Okayyyy….
The boss of a top legal AI company has claimed that partners at elite law firms are undercharging.
Max Junestrand, the 26 year-old Swedish tech whizz who runs Legora, believes that law firms’ billable hour model means “you overcharge for the associates and you actually undercharge for the partners”.
Speaking to the All-In podcast, Junestrand cited Kirkland & Ellis, where average profit per equity partner stands at £8.2 million, and charge our rates for the best lawyers reach thousands of pounds per hour, to illustrate his point, explaining:
“Thirty minutes of a Kirkland partner’s time when it really matters can be worth a lot more than that, if it’s bet the company litigation or you avoid a pitfall that would have cost the company tens of millions of dollars.”
He continued: “The only way they know how to price that is to overcharge for the associates”.
Flattering partners, while downplaying the importance of their underlings, has long been a popular tactic for vendors selling to law firms. But the white collar job loss narrative around AI has seemingly taken this approach to the next level. Not that Junestrand, who graduated from a computer science degree in 2023, believes it’s all over for rookie lawyers. He added: “The job will exist, the tasks will be different. In order to have a partner-driven model you need to bring people up the ranks.”
Legora is one of a handful of legal AI companies that have experienced rapid growth in recent years. Awash with venture capital money, the company recently splashed out on a advertising campaign featuring actor Jude Law, which used the strapline ‘Law just got more attractive’.
I didn’t realise this guy was 26. Not sure whether to be impressed or horrified.
He’s probably right.
Alex folded yesterday’s copy of the Daily Mirror and sighed. The comments just weren’t being generated with the frequency they had in the past. He needed a scoop. A big scoop. Something to make the in house HR people sit up.
This guy’s a complete yokel. That 26-year-old with a basic bachelor’s degree which is nothing in this job market anymore. Any decent computer scientist has to have a master’s to do anything interesting at a major tech company. He has never worked in law and it’s unclear how unearth he was qualified to start a legal tech company. Now with zero experience as a lawyer he’s going around making comments about the Legal market.
Note that this guy has precisely 0 years of experience at any decent software firm. No Microsoft no Amazon and definitely nothing top tier.
He is actually a very interesting, engaging and driven person. You can feel the real passion when you meet him. Studied machine learning and had a lawyer roommate, which explains the beginnings of the company. Spoke to as many large law firms as there are. Hired a lot of lawyers. Could deliver lively presentations at 24-25 of age in ways many people could never dream to do in their life in front of audiences in the hundreds. I say well done.
And yet he’s founded a company valued at $5 billion which delivers real value to its customers. It’s called risk taking and execution… you should try it sometime.
OK. I concede.
That’s not chicken feed.
I suppose that he’s correct, but it’s no different to any other industry. If a graphic designer charged £5M to design the McDonalds logo, they would be ‘undercharging’ insofar as the instant brand recognition is worth considerably more. Likewise, if a wealth manager charges £1M to turn £500k into £20M, they’ve probably ‘undercharged’.
However, that misses the point and is only arguable as an abstract idea.
How much a lawyer is worth is dictated not solely by how much they ‘save’, ‘earn, or ‘help’ a client. The courts have been very clear in this regard. Their value also depends (amongst other things) on creating returning, reliable, and high paying business (especially insofar as equity partners are concerned). On that point alone, very few clients will be able to justify paying £10k per hour (for the sake of example) for even an especially good Kirkland equity partner. It would represent being an exceptional outlier, which isn’t good for creating returning, regular business. That is to say, whilst the odd equity partner or KC may be able to command such sums, it is not conducive to sustaining an exceptionally costly organisation, nor is it within the justifiable reach of enough clients to produce sufficient business on a wide enough scale to justify the entire equity partnership charging at such a rate.