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Gary Sangha L’03 on Opportunities for Legal Tech Entrepreneurs in a Changing Legal Landscape

Gary Sangha

Law 2030 Podcast - Season 2 | Episode 9

Gary Sangha Gary Sangha L’03 is a Penn Law grad and serial legal entrepreneur. He sold his first startup, Intelligize, and recently launched his second venture, LexCheck, an AI-powered contract review platform.

On this episode, Gary discusses the evolution of legal entrepreneurship over the last decade, skills lawyers who want to build a startup should develop, and why the legal tech landscape is booming and will continue to grow in the years ahead.

Episode Mentions:

LexCheck

Our Key Takeaways From This Episode

If you’re new to the legal profession, there are enormous opportunities to solve problems in new ways that didn’t exist even 15 years ago.

The convergence of attention focused on the access to justice crisis and the availability and low cost of legal tech means people other than seasoned entrepreneurs or technologists can learn to attack problems in new ways.

If we really want to make progress in our profession, we first have to carefully create categories for focus.

Gary mentioned the growth of legal operations and specifically the emergence of CLOC and how that has changed the game by creating a defined space for legal tech in corporations. As Gary said, “The work was already there, but somebody needed to come along and define the category before we could devote resources to it.”

For all of us in the legal profession who want to finally see change on a number of fronts, we should be encouraged by the growing ability of tech to scale services in a way that can respond to the huge mismatch, between the demand in legal services and the supply of lawyers.

This market dysfunction coupled with more sophisticated and cheaper technology means unprecedented change is really possible.

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Full Episode Transcript

Jennifer: Gary Sangha, what makes you optimistic about the future of the legal profession?

Gary: What makes me optimistic is just all the cool tech that’s coming around the corner. I think we all agree there are certain aspects of legal work that people don’t enjoy. The tech that’s coming through is going to really just take away that work so folks can really focus on the creative aspects, the stuff you went to law school to do. So that’s what has me excited, that I think the nature and quality of legal work is going to get a lot more interesting.

Jennifer: Hi everyone. I’m Jennifer Leonard, Chief Innovation Officer at the University of Pennsylvania Carey Law School. As an alum of the law school, who practiced law for a decade in private sector and government practices, I realized there are so many ways we lawyers can better serve our clients. And now through the Future of the Profession Initiative, my colleagues and I focus all our energy on thinking about how to do just that. Our profession is full of bright, engaged lawyers working at the highest levels, but we frustrate many of those we want to serve because of the way we’ve structured the practice of law and our legal systems. And students coming to law school today need new skills that turbocharge their legal education so that they can navigate the dynamic landscape that lies ahead.

To develop fresh approaches to the way we educate lawyers and serve our clients, we need to open up the conversation. So on this podcast, we’ll hear from experts working to change the legal profession and leaders who’ve developed creative solutions to complex problems in other fields. We’ll also discuss how the law school is producing the next generation of lawyers, a generation that will create new ways to put the people they serve at the center of everything they do. There’s so much to do so let’s get started.

Today, I’m excited to welcome Gary Sangha. Gary is a Penn Law grad and serial legal entrepreneur. He sold his first startup, Intelligize, and recently launched his second venture, LexCheck, an AI powered contract review platform. On this episode, we’ll discuss the evolution of legal entrepreneurship over the last decade, skills lawyers who want to build a startup should develop, and why the legal tech landscape is booming and will continue to grow in the years ahead. Here’s my conversation with Gary Sangha.

Jennifer: Gary, thank you so much for joining us.

Gary Sangha: Hey, Jen, thanks for having me.

Jennifer: Just to get started, to help our audience, get to know you a little bit more as a person, you have such an interesting background with respect to some of your outdoor activities. You recently, I guess, in the last few years cycled across Mongolia. And when you were in law school, you participated in base camp training at Denali in Alaska. Is that right?

Gary Sangha: That is right. And now, I direct most of the danger to startups and navigating the pedestrians while I drop my kids off to nursery school.

Jennifer: Also, can be a very perilous journey as well. You never know what’s going to come up on those daycare trips. I have had this experience in the past, particularly working with students who are entrepreneurial, particularly students in our JD MBA program. We had a student a few years ago who graduated from the JD MBA program and then hiked Everest. And is there a connection around a risky challenging outdoor activity and the entrepreneurial mindset?

Gary Sangha: I think that’s a very romantic way to put it. I think maybe I’m just a bozo that takes too many risks in life.

Jennifer: Well, I’m a romantic at heart. So that makes sense. Well, we are glad that you are safe and sound and accomplished in all those endeavors and joining us today to talk about entrepreneurship in legal. You’ve been an entrepreneur in legal for the last few decades, and I’m curious how you’ve seen entrepreneurship change over time. There’s certainly a proliferation now of legal tech and of people getting more engaged in the idea of entrepreneurship. What do you see as the biggest changes in the last few years?

Gary Sangha: Gosh, it’s been incredible. I remember when I started in 2007, 2008 with my first startup, I think I knew every legal tech entrepreneur out there. There were literally less than a dozen of us I feel like. And now, gosh, it’s become its own category. I mean, the amount of venture capital flowing in legal tech companies IPOing, it’s been an incredible sea change.

Jennifer: We see this too in the work that we do at the law school. I work with two colleagues, Jim Sandman, and Miguel Willis, who are actively working with us to try to expand access to justice to try to make more efficient the work that we do as lawyers. And one of the things we talk about frequently with the proliferation of tech is how can we get our arms around what’s actually happening in real-time as a profession when you see this explosion in venture capitalism, in people coming out who aren’t even necessarily trained as lawyers but see the opportunities on the landscape? How can you even start to assess what is a quality product in that environment and what all the different offerings are, who the players are that are coming and going? There’s just so much activity to keep track of.

Gary Sangha: No, absolutely. The thing about legal is people are just more thorough. There are processes to check you out whereas I think in other sectors, maybe little more of a leap of faith in trying stuff out, but yeah, there’s going to be hits, there’s going to be misses, but that’s the nature of cutting edge tech.

Jennifer: So what do you think has changed on that point? Because I had always heard the old joke that it doesn’t take a lawyer to sell to another lawyer. It takes decades—that lawyers are so risk-averse and they like to follow what’s already been done by somebody else successfully. And so it seems like it’s a particularly difficult terrain in which to sell a new product, but now clearly the market is signaling that there is activity, there is interest. So what has caused that shift and what makes people actually want to jump into this profession in this industry in an entrepreneurial way?

Gary Sangha: Yeah, absolutely. So look, historically lawyers and I think maybe doctors as well have not been on the front part of the technology adoption curve. I think that goes without saying, so you’ve always had to deal with that. And again, it’s our nature as attorneys to be risk-averse because we’re trained to see danger everywhere. And lastly, for a lot of folks, frankly, it’s a very lucrative position. So you don’t have the incentive frankly to make changes when the profits per partner are what they are.

I think so that’s like just the macro landscape, right? And a lot of that’s still there. I think what’s changed is you’ve now created room for early adopters whereas in the past people that even wanted to, it was risky. And then also they had limited budgets and it was typically taken up by a handful of caselaw suites. And now you have this space for early adopters that I think has really changed things. Secondly, I think people just have budget now. People recognize that this is an important part of doing business, right? So now that you have budget, suddenly you have a greater focus on tech that wasn’t there before.

Jennifer: Has the rise of legal operations roles in in-house counsel departments and the growth of CLOC, has that also accelerated the discussion around technology, the sophistication in the way that we approach it?

And for anybody who’s not familiar with CLOC, CLOC is the Corporate Legal Operations Consortium.

Gary Sangha: I think that’s been a game-changer. I think CLOC, Connie Brenton is a founder, and our colleagues have just really, I mean, by creating this category by creating a space for legal tech in corporations, it’s fundamentally changed the nature of the game, which is fascinating, right? The work is always there, but until somebody created a category, you didn’t have resources devoted to it.

Jennifer: And it seems like what CLOC has done has created transparency and visibility around the legal spend and metrics that allow in-house counsel to actually see how technology can change those metrics in positive ways. If you’re the cost center of a corporation and you can show to the C-suite professionals that you’re saving money by adopting an Intelligize or LexCheck, it’s an easier case to make than it was 10 years ago when you didn’t have the data-driven approach to telling that story.

Gary Sangha: Absolutely. And I think, look, it goes both ways. I don’t think a lot of in-house departments wanted to tell that story, right? I think they’re perfectly happy legal being a black box and saying, it’s immune from any metrics, right? Only we know this voodoo magic, no one else does. And then the legal ops people realize, you know what? You can measure speed. You can measure accuracy, you can measure cost, right. So yeah.

Jennifer: So the genie is out of the bottle now.

Gary Sangha: Exactly. And some people wish it wasn’t, but it’s out and now you can deploy best practices

Jennifer: And I wanted to go back to what you talked about, the two changes that you see lending themselves to this growth in legal tech, the space for early adopters, and the budget. So certainly, I mean, with the exception of the post Great Recession era that we lived through where budgets were really lean and we were cutting across the board in the last few years, certainly there’s been huge profits per equity partner in BigLaw. Law firms are wildly successful.

And so the budget’s definitely there. But one thing we’ve talked about with guests on this podcast is the need to be able to have a space to learn and part of that learning really is trying things and failing and getting better over time. And so when you talk about this space for early adopters, I’m curious what that looks like in practice for a profession that is focused on precision and everything that it does. And I think that that’s exactly where we should be with respect to legal counsel and analysis, but it stymies our efforts at innovation because we can’t ever fail and we can’t ever learn and iterate over time. So what does that look like on the ground? How do lawyers take the technology that you’re developing, test it out, see if it works in a way that doesn’t risk damage to the client’s interests and in a way that is profitable?

Gary Sangha: Absolutely. Well, number one, it means really taking care of and being grateful for the early adopters. It is the first thing you do because yes, these people are fundamentally making a bet on you. So for them to make a bet, they either have enough political capital and they have a track record of success where they can, or yes, maybe they’re going out on a limb for you, right? So at that point, I think what they want to see is I think people are adults, they recognize that most software is a work in progress. What they want to see is good faith effort. They want to see results. And they want to see that you’re 110%. And I think if they see that, that really gives you just a lot more… Just gives you longer rope frankly.

Jennifer: And as firms grow the number of roles that focus on innovation, chief innovation officer type roles in law firms where there’s a sophisticated person in the organization who understands this language and what the purpose is for legal tech, does that accelerate the adoption because it allows law firms to hand over that work to somebody who’s a professional and not necessarily somebody who’s a securities lawyer, for example, trying to make that decision.

Gary Sangha: Absolutely. I don’t think it can hurt. And what you’re also seeing is you’re seeing law firms also now expand their business models, right? So you’re seeing folks that have, in-house, frankly, alternative legal service shops. You’re seeing folks that are just various structures and whatnot. So I think it’s all super neat. Once you break out of the billable hour straight-jacket, lots of cool things can happen.

Jennifer: Absolutely. And we’re seeing lots of positive shifts that suggests that we’re moving more and more in that direction which is really exciting. I’m curious as somebody who works in legal education preparing the future lawyers of the profession, you seem to have a natural entrepreneurial mindset. Do you think law schools should be training students how to be more entrepreneurial or focusing on the bread and butter of what law schools do really well, which is the legal training and allowing the rare person who comes along to be entrepreneurial to play that role and have lawyers work with others who do this, or what is your opinion about how we should be preparing future lawyers for these opportunities and developing more entrepreneurial approaches?

Gary Sangha: Absolutely. We definitely should not have the tail wag the dog. This is law school, it’s not B school. So the goal should be to produce trained attorneys. And, but I do think there should be courses on entrepreneurship. So people are aware of these options. I think far too often people that graduate from law school believe that their career options are quite limited. So they go into public service, private practice, maybe in-house, but it’s just not true. There’s so many options. At my two startups, we made it a habit of taking smart lawyers and converting them into engineers, product managers. The skill sets that you get in law school and in just practicing as a lawyer, specifically in attention to detail, organizational skills, how to comport yourself in a professional environment, really lend yourself well with other aspects of business.

Jennifer: It’s an exciting time too at the law school level because what we’re learning as we do more work around innovation and entrepreneurship, especially from our students who are exposed to the other schools on campus, is what they’re saying to us is there are all these entrepreneurs over at Wharton, or over at engineering, or over at integrated product design who want to solve problems and the way that we can connect with them is actually to surface the problems in legal and then let them attack them. So I think that’s a great model for thinking about the future of the profession too, or maybe even the present of the profession is this interdisciplinary approach to innovation. And it aligns exactly with what you’re saying about cross-training lawyers.

Gary Sangha: A hundred percent.

Jennifer: So recognizing that, Gary, if you’re a lawyer like yourself and you decide to launch a startup, which professionals should you be thinking about asking to join your team to help you?

Gary Sangha: Look if you’re joining a tech startup, you should probably be a technologist, right? If you’re starting a professional services firm, you should have someone has operations in professional services. Key thing to note is whatever you’re doing, you’re making a career switch, right? You’re entering a new sector. You’re not practicing law anymore. So you want to bring onboard somebody that has experience in that vertical, whether it’s consulting, operations, tech, whatever business you want to start that has experience in that vertical, they should be your first partner.

Gary: What’s the law school doing to foster innovation and entrepreneurship with regards to the law?

Jennifer: So, as you might know, we launched recently our future of the profession initiative which I have the privilege to be part of. We are bringing in alumni like you and others who serve on our advisory board from across the profession to really give us a more holistic perspective of what’s happening in the innovation landscape. And we’re connecting all of those people with the programs that we’re developing. We’re developing new curriculum, including design thinking for lawyers, leadership for lawyers, access to justice and data, and tech. We have a new partnership with the access to justice tech fellowship for 1Ls so they could spend their 1L summer with public interest organizations learning how to use design thinking data and analytics to scale access to justice. But I think probably the most exciting thing we’re doing is what I referenced earlier, which is connecting with the other schools on campus and their innovation centers and trying to learn.

I mean, one of the benefits of being the last industry in a lot of ways to the innovation game is that there’s a lot to learn from in other areas. And we’ve learned a lot. It may seem strange from the school of nursing. They have an incredibly innovative program at nursing. We’ve learned a lot from engineering, from Wharton, from GSE, from Penn Med. And now we’re connecting our students with students in those schools so that we can really amplify what we’re doing and develop more of that connective tissue that allows us to be less siloed as a profession. And certainly, as the regulations start to change will be the reality in practice as well. And leading conversations like this and getting the word out to the broader legal community about what’s happening.

Gary Sangha: That’s fantastic.

Jennifer: So I’d love to talk a little bit about your two startups and the differences and distinctions between the two of them. Could you tell us a little bit about Intelligize and how you developed the idea and what it did?

 

Gary Sangha: Sure. So Intelligize is a research tool designed to help people just prepare and review SEC filings more quickly. I used to be an equity capital markets lawyer and doing this work would just take forever for me personally. And I just thought, gosh, it’s probably because I’m slow. And I told some of my coworkers and they said, “Gary, I have the same problem.” It would just be so much easier if software can tell you what’s market, what’s not. So I had my coworkers invest in me. They were my initial angel investors. And I tell people to this day, I don’t know if they thought of me as a great potential entrepreneur or frankly, an incompetent lawyer and they wanted to get rid of me, but either way, they gave me money and I started on my way. And I started, frankly, right before the great recession, my superpower I tell people is I made every mistake in the book as an entrepreneur.

Any mistake you name. Gosh, I made it, people to partner with investors, everything, but I learned and we were up against Thomson Reuters at a hundred percent market share at the time. And we just scratched and clawed and just bought our way to the position where I think we have frankly almost a hundred percent market share. And we sold that to LexisNexis group. In between, I was a lecturer, actually at Penn. And at Penn, I got connected with the AI faculty and the idea was, “Hey, why don’t we use advances in AI to improve contracting?” We did a lot of pivots and a lot of R and D along the way, but a couple of years ago we cracked it and we developed tech that can take in contracts that the system has never seen before and mark them up largely the way an internal staffer would. And this solved the problem that I had at Intelligize because I was basically the GC and I saw this being employed and I thought, “Gosh, the first 80, 90% of any review’s all the same, right? Why can’t software do this?”

Jennifer: Yeah. And it really allows lawyers to do what they came to law school to do which is not to sit and sift through contracts, it’s to use judgment and problem-solving skills and become a trusted advisor to a client, right?

Gary Sangha: Absolutely.

Jennifer: What was your biggest mistake and what did you learn that our audience might want to know?

Gary Sangha: Too many to choose from, way too many to choose from. I think my biggest mistake was probably it’s a combination of lack of humility and over-reliance on other people’s guts, right? I think you fundamentally have to get client feedback that is the north star, nothing else that matters. And I think I depended often on just feedback from other folks whose opinion in retrospect probably didn’t matter as much. You have to, have to, have to listen to the customer and be driven by the customer. The customer‘s your north star. It’s not your employees. It’s not your investors. It’s not your board. It’s the customers. You have to listen to the customer.

Jennifer: Was it challenging in those cases not to listen to yourself? Did you have the problem of falling in love with your own idea and having to peel yourself away from it?

Gary Sangha: Absolutely. Or, falling in love with other people’s ideas who you think should know better, but it’s always easier, right? To short circuit, but you have to do the hard work.

Jennifer: And you’re talking all about and again, we hear this from our colleagues over at Wharton, the need to pivot and the need to keep iterating an idea and attacking it. But it does still feel to me and maybe this is an old-fashioned notion of lawyers, but it seems like a skillset that you really need to develop that complements your legal training because again, we’re focused on precision. So did you develop resilience over time? Were you at all worried in the early days when you realized you were making mistakes as every entrepreneur does or did you just naturally have an appetite for problem-solving and iterating and getting it right the next time?

Gary Sangha: No, I think that for me truthfully, it was the equivalent of getting on a really scary rollercoaster that you never thought you were going to get on. And then you’re holding on for dear life is how I would describe my first startup. And sometimes I think lawyers are perfectionists. They hate to be wrong, right? So you have to be comfortable with setbacks and making mistakes. There’s frankly, almost a cliche now in Silicon Valley, where they call it fail fast. Fail fast and pivot fast. So, and I tell all of my team members, “There’s nothing wrong with making mistakes. I’m still going to make mistakes. Let’s just correct them quickly, right? And move on.” And to have that attitude, taking in data, understanding you made a mistake, and then moving on and optimizing.

Jennifer: That’s great. And it’s exactly what we try to teach in the innovation courses that we have at the law school and the entrepreneurship courses and helping students understand the places where they can try and fail fast and learn, and the places where they really need to be deploying that precision-oriented ideal goal for legal services. So it’s exciting to see a real-world manifestation of that. What motivated you? I mean, I know you were doing work that you didn’t enjoy as a lot of young lawyers do, but most young lawyers don’t then decide to launch a startup to solve the problem. So what drove you?

Gary Sangha: Yeah. For me, frankly, what drove me was it was cool, but frankly, my coworkers had given me money. So it was put up or shut up time.

Jennifer: So they created some built-in accountability that you had to respond to.

Gary Sangha: Absolutely. And then for the second startup was the same thing. I had some ideas and I brought in a lot of my previous investors and they pushed me to do it.

Jennifer: What was the difference in terms of your confidence level, in terms of your sophistication when you launched the second startup, and presumably you had more resources to work with because you had been successful in the first one, did you approach it completely differently from the first?

Gary Sangha: So truthfully I come at this from a position of extreme humility. I don’t assume that I know what the world looks like. So I think the fear is still there, right? And okay. I got product-market fit. I got product-market fit in the first startup, kind of do in the second time. And again, the experience in the first time, I mean I had a lot of successes but a lot of setbacks as well. So yeah, I wasn’t sure. And frankly, again, it took four or five years to really crack it.

Jennifer: So what’s the most effective strategy for selling to legal?

Gary Sangha: Gosh, showing up and being prepared, right? Because you’re going to face skeptical buyers and they’re thorough, and they’re diligent, right? So you have to come there prepared.

Jennifer: Great. And I would love to pivot using our language from earlier in the conversation, if it’s okay with you, Gary, and ask you a couple of questions in our speed round. I’ll throw a few your way and just have you answer in a few words if that’s all right with you.

Gary Sangha: Sure.

Jennifer: So what do you think will change the profession the most over the next five years?

Gary Sangha: What’s going to change the profession the most is the mismatch in demand and supply of lawyers. There’s not enough lawyers, so it’s going to force change.

Jennifer: And what would surprise most lawyers about your experience as an entrepreneur?

Gary Sangha: Ooh. Gosh. I guess the joy, the process.

Jennifer: Tell us more about that.

Gary Sangha: There’s a certain joy from going from A to B in startups, from creating an idea to a product, from talking to a client for the first time to closing out the deal, from seeing a person join your team who’s made a career switch and, fast forward, they’re thriving in their new occupation. There’s a certain joy to the startup game that I just love. And frankly, it’s the primary reason why I did it a second time even though I didn’t need to.

Jennifer: And finally, if you could give new lawyers one piece of advice, what would it be?

Gary Sangha: Spend a couple of years in practice before you switch to entrepreneurship.

Jennifer: Thanks so much, Gary. And thank you so much for joining us today. We really value your insights. We’re excited about what you’re doing. We hope you’ll come back and participate in more of our programs.

Gary Sangha: Thank you. I really appreciate it.

Jennifer: What an enlightening conversation with Gary Sangha. Here are my three key takeaways.

First, if you’re new to the legal profession, there are enormous opportunities to solve problems in new ways that didn’t exist even 15 years ago. The convergence of attention focused on the access to justice crisis and the availability and low cost of legal tech means people other than seasoned entrepreneurs or technologists can learn to attack problems in new ways.

Next, if we really want to make progress in our profession, we first have to carefully create categories for focus. Gary mentioned the growth of legal operations and specifically the emergence of CLOC and how that has changed the game by creating a defined space for legal tech in corporations. As Gary said, “The work was already there, but somebody needed to come along and define the category before we could devote resources to it.”

And finally, for all of us in the legal profession who want to finally see change on a number of fronts, we should be encouraged by the growing ability of tech to scale services in a way that can respond to the huge mismatch, between the demand in legal services and the supply of lawyers. This market dysfunction coupled with more sophisticated and cheaper technology means unprecedented change is really possible.

Thanks to all of you for joining us today. Make sure to subscribe to this podcast wherever you listen. Be sure to leave us a comment and rate the show too. We’ll see you next time on another edition of Law 2030.


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