Episode Transcript

Chad Main:

I’m Chad Main and this is Technically Legal, a podcast about legal technology and legal innovation. In today’s episode we talk to the chairman of Lex Machina, Josh Becker. Lex Machina helps lawyers mine and analyze litigation data to provide strategic insights about judges, law firms, parties and other information related to lawsuits and legal matters. As Josh will explain, having this kind of data helps law firms and companies predict behaviors and outcomes with different legal strategies might bring about, enabling law firms to win business and the clients to win cases. Josh also talks about what it means to be a data driven lawyer and where lawyers can start using analytics in their legal departments and law practice.

Chad: I saw that in 1997, in the midst of the browser wars, you actually started your career in tech with Netscape. What was that like?

Josh Becker: I was in law school and business school at the time, so I was starting out. I really was a summer intern, a summer associate, but it was a fascinating time to be there because you had Microsoft gaining. So the core team with Mark and Theresa and you had Jim Barksdale as a leader, and he’d have to walk this balance of inspiring the troops. So warning about Microsoft and the very real threat that Microsoft created for Netscape and our team, but also inspiring people that they could do it. And it was a really interesting balance and I learned a lot just watching Jim Barksdale in those all company meetings. It was a fascinating time.

Chad: So yeah, you got a JD MBA but you never really actually practiced, right? You kind of went the VC route and the tech route and startup route.

Josh: Right. Yeah, exactly.

Chad: What was the first thing you did when you got out of law school and business school?

Josh: So when I got out it was 1999 and I had been involved with an early internet startup at that point that had done well, although it had its ups and downs. And I was really looking at doing a startup again. I’d also been involved, while in law school with pitching a lot of business plan competitions and things like that. And so I kind of kept this real interest in startups and then the VC thing just kind of came around where I was like, “Wow, okay, this would be interesting to be on the other side for a little bit.” And just kind of get to see what it was like to evaluate lots of different plans to meet with entrepreneurs every day, which is the most fascinating part of that job, by the way. It’s just every day you get teams of entrepreneurs coming in, they’re all excited and they’re innovating in some sector of the world.

Josh: And anyway, it was really fascinating, fascinating time. But yeah, that’s what I tried to do ultimately was to take a job in with Brentwood Venture Capital, which had started in mode of, I call it maybe the early to mid years of professional venture capital where we had a healthcare and information technology. So there’s three healthcare partners, three IT partners and two in LA, four up in the Bay Area and got to be part of a team at a fascinating time kind of towards the end of the first dot com wave.

Chad: After working in the VC and startup world for awhile, Josh joined Lex Machina, a legal analytics company hatched at Stanford. Josh would go on to serve as CEO and during his tenure the company would be sold to LexisNexis.

Josh: Lex Machina, first of all, it started as a public interest project at Stanford Law School. So at a high level it’s meant to bring openness and transparency to the law. And for lawyers it helps them win. It helps you win business. It helps you win cases by using data and analytics, data that you’ve never, not been available before about a judge, about opposing party, about some actors in the ecosystem that will give you a competitive advantage.

Chad: And it started with a focus on intellectual property, but it’s expanded its offerings. What all types of law or legal fields does it cover now?

Josh: Sure. So for the first really six years, it was really just patents. It was funded as a public interest project, as I mentioned, by folks who wanted better data about the patent system and what was happening in the… we had the patent wars and a rise in patent lawsuits and people said there’s got to be better data out there. And so it took a long, long time, but that was, we really perfected the technology, the national index processing and to some extent the machine learning as a patent database. And then realized, we said, “Hey,” started talking to other lawyers, commercial employment, product liabilities, said, “Hey, would you like more data about the judge?” “Yes.” “Would you like better data about the opposing party?” “Yes.” And then we spent it out first into securities and antitrust and then to contracts, product liability, employment, bankruptcy and we continue to expand.

Chad: How did you become involved with the company back in the day?

Josh:

So I got involved with the Stanford Angels and Entrepreneurs, which is a new angel group being started at the time by Miriam Rivera who had been the Deputy General Counsel of Google and then and her husband Clint Korver who had a PhD in decision science. And so she had this legal background, he had this decision science background and they saw the potential of it. They had helped arrange the original seed funding. For three years it was a public interest project at Stanford and then spun out, realized it needed more capital. And so Miriam got involved and Clint then in helping spin that. And then there was, they needed someone to come in and help grow it and they reached out to me and I came in as interim CEO and that was in July of 2011. And then starting in September of 2011, I became the full time CEO.

Chad:

And what’s your current position with the company?

Josh: So we’re part of LexisNexis or LexisNexis saw the opportunity, the potential of analytics, I’m going to credit them for that, for getting heavily involved in analytics before anyone else really thought about it. And we needed access to documents to grow and those were documents that they had for large part historical PACER documents that we needed. And so anyway we started working with them and so now I’m head of analytics for LexisNexis and really do kind of a lot of high level meetings about the future of law as well as I run a legal tech accelerator that we have, Lexis has, we have nine companies right now, fascinating companies in our legal accelerator. And then I sort of advise Lex Machina, but I’m not involved day-to-day. Carl Harris runs Lex Machina now day-to-day, who was my head of product.

Chad: And you just mentioned the LexisNexis tech accelerator program. How do companies become involved in that? How do they apply? How are they selected? What’s the process there?

Josh: So every time when we launch a new cohort, it’s usually in the fall we’ll put out a press release and announcement. We’ll say, “Hey, here’s, open up an new cohort, apply by this date.” And then companies, anyone can go through and apply and then we’ll spend the next, three, four weeks vetting those companies. Narrowing down the list was really hard this year. We had a lot of great candidates. Eventually narrowed the list down to nine, which was the most we’ve ever had and then they started the program back in September. But yeah, we make it available. We say, “Hey, great, we’re starting new cohort,” and then people can apply.

Chad: Being a data-driven lawyer is a concept near and dear to Josh’s heart. What is a data-driven lawyer? According to Josh, it’s a lawyer that stays ahead of competition and differentiates their services by leveraging tech and analytics to provide measurable value to their clients. Data-driven lawyers use analytics to figure out what strategies to use in front of particular judges, which clients to pursue for business and what strategy legal opponents are likely to use. As Josh also explains, analytics can also be used to figure out which lawyers to hire to represent your company.

Josh: You’re not going to replace legal research and reasoning. It’s still the core part of what a lawyer does. But we want to now augment that with data. So too often in law, historically, everything has been anecdote-driven, right? It’s like, “Oh, who’s been in front of this judge before? What have you heard? What’s this judge been like? What do you think our strategy should be? Right? Or what was my experience this one time in front of this judge?” Or we think he’s got a tendency to do this or she has a tendency to do that and there just wasn’t, just never been hard data around it. And so we now make that data available and lawyers can then analyze that data and they make, and I said they may make the same decision they were going to make otherwise and set the same strategy or they may make a completely different one, but now it’s at least it’s a data-driven decision, right?

Josh: That’s what we like to say. It doesn’t mean there’s no place for gut or feel or instinct, but it means, okay, let me consult the data and if the judge has tend to behave in this way or this is how long it takes key milestones, okay, that’s going to help me inform my strategy and let me make a data-driven strategy for this case.

Chad: Some of the stuff you talked about there is, to just generalize, geared towards litigators or maybe in-house legal departments, the IP arms or the litigation arms of in-house corporate legal departments so they can weigh whether or not they should pursue a claim or how to defend a claim, settle, et cetera. But I think recently you went out and talked to managing partners of law firms, managing partners to talk about using data to grow and augment their law firms. Well, what’d you find out there and what was the purpose for these meetings and what were you looking for? What you’re trying to explain?

Josh: Yeah. And I still do that. So I’m going in, I met with the CEO of Latham recently when I was in New York and other senior leaders. And yeah, it’s really fun because I get a chance to have these conversations with these leaders and talk about what role they see data analytic having in their firm. And I tell them some of the best practices that I’ve seen now working across many different firms and companies and kind of share some of the new developments that I’m seeing in the marketplace. A lot of them happen to be from Lexis, but some other ones as well or what’s happening with our legal accelerator companies. And it’s really interesting. And sometimes it’s the law firm leaders are not very well versed in the technology and you can tell that they’re sort of holding back the firm a little bit.

Josh: Other times, they’re really excited about it and they say, “Hey, you have to help me bring my firm along. We want to do this. But our partners are just not there yet.” Right. So it’s very interesting how that goes. And so it’s been a continual evolution. And again, when we first started talking about this, people were like, “What? Analytics? Data?” And now it’s becoming more and more accepted and people want to know, “Okay, what does it mean for our firm? How can we harness it?” I’ve seen firms now that are having innovation days just for perspective, graduating law students just to show that they are on top of the innovations in law and that if someone comes to practice there, they’re going to have access to all the latest technology. And so it’s really interesting, but it’s still pretty early days I would say.

Chad: So it seems like part of it is educating. You get out there, you want to educate law firm leaders about what data can do, opportunities it presents, analytics, et cetera. You mentioned best practices. What do you mean by that? What’s the type of education you’re providing to these managing partners and law firm leaders?

Josh: Well, when I say best practices, it’s again, now having kind of been doing this probably longer than anyone and from an analytics space and just from all the conversations that I’ve had, to see what’s working in firms and what’s not working. I mean, so for example, and we were very clear about this from the beginning, but the thing in Silicon Valley too often you have technology searching for a problem to solve, right? And luckily Lex Machina didn’t start that way because we had bunch of companies and law firms saying, “Hey, we want better data, right? We already have the problem. How can we get better data?” And ultimately partnering up with Stanford to start that discovery process. But the point is you have to be very use case focused. And so a lot of times legal technology, somebody will say, “Hey great, I’ve got this cool new technology.”

Josh: It’s like, “Okay, okay, well how are people really going to use it?” And then once even once you establish the use cases, how do you get adoption within a firm? Because you may have people that have been doing things one way for 20, 30, 40 years, right? How do you convince them that they should make this part of their practice? And so I’ve been able to see some firms, I think that have done that really well and been able to then take that and translate into other firms about who needs to champion this? What kind of trainings, where you do those trainings, what kind of incentives do you put in place for lawyers to get up to speed and have the ability to use this technology and embrace this technology.

Josh: So when I talk about best practice, very much it’s that. It’s what have I seen within firms to embrace the kind of technology and encourage their lawyers to do so so that you get wide adoption. I mean, they’re spending the money now for this product. Okay, great. How do you get value from it? Does that make sense?

Chad: Yeah, totally makes sense. And so beyond the education part, beyond the exposure, beyond talking about legal tech, to those law firm leaders and managing partners who get it maybe a little ahead of the curve or what’s resonating with them? What are the types of questions they’re asking you? What types of legal tech or what types of processes are they trying to tackle to provide value to the firms?

Josh: It’s a couple of things. If they’re some litigators or transactional lawyers, and they may have come at it with a different perspective. One thing that resonates with anyone is how can you use data to win more business for your firm? So from a law firm perspective, how do you use data now to compete more effectively and to put your best foot forward and to say, “Hey, do you know that in this district and these kinds of cases we’ve got the experience or the best success rate or look at our strategy, you can sort of see it here.” So how do they use data then to put their best foot forward and win more business for their firm? That tends to resonate with everyone.

Josh: And then how do you use data then to understand the judge better? Not just from the perspective that we’ve been talking about it from the time to trial and all those pieces, but also integrating Context. Context is another product that Lexus recently launched. It’s actually also started out of a Stanford project that really is about interpreting the language. What language does this judge tend to cite? What cases does judge tend to cite and what language within those cases does that judge tend to cite? And so getting insights into how do you speak in a way that this judge will hear, right?

Josh: So you talk about it from that perspective, that tends to resonate with is both winning business and winning cases because winning cases is ultimately about repeat business. And then talk about the transactional side as well. Many firms are now saying, “Hey, I’ve done 20 years of these kinds of cases or I’ve represented all these different biotech clients in post phase two negotiations with big pharma or whatever it is. How do I mind my internal data so I can… or I’ve done all these kinds of M & A deals. How can I mind my internal data to both serve my customers better, my clients better, and to kind of create efficiencies? And maybe there’s a practice that’s commoditizing and how do I be able to compete effectively in that leveraging my past transactional data?”

Josh: Or it might be in the case of a transactional situation where someone’s trying to mine SEC data and they’re trying to figure out, “Great, what are risk factors that people are citing in their 10 Q’s and what’s trending? What should I be on the lookout for?” And then they’ll use a Lexis product called Intelligize, which again was another acquisition. So you see this theme of bringing together best of breed products and that’s a leading product to search SEC documents. And so the people get them to say, “Oh, okay, okay. I get it, how it could help us in that area. What about tools for M & A due diligence?” Well, there’s a lot of those kinds of tools and a lot of folks that are doing now contract analytics and so sometimes that will really resonate with firm leaders.

Josh: I mean, ultimately some of them are interested in the bottom line, right? How pricing, right. Some of them are getting pressure because they’re having to do more capped deals where they’re not allowed to spend more than a certain amount, or maybe there is a fixed fee and they’re trying to say, “Okay, great. How do we bid on a deal like that? Right? How do we make sure that we can make money for our firm while also getting the best result?”

Chad: That’s an interesting point you brought up, too, with a couple of the things I read in your other presentations. A lot of times the law firm leaders you’ve been talking to about data analytics, it’s about the bottom line. How do we use this to get more business? And I think you pointed out that sometimes the use in marketing is overlooked. Well, how can lawyers use data and analytics about legal matters to get business?

Josh: So far up until now it’s been mainly relationship oriented, right? “Hey, we went to law school together.” Or some other way of, “Hey, I met you at this conference. I do this, I do that, let’s try to give me a shot essentially.” Or again, just reputation of certain firms. “Oh yeah. That firm’s really expensive, therefore they must be really good.” And so again, we’re just trying to add data to that equation now. So a lawyer can see, for example, they may do a few matters for a company and then now with Lex Machina they can see, “Okay well who else is that company using?” And then they can see how they stack up and try to use data to compete and say, “I have a faster time to trial or my firm has a lot more experience in front of this judge. Here, look at this data. Therefore you should go with me for the next matter.”

Chad: A lot of this big data stuff can seem overwhelming. So as I like to do with most of my guests, I asked Josh where legal teams can start to use data and analytics in their practices.

Josh: Certainly if they’re a litigation attorney, and again we started out at the federal level because of the availability of PACER and now moving more and more into the state. The problem at the state level, if you really want to do real analytics, you need access to the underlying documents as well. And that’s generally not been available consistently at a state level. And so it ends up being very, very expensive if you really want to do it right. And now lots of people, by the way, just as a warning to your listeners, now that we’ve proven out the market, lots of people are slapping on, including big companies, a label saying, “Oh, we have analytics, too.” Right?

Josh: And the reality is, no, you really don’t, or you don’t have the accurate underlying data. And bad analytics are worse than no analytics, right? If you don’t have the right, and if you’re not basing on the right dataset, you’re going to see a pretty graph and it’s going to lead you off in the wrong direction.

Josh: So anyway, I’d say that if you were a litigator, call us up, check out the examples on the website. Maybe there’s a report that we have that you want to get access to an area that you’re practicing in. So every time we go into new area, we do a report with insights that no one really knew before, right, about the judges and that area about the companies in that area. Who’s getting sued the most? Who’s winning? Who’s losing? All that sort of stuff. And that might be a good way.

Josh: And then I’d say just try to get your hands on these tools and play around with them yourselves because, again, in the case of Lex Machina, we’ve tried to make it very intuitive, more like an airline flight.

Chad: What’d you mean by that? We want to make it like an airline flight.

Josh: Well, what I was going to say is that ultimately you’re just putting together a case list and then we roll up analytics automatically on that case list. So you as the lawyer are saying, “I want to see cases in this district involving these parties, involving this subject matter in this timeframe.” Right. And then we’ll roll up analytics on that. And then you say, “Well let me, instead of looking at the last two months, let me look at the last six months or just the last six weeks in that district. Or instead of this party, let me include these three other parties as well.”

Josh: And so then you can move the dials up and down and get two different kinds of case lists and then we’ll automatically roll up the analytics. That’s the way we designed it and I think that’s hopefully a good way of helping people visualize how it works. So I think just kind of getting your hands on it and then just playing around with it yourself because it is pretty intuitive. I think especially a lot of law firm partners don’t always put their hands on legal research these days. They’ll maybe outsource some of that. Whereas this, a lot of the analytics, we call it keep the tab open. You hear about a party, you hear about a lawyer, just put it in, just do a search and see what comes up. So that can be pretty intuitive. But the other thing I was going to say is, like this podcast, there’s more and more resources out there where people can get a sense of what some of these technologies are and how it can help them.

Chad: So you mentioned case law just a second ago, too. That’s another area where there’s AI and analytics and driving some of that, too. There’s products out there like Ravel that might be a good place to start for lawyers to take a look at what tech can do for them, too, right?

Josh: And Ravel… so when I referred to Context earlier, Ravel has the Ravel technology, which you refer to, also came out of Stanford to again focus on this legal language. So less about behavior, which is what Lex Machina focuses on and more about analyzing, doing language analytics and understanding that judge. And so Ravel has now been integrated into the Lexis core and relaunched as a product called Context. So when I was referring to Context earlier, that is Ravel. And so absolutely it’s another really fun one. And it’s also has great visualization technologies that now Lexis has built in as well to allow people to visualize the citations and in a really fun, cool way that I think people will enjoy playing around with.

Josh:  I think you just want people to understand that this is still early days and it’s a great time to, they’re not too early, they’re not too late. This is a great time to engage and understand what’s out there and educate themselves.