For this week’s feature post (209), Legal Evolution is pleased to welcome Raj Goyle, CEO of Bodhala, an AI-enabled spend management company which earlier this year attracted significant attention when it successfully closed a $10 million round of investment. See “Bodhala Raises $10 Million Growth Investment Led by Edison Partners,” Businesswire, Apr 22, 2020.
I offered this slot to Raj because the legal ecosystem needs more founder stories to help demystify what it takes to build a successful operating company in the legal industry, especially when the offerings are potentially disruptive. See Post 201 (soliciting founder stories). From far away, LegalTech is often viewed as something cool. But up close, it’s at best a multi-year grind with an immense amount of risk, huge deposits of sweat equity, and a couple of dozen judgment calls that could make or break the company. Bodhala is no exception.
Bodhala was founded in late 2014 with the dream of making the legal services market more efficient—a vision that, in reality, is so audacious that even today few lawyers understand what Raj and his co-founder, Ketan Jhaveri, are talking about. Now, nearly six years later, they are able to pop the hood on Bodhala so we can see what we’ve never really seen before: true apples-to-apples comparisons of law firms and individual lawyers, by practice area, based on hourly rates, staffing of cases, and how long matters last by duration (days) and hours worked.
Already I can hear lawyer-critics complain that Bodhala data are imperfect—that they do not enable the type of analysis that gets to the heart of value. I have two reactions to these predictable responses.
First, some portion of complaints is just noise by market participants who chafe at the prospect of being measured and compared. Let time do its work. Second, Bodhala is first-generation metrics for outside counsel management that, by necessity, is geared to the current state-of-the-art, which is hourly billing combined with discounts. Quantum leaps in efficiency, quality, and cycle time will come when the output of billable hour engagement by a large firm can be compared to its equivalent performed with a carefully designed mix of lawyers, technology, process, and alternative staffing, which will likely be done for a single flat-fee price. But the market is just not ripe for this level of change. For every outspoken GC or legal ops professional banging the drum for more law firm innovation, another ten are looking for something much more incremental. Bodhala’s hyper-transparency is a necessary intermediate step in their direction.
Bodhala’s biggest long-term challenge is the culture of in-house lawyering, which, as Casey Flaherty has pointed out, has the same DNA as large law firms. See Post 040 (discussing Flaherty’s “Lawyer Theory of Value”). I am skeptical that the current generation of in-house lawyers is (a) willing to manage outside counsel in a metrics-driven way, (b) has the aptitude to use metrics, and (c), if they do, will be appropriately rewarded for making the shift.
But note I said this generation. What about the next generation, which is likely in law school rightnow?
Bodhala is the legal market equivalent of a starter Lego set–once you understand its logic, it alters your imagination and increases your ambition. Thus, in the long run, we end up in some amazing and unexpected places. For that to happen, however, what is new has to become normal. Bodhala is a good start.
I hope you enjoy Raj Goyle’s founder story. See Post 209.