As Atrium Lays Off Legal Staff, Is It Déjà Vu All Over Again?

Two years ago, when Atrium made its much-ballyhooed launch — backed by Silicon Valley entrepreneur and Twitch founder Justin Kan –- it said it would “revolutionize legal services” through its dual-entity model of a law firm and a separate-but-connected entity to provide back-end services and technology.

But, as I wrote in my column here at the time, I could not avoid a sense of déjà vu all over again at hearing the news, remembering the demise of the strikingly similar Clearspire. “Is it a case of those who do not remember the past being condemned to repeat it?” I wondered.

Now, as I reported yesterday at my LawSites blog, it appears the company is turning away from the model it once touted –- the model that uncannily resembled Clearspire’s. Reports indicate it is letting go most of the lawyers and staff who provide direct services to clients and shutting down that part of its operation.

Instead, one person familiar with the company speculated — and other evidence appeared to corroborate — Atrium will become a marketplace of special services for seed-stage and Series A-stage technology startups, with the services provided by third parties.

Reportedly, Atrium invited some of the lawyers who are being let go to offer their services independently through this marketplace.

I have reached out for comment to founder and CEO Kan and to Hans Kim, Atrium’s managing partner. Neither has responded. I have also reached out to several Atrium lawyers through LinkedIn. Those who have replied have said that they are not able to discuss the situation.

Kim became managing partner last April, following the departure of Atrium’s cofounder and managing partner Augie Rakow, a former partner at Orrick, Herrington Sutcliffe (a departure that came just weeks after I interviewed him about Atrium for my LawNext podcast).

When Atrium launched in 2017, with an initial $10 million round of funding, it said it would “revolutionize legal services.” Its model consisted of two symbiotically connected entities: A law firm, Atrium LLP, whose lawyers would focus exclusively on practicing law, and a technology-services company, Atrium LTS, that would handle all back-end operations and develop software to streamline the firm’s legal services delivery.

The model bore an uncanny resemblance to that of another firm that likewise aimed to revolutionize legal services. Clearspire opened in 2010 and shut down four years later. Like Atrium, Clearspire operated as two entities. The law firm, Clearspire Law, promised high-end legal work delivered efficiently, collaboratively, and transparently, at fixed prices. The service company, Clearspire Service Co., supported the firm’s business operations and infrastructure and developed a custom software platform, Coral, to support the law firm.

But Kan’s pedigree was seductive, and all signs were positive. Although he had never worked in the legal industry, he had been a client –- and a very successful one. He founded the live-video platforms Justin.tv and Twitch.tv, selling Twitch to Amazon in 2014 for $970 million. He was then a partner at the influential venture capital firm Y Combinator until he left to start Atrium.

Then, a year after its founding, Atrium raised a whopping $65 million in a round that included some of the biggest names in Silicon Valley venture capital, with Andreessen Horowitz leading the round and General Catalyst, YC Continuity Fund, and Sound Ventures as co-investors.

“Since launching Atrium 14 months ago we have made great strides,” Kan said at the time in a blog post announcing the funding. “We’ve helped over 250 clients raise a total of over $500 million in primary financings, and have built the A-team into over 110 great employees who are motivated to change this industry.”

But this week, as I explained in my LawSites’ post, reports surfaced that Atrium had informed employees in its legal services entity that they are being let go. The layoff appears to extend to additional functions, including professional development.

So is this déjà vu all over again? Is it history repeating itself?

Well, no. At least it appears not.

When Clearspire shut down, it shut down both entities. Atrium is not shutting down. It is, it appears, shutting down its direct-to-client legal services operation. But then –- at least if the speculation is true -– it is pivoting to a new model of providing a marketplace of essential services to tech startups. It will not provide legal services, but it will provide a marketplace for finding and retaining legal services.

With $75 million invested in Atrium, I do not expect it to go away. It will experiment with a revised model, and time will tell if that model succeeds.

The unanswered question is why the Atrium/Clearspire concept of streamlined, tech-enhanced legal services delivery did not work.

Mark A. Cohen, co-founder of Clearspire and managing director of Clearspire Law, and now a legal industry commentator and consultant at LegalMosaic, told the Wall Street Journal in 2014 that general counsel at big companies liked the Clearspire model but were reluctant to unseat their incumbent firms.

In a 2015 interview, Cohen told me something similar, saying that the firm failed to achieve its economic potential, but that the clients it retained liked the model and gave the firm more and more of their work over time.

But in a 2014 column at the ABA Journal, Patrick J. Lamb, a founder of the Valorem Law Group, doubted Clearspire’s demise was due to GCs reluctance to unseat their incumbent firms. Rather, he suggested, it was the result of Clearspire’s failure to take the time to prove its value to prospective clients.

“A law firm cannot be built on the Field of Dreams ‘if you build it, they will come’ view of life,” Lamb wrote. “That approach may work in movies, but even those with a passing understanding of business development know that something special may earn a try-out, but performance and solutions to client problems are the things that earn more work.”

Many thought Clearspire was simply ahead of its time. That seemed to foretell a different future for Atrium. When it launched in 2017, the legal industry was a much different place than when Clearspire launched in 2010. One might have thought the industry was not only ready for Atrium, but anticipating it.

Pundits will ponder this news for weeks, months, maybe years to come. Meanwhile, I’ll keep my fingers crossed that Kan gets back to me. I’d love to hear his perspective and learn about his plans.


Robert Ambrogi is a Massachusetts lawyer and journalist who has been covering legal technology and the web for more than 20 years, primarily through his blog LawSites.com. Former editor-in-chief of several legal newspapers, he is a fellow of the College of Law Practice Management and an inaugural Fastcase 50 honoree. He can be reached by email at ambrogi@gmail.com, and you can follow him on Twitter (@BobAmbrogi).

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