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$75M legal startup Atrium shuts down, lays off 100
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$75M legal startup Atrium shuts down, lays off 100


Justin Kan’shybrid legal software and law firm startup Atriumis shutting down today after failing to figure out how to deliver better effectivity than a traditional law firm, the CEO tells TechCrunch completely. The startup has now laid off all its workers, which totaled factual over 100. It can return some of its $75.5 million in funding to investors, including Sequence B lead Andreessen Horowitz. The separate Atrium law firm will continue to operate.

“I’m really grateful to the customers and the team individuals who came along with me and our investors. It’s unfortunate that this wasn’t the final result that we wanted however we’re thankful to every person that came with us on the promenade,” said Kan. He’d beforehand founded Justin.tv, which pivoted to turn into Twitch and later sold to Amazon for $970 million. “We determined to call it and wind down the startup operations. There shall be some capital returned to investors post wind-down,” Kan told me.

Atrium had attempted a pivot back in January, laying off its in-home lawyers to turn into a extra pure software startup with better margins. Some of its lawyers shaped a separate standalone legal firm and took on obsolete Atrium purchasers. However Kan tells me that it was tough to regain momentum coming out of that change, which some Atrium customers explain me felt chaotic and left them uncertain of their legal representation.

Extra layoffs quietly ensued as divisions connected to these lawyers had been eliminated. However trying to get software for third-party lawyers, many of whom have entrenched processes and older leadership, proved complicated. The streamlined workflows may no longer have gave the influence value the thrash of adopting novel technology.

“For these that contemplate at our original business model with the verticalized law firm, a lot of these companies that have this kind of fat stack model are no longer going to live on,” Kan explained. “A lot of these companies, Atrium included, did no longer figure out how to make a dent in operational effectivity.”

Disrupting law companies proves complicated

Founded in 2017, Atrium constructed software for startups to navigate fundraising, hiring, acquisition deals and collaboration with their legal team. Atrium also supplied in-home lawyers that may present counsel and most effective practices in these matters. The idea was that the collaboration software would make its lawyers extra atmosphere friendly than a traditional law firm so they may get work carried out faster, translating to savings for purchasers and Atrium.

Atrium’s software included Information, a Dropbox-esque gadget for keeping track of legal paperwork, and Hiring, which instantly generated employment provide letters based on details punched into a accomplish while keeping track of signatures. The startup hoped it may stop purchasers and lawyers from wasting time digging via email chains or missing a sign-off that may put them in legal jeopardy.

The company tried to generate client leads by hosting fundraising workshops for startups, starring Kan and his stories from growing Twitch. A charismatic leader with a near-billion-dollar exit beneath his belt, investors and founders alike had been mercurial to want into Kan’s vision and advice. Startups saw Atrium as an ally with industry skills that may abet them avoid dirty time period sheets or botched hires.

However keeping a large squad of lawyers on staff proved expensive. Atrium priced packages of its software and legal assistance beneath subscriptions, with momentous deals care for acquisitions incurring add-on fees. The model relied less on milking purchasers with steep hourly rates measured down to six-minute increments care for most law companies.

Yet eliminating the busywork for lawyers via its software didn’t materialize into bountiful profits. The pivot sought to create a professional companies and products network the place Atrium may route purchasers to attorneys. The layoffs had shaken faith in the startup as purchasers demanded stability, lest they be caught with out counsel at a tough time.

Rather than coast on, Kan determined to fold the company. The standalone Atrium law firm will continue to operate beneath partners Michel Narganes and Matthew Melville, however the startup developing legal software is carried out.

Atrium’s implosion may ship ripples via the legal tech scene, and push various entrepreneurs to start with a extra focused software-easiest approach.

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