#23 Providing new value to corporate legal affairs through the use of AI technology, pioneering legal tech

After graduating from Kyoto University Faculty of Law in 2010, he attended the university's law school, passed the bar exam in 2012, and registered as a lawyer. He then worked at Mori Hamada & Matsumoto in general corporate legal affairs before starting his own business in April 2017.

I thought about starting a business just before I retired from the law firm, but during my tenure at the law firm, I was thinking about what "good legal services (for companies)" should be. I was discussing with my colleague Masataka Ogasawara (co-founder, current Director and Audit & Supervisory Board Member) on a daily basis whether we could create a better legal service than what had been done by our predecessors. At the time, AI (Artificial Intelligence) technology based on neural networks was attracting a great deal of attention, with the computer Go program AlphaGo (Alpha Go, Google DeepMind) winning against the best professional Go players. I thought that the application of this technology had the potential to improve legal services, and I started LegalForce Inc. (now LegalOn Technologies Inc.) to realize it.

Our idea of better legal services is more abstract, but it includes services that focus on providing higher quality legal advice faster, drafting contracts, or working more closely with the client company to deliver business wins.

In order to catch up with the times, we knew that we would have to establish a company with the objective of focusing firmly on technology development in order to do well. We also believed that we would not be able to maintain our competitiveness without in-house development in order to obtain feedback from our customers and reflect it in our development at a high speed. Neither Ogasawara nor I had any knowledge of technology, so our first task was to scout for engineers with expertise in AI.

Everything was a challenge, so it was a series of hardships from start to finish. There is no right answer when it comes to deciding on a product concept, and there are many options when it comes to legal tech, so we had no idea where to focus our efforts. Even if we narrowed it down, we had no idea whether it would be successful or not, or whether it would sell. We had no idea how to realize the concept, and since we had no engineers, we had no idea how to make it happen. We had to clear all these issues one by one, including whether we would be able to attract human resources in such a situation. Even if we wanted to hire engineers in the first place, we did not have a product yet, nor did we have the money to pay for it - people would not easily come to such a risky company.

For the first year after its establishment, the company paid staff compensation and other expenses with earnings from Zelo, a law firm that Ogasawara and I had established at the same time and that we operated together, and with personal borrowed funds. As the company's operating funds dwindled, I was drawing up a roadmap for product development, starting operations, and fundraising, so I felt a lot of pressure to accomplish what I had to do and the plans in front of me, which kept me busy.

Under these circumstances, a beta version of our first product, "LegalForce," was completed in April 2018, but we had to reject it because we felt that our customers would not use it even if we released it. Therefore, we greatly compressed the concept and completed a new beta version about three months later that focused on the current base functionality of "LegalForce" - automatic review and search of contracts - and were able to start offering it to customers as an open beta version.

Our business itself was getting a lot of attention in the media, but there was a period of time when we could not get any contracts at all, even though we went out to sales with our open beta version. No matter how many companies we visited, they were slow to respond and would not buy at all.... So, while thinking about how we could get people to buy our products, we kept repeating trial and error, changing the way we explained things, changing the way we made proposals, etc. Then one day, all of a sudden, we started to sell. Sales by simply explaining in detail or appealing to the features of the product will not sell. It was the moment when I realized that new and innovative products will never sell unless we can conduct sales activities that change the way customers think. From that point on, I began to think about how to conduct sales.

There are several timing factors when a product sells. In the case of "LegalForce," the initial sales were strong due to media coverage. Six months later, the user interface (UI) was significantly updated to make it easier to see and use, which accelerated the number of users; a year later, further improvements were made, and overall accuracy was greatly enhanced, making it easier for the sales department to sell the product. I believe that the fact that our engineers have accompanied our customers during business meetings, listening to their opinions and reflecting their needs in the development of the product, has been highly evaluated.

We also believe that in order to achieve gradual growth, it is important to evolve our sales methods in line with improvements in product performance and other factors. To begin with, we have always believed that no matter how high the quality of a product, it cannot be sold without sales, and we have emphasized sales operations from the initial stages. I pointed out earlier the importance of changing our sales approach, and we are committed to continuing to evolve our presentation methods and proposals as the performance of our products improves.