All start-ups have legal needs but rarely fit the service delivery model of traditional legal firms. Clara is a legal assistance platformed designed specifically to serve the needs of first-time founders and their legal challenges
by Natasha Mascarenhas in Cruchbase on July 9, 2109
Working as a corporate lawyer in Dubai, Patrick Rogers found himself in the thick of mergers, restructuring, and corporate governance. After years in the trenches of international law, he found a new type of brave and unpredictable client base that he wanted to work with: founders and startups.
But according to Rogers, startup clients didn’t fit within the constraints of his day job. It was even harder to imagine working with startups from emerging markets, strapped for resources and money but still looking for advice. Still, as he felt the volume of founders growing in the Middle East and Africa, he quit his job and founded Support Legal to offer legal counsel to these emerging companies.
Now he’s spinning out a second business from his first: Clara. The new company just raised $2 million in a seed round to help digitize legal processes related to startup operations. Clara plans to provide legal counsel, advice, and connections to startups and venture capitalists in both emerging and established markets. Along with Rogers, the other co-founders on the team are Lee McMahon, Hannah McKinlay, Ahmed Arif, and Arthur Guest. “Traditional corporate firms make money based on the number of hours their lawyers work on client on matters,” Rogers told Crunchbase News. “There is no connection between value delivered and fees paid. Instead, clients simply pay for the number of hours lawyers spent on a given task, regardless of complexity.”
Clara, in contrast, designs a processes around the legal steps, then builds software around those processes, allowing software to perform a lot of the tasks associated with startup law. Then, founders can have the option to talk to lawyers for more complex tasks, on a fixed fee basis.
“Your average founder is a first-time founder, [so] they don’t know what they don’t know,” Rogers said on a phone call from London, where the company’s headquarters will relocate.
How It Works
Initially startups will pay Clara on a regular basis for support regarding their legal needs.
Rogers is confident that this strategy makes sense partly because Clara’s slew of investors include Techstars and 500 Startups, both of which will work as a pipeline for new customers. To Clara, that’s free marketing.
“[Venture capitalists] say we’re going to insist every startup we invest into get a Clara subscription,” said Rogers.
Then Clara will offer a content management system of sorts for portfolio companies (think Carta) to venture capitalists for a subscription fee. It’ll help compare and contrast portfolio companies, and have all legal documents around financing deals in one place.
Jason Boehmig, CEO and co-founder of Ironclad, which manages contracts for companies like Dropbox, Away, and Glassdoor, thinks that startups are taking legal help more seriously, and investment into the space is becoming increasingly more worthwhile.
Beyond the fact that adhering to the law is important, Boehmig thinks that streamlining contract management and other legal documents is a “hidden opportunity for efficiency gains.” It frees up the legal team for more important, and pressing parts of the business, he said.
As for why corporate law isn’t tapping into startups thirsty for advice? Boehmig, unlike Rogers, said that lawyers aren’t hesitant to work for a startup, they want to.
“You feel like a business partner versus just a partner at the firm,” he said, when it comes to work with a startup.
Boehmig said he sees companies bring in their first in-house lawyer around the 100 person mark. Now, he’s slowly seeing lawyers on the founding team of startups to help execs become more efficient.
Founders can expect to see a world of automation, clarification, and explainers to bring legal expertise within arms reach. While it feels a ways away that we’ll see a world where startups are comfortable accepting legal expertise from a Khan Academy-esque video, versus a professional. companies like Clara are betting on this new hybrid approach.
Illustration: Li-Anne Dias.