Building and Scaling Legal Tech: Lessons from Gary Sangha, the CEO of LexCheck During LexCheck's Decade of InnovationLegal Tech StartUp Focus Podcast
22:49 Share

Welcome, everyone. This is Charlie Uniman, your host at the LegalTech Startup Focus podcast. I am thrilled to have as a guest today, Gary Sagaha. I'll ask and confirm with Gary if I mispronounced his last name, but we'll make sure we get that right. And Gary is the CEO at LexCheck. We're going to learn a lot more about LexCheck and a lot more about Gary. And I want to say, Gary, welcome. Thank you for having me.

Did I get the pronunciation of your last name right? Close enough. How should I say it? Senga. Senga. Okay. I will remember that. And thank you for the correction. Gary, how long has LexCheck been in business?

I think it's been a while, hasn't it? Yeah, so closing in on almost 10 years. So I founded this. This is my second startup. My first startup, Intelligize, was acquired by LexisNexis. And we've historically been an NLP dev shop, so developing natural language processing solutions to help law firms and legal departments out. And now let's get into the meat and potatoes of LexCheck. What...

I must say, I've looked at your website, so I'm not entirely innocent of what it does. But those few listeners who might not know, why don't you give us a little background about what LexCheck is all about, where you are in its 10-year journey, and we'll dig into some of the even more granular particulars about your offering. So what is LexCheck? Thanks.

So we've historically been, again, a natural language processing development shop, using AI tech to help law firms and legal departments out. Our latest solution, which is about to be released, is called LexCheck Insights. And this marries the best of natural language processing with large language models.

The upshot is you get a very, very powerful contract review tool. You can create playbooks in minutes. The accuracy of the insights is phenomenal, and the redlining is best in class. And what, did I understand correctly, Insight, if I have that right, has not yet been released, or have you released it already? So we've had a soft release. The official release is coming in a couple of weeks. Aha. Well, I don't know if I'm getting a scoop here, but I'll take what I can get. What...

What distinguishes LexCheck from its esteemed competitors in your space? And more particularly, what does Insight bring to the party that we want to know about? Absolutely. So we like to think of ourselves as the next generation of large language model.

software plays. So LMS have been game changers, but they have limitations. And I think the market has quickly discovered them. Right.

In terms of contract review, they can be very limiting. They typically seem to break down beyond simple NDAs. Setting up guidance and playbooks is really painful. A lot of people, I think I figured out, a lot of entrepreneurs, that there's a lot of nuance involved in contracting that LLM themselves don't just easily solve. So these are problems that we've been aware of for ages, and our NLP tech is just very well suited to solving them.

So the upshot is we've discovered that when we have applied our NLP tech to large language models, you just get an uptick in quality and comprehensiveness that we haven't seen from the marketplace.

And is Insight even more of an add-on to that, or is what you described include some of the Insight features? I guess it's part of your NLP layer, if I understood correctly, that you apply or add on to or conjoin with the LLMs that you're using. Exactly. And what...

What, you know, I was a transactional lawyer for almost 40 years in New York, so contracts were my meat and potatoes. I often look back and sigh and say, why didn't I have the tools that are available now when I was practicing law? But here I am looking at a contract and I want to do some redlining. And, you know, if I can prattle on for a little bit. Redlining to me, when I was still practicing before NLP took on the contract,

business that it does and before Gen I even added to what NLP processing, natural language processing could do was just showing changes from one version of a document to another. Red lighting today means really what? Pointing out important aspects of the contract vis-a-vis a playbook and the like. And beyond that, actually making the edits.

Making the edits, okay. So it's not your grandfather's old-fashioned redlining anymore. So what, you know, without getting into...

you know, the technicalities, which I'm ill prepared to understand, of generative AI, LLMs, and your NLP. What does it actually do to add that or enable that nuance and, for example, produce a better result when it comes to making changes to a document that came in over the transom that you now, as the reviewing lawyer, have to analyze?

Sure. So we have proprietary pre-processing technology and post-processing technology. So there's stuff that we do to the contract before it goes to the LLM and after we receive it from the LLM that just increases the quality and comprehensiveness.

And go ahead. I'm sorry, I don't mean to interrupt. You continue, please. Not at all. So again, if you have tools that are simple GPT wrappers, they're kind of limited, right? Because you're kind of dependent on whatever OpenAI gives you. We've discovered that if you can do some pre-processing, almost like if you're developing a recipe and you kind of build your sauce beforehand, you add it, you

you can just get a better outcome at the end. Right. So it's not just a matter then of, well, I may be talking through my hat and getting it wrong here. It's not just a matter of fine-tuning the LLM. It's actually using your software to do work on the contract before and after it's been run through the LLM. Is that a good way to put it? Exactly. Spot on.

Okay, very good. Well, again, and by the way, you were a lawyer too at one time, or at least you went to law school if I remember correctly. Absolutely. And were you a transactional lawyer? Did you learn to love-hate contracts as much as I did? No.

No comment. I was actually a capital markets attorney, so working on stock and bond deals. Right. So you had to deal with contracts of various sorts. Not like our friends, the litigators who...

can't believe that we can put up with 180-page credit agreements and they're left to deal with the sometimes badly drafted language that results in litigation. You were like me dealing with the contract itself. Charlie, and hats off to those folks that have to deal with those 180-page credit agreements. Oh, man, I wake up still 10 years later in a cold sweat thinking I haven't completed the review of one. And what is the chief...

target market for LexCheck? Is it principally aimed at enterprises and corporations with, you know, massive numbers of contracts and people in procurement as well as in-house, or does it look to private law firms as clients as well? It looks to both. You

Basically, what we need are folks that do repeat business. Do you work on the same type of documents over and over again? So if it's custom work you do once in a while, we're probably not a good fit. But if you're working on the same type of contract over and over again, and you have best practices, and you want to be consistent throughout your org, we're a good fit. So it would be both enterprises and law firms. But again, you want to be working the same type of document over and over again. Yep, yep, I got you.

Yeah, and it could apply to both, although I see particular relevance for procurement types and in-house who have distributorship agreements over and over and over again and have commercial contracts that repeat themselves. I can remember dealing with a few of those on the private finance side when I was practicing. How big is...

Let's check, market, is it international? Has it confined itself to the US? Where do you market and get your customers? Great question. So we are focused right now on English language contracts. Anglophone, okay, right. And I guess that means anything from Australia to Canada to the UK and all that good stuff. Despite what they're telling me, I still believe it's one language. Yeah. Yeah.

Yeah, well, I had a roommate in college from Western Canada, and as soon as I deciphered his gains and abouts, I was okay. But yeah, I think it's pretty much the same language. So you've been in business for 10 years. You're a founder or a co-founder, is that right? Correct. So you've seen the whole span.

You know, a number of questions that we sort of discussed, Gary and I, by email beforehand. And those are the sorts of questions that I'd appreciate Gary's wisdom on to help other startup leaders in the legal tech vertical deal with the issues of that face. What have you found to be your key drivers for successful marketing and revenue growth and sales here?

for LexCheck. I wish I could tell your audience that there's a secret sauce or a magical solution. Unless you have a $100 million ad budget, sadly, there's no replacing just hard work and rolling up your sleeves. Go ahead. Please. And I guess part of that is...

you know, dealing with both outbound marketing and sales and inbound? I mean, do you post to social media? Are you driving new customer growth from, you know, LinkedIn, from some of the social media outlets? Or is it pretty much a sales-driven from the inside out to the world that you're doing at LexCheck?

So ideally, you do a bit of everything, right? So if you have your groove, you ideally, you want to aim for at least 50% of your leads being inbound, and then half being sales driven and outbound would kind of be the goal. But initially, it has to almost entirely be outbound.

Yeah, outbound sales. Yeah, it's a – I don't mean to be pejorative here, and I'm not saying that the people who come to LexCheck are dealing with undue complexity, but selling most legal tech applications is a complex enough sell –

that you really do have to have people who know the product, can get out there, explain it to the buyers and users. And that often is a sales, outbound sales mechanism. I quite understand that. Absolutely. Because again, unlike say certain other departments like sales or IT, historically legal hasn't been all that big of a software purchaser, right? It's changing. Sure.

But historically, they haven't had that budget or that, you know, those muscles. So it definitely it's not necessarily self-service at this point. You still have to hold clients hands. Right. Now, I often think about this when I'm talking to other startups and I have to tell you, and I think you'll agree, legal tech has come a long way.

from the early days and I'm going back to 20 years where the UI, the user interface, the user experience was, let's just say not delightful.

And I think that legal tech leaders have recognized that lawyers are like other people. They have not only busy schedules, and while they have tremendous talent for focusing on the work they're doing, they're not interested primarily in learning how to use software. So being able to onboard successfully and quickly from a lawyer user standpoint is important. Have you...

Any special tips or lessons to be learned from your own experience when it comes to dealing with onboarding in a manner where your users are happy to use the software and don't just give it a try and leave it on the shelf, turning it into that awful thing called shelfware? Yep. I think the key thing that legal tech entrepreneurs need to know is that

They're not the iPhone. So you can't just give them the product and expect people to just use it by themselves, right? So you have to lean in to onboarding as a process. There are obviously lots of tools available these days, videos, whatnot, that can help

automate some of the onboarding, but really you can't cut corners. So my advice to folks is to be...

overly labor intensive with the onboarding. Really lean in, really lean in, understand what the best practices are, understand where people drop off, be willing to follow up. And only at that point when you have a process that is humming, should you start looking into automation tools like videos, emails and all that jazz. - No, I remember again in the,

worse or bad old days. There was a particular product that I was using in my practice in the group in which I worked at the law firm in New York City. And the user interface was just awful. This goes back maybe 15 years.

And we had to learn the software because the client was part of an industry group, or the clients in this case, that insisted that this software be used by their outside counsel. And it was just a maze of buttons and boxes. And look, the vendor had a leg up because we were told, learn it and use it. That's not often the case. And I have to say, I came away from that experience just...

just grunting. And I was a techie. I enjoyed software. I liked playing around with things. And I just wish that that vendor had, you know, borne the cost of having some people who knew the product inside out,

Not only would I have expected or wished that the vendor had redesigned the software, but dealing with what we had to deal with had people who could join us either in the office or even 15 years ago online and describe and instruct us on how to use that. I think it's an expense that if you can afford it all is among the expenses that's well worth incurring.

I tell you, Charlie, when I look at various legal tech products, I can tell which ones had a lawyer involved in creating the user and the user experience, because it's not something that you can kick out to some UI wizard because they lack the intuition and just the nuance of how legal work is done. Right. No, I agree.

And, you know, the lawyer who's involved in the software development can tell you almost from the get-go that, you know, pointing the user in the direction of taking one, two, three steps and four is just running counter to how it's really done.

So, yeah, I think your point's a good one. The subject matter expert, whether it's a champion giving you feedback from a customer or whether it's someone on staff who has been in the trenches and practiced in this area, that's a valuable, valuable thing to be able to offer your development team and even your customer success team. Thank you.

So with 10 years under your belt, as is the case with virtually every software product, there have been ups and downs. But let's focus on the ups.

I first want to congratulate you and your team at LexCheck for being in the business for this long. I mean, staying power is a damn good indicator of the value add that you bring to your customers. Having said that, among all the successes and wins, what are the one or two that you look back on most fondly and that you're most proud of over the last 10 years?

Oh gosh, there's so many. So, you know, it's the first set of sales, right? The first set of actually not even sales, just the customer renewals. Right. And they, you know, concur that you're adding overwhelming value. That is something that's really special. Yeah, that's a jazzy point for sure.

And no one can take that away from you. Also, just as a leader, just seeing your team members join a startup to take a risk and to see how their careers blossom is something that's also important.

something that just gives me a lot of joy and pride. Yeah, undoubtedly. Unfortunately, legal tech companies and a lot of software companies can't put the first dollar bill up on the wall as you sometimes see at the bakery or whatever. But you'll never forget that first check and you'll never forget that first

It's probably even more so than getting outside funding from an institutional investor. It's probably the best form of validation. And, you know, I often talk to startups about getting product market fit and

You know, my when they say, Well, how can I tell if I have gotten it? Well, there are a number of pointers, I suppose that people have written about. But I think the best thing if you can get your hands on data like this, is to be able to ask your customers, how bad would you feel if we disappeared tomorrow? Yeah. And, you know, if they say, Oh, my God, my, my work life would be just immeasurably more horrible.

or they renew, I think you've got the best, the very best form of validation that you have fit with the market. Yeah, I agree. So...

You know, we're going to be jealous of our listeners' time, as we always are in the Legal Tech Startup Focus podcast. I want to thank you for the insights and description of LexCheck. You can be sure that if I were practicing, I'd insist on having a go at that, and I'm sure I'd love it and bring it into the firm. Fortunately, I don't have to worry about those agreements being completed on time and well, except in my nightmares.

But if people do want to reach out to you, where do they find you? At the website? Are you on LinkedIn? What's a good way to get in touch with you, Gary? Yeah, you can find me on LinkedIn. You can find me on LexCheck. Email me. My email is my initials, gs at lexcheck.com. And it's L-A-X-C-H-E-C-K, just like I guess you would think it. Yes, sir.

All right, well, I make it a point at the end of every podcast to say that I hope we meet at a convention, a conference, a Legal Tech get-together. You're on the other side of the country from me. I'm near New York City. But if you're heading out to Legal Week,

I guess it's late February, early March this year. I keep forgetting just when. If you're going to be in New York, let me know. We will have a beer. We'll have some coffee. We'll get together and talk about legal tech. Sounds like a plan. All right. Thanks so much for joining me, Gary. Thank you. Thank you for listening to the Legal Tech Startup Focus podcast. If you're interested in legal tech startups and enjoyed this podcast,

Please consider joining the free LegalTech Startup Focus community by going to www.legaltechstartupfocus.com and signing up. Again, thanks.