a firm’s unique experience to co-create new legal services for their clients.
