Harvey is valued at $11B. Legora just raised at $5.5B. I built their entire web application in two weeks and I'm making it open-source and free for everyone to use. Say hi to Mike: https://t.co/NdtTt5MSJ2.
When I got the chance to try Harvey and Legora, I was surprised by how simple they were. A thought came to mind: I could probably build something similar in no time at all with Claude. And so I did.
Assistant, project, tabular review and workflows. You get it all without vendor lock-in.
Mike offers law firms an alternative, where they own the application layer and aren't stuck with a vendor they're renewing forever.
You can try Mike in the demo on the website, or go to the GitHub link on the site to download the code and run a local version yourself.
AI wrappers which are in essence token resellers exist as a brilliant form of financial engineering.
They have created significant paper wealth simply by accounting for token pass-through as ARR.
When token spend passes through a reseller, it supports the valuations of both the reseller and the model provider, doubling the amount of wealth creation on paper, even though almost all of the wrapper’s revenue is ultimately paid to the model provider.
So someone just alerted me to a part of this post which I missed.
“Our eng org is starting to spend as much on tokens as we do on headcount.”
At 1000+ headcount, assuming average salary at $200k, employee costs are already >$200m/yr which is almost as much as the “ARR”.
If the internal token costs are another $200m, that means Harvey will be in the red for about $100m to $200m BEFORE accounting for the costs of tokens to customers who are on fixed pricing.
I imagine they might be accounting for this in R&D instead of operating costs but in reality this is an ongoing operating cost.
And the costs of tokens are just going to keep increasing…
We don’t plan to become a law firm or acquire one - we think the best business for Harvey is to help every law firm become AI-native not become one.
If Kirkland and every other top firm spend $500M on AI that means this market is going to massive and there will be plenty of room for OAI / ANT / Harvey / Legora / Mike to all be successful because there will be many more firms that can’t afford to spend $500M and will need similar platforms.
The part most people are missing is how expensive AI is about to get. Our eng org is starting to spend as much on tokens as we do on headcount. If the same happens for law firms there is going to be a massive opportunity to help firms manage and optimize that spend. We think there is value in building the agent infrastructure, all of the firm level management infrastructure (how do you manage your token spend / agents / data / lawyers by client, matter, practice area) and custom models to reduce this spend (you don’t have to train a model better than mythos - you just need open source models that can perform diligence better than mythos and our recent post training results show this is probably possible).
There is a world where Kirkland builds an awesome platform, we help them with some of it and we help a lot of other firms with it as well and so do all the other legal tech players and everyone wins without anyone needing to build a law firm
Many issues. Cash burn (simple calculation shows ‘ARR’ can’t even cover employee costs let alone token costs), token costs going up significantly while they are on fixed pricing, Am law 200 market saturation (going downmarket raises questions on whether they can maintain the same pricing…), firms building on their own…
You don’t have to acquire the staff. The only ones who matter are the founders some executives and the contracts.
There are also relationships you have to consider. Sam Altman made a personal seed investment in Harvey and via the OpenAI Startup fund, and granted Harvey exclusive early access to the OpenAI API. These were decisions which essentially created the startup.
I think Kirkland is ahead of the curve on trying to own their own AI infrastructure. Making AI that you can sell to law firms and making AI that solves problems for you and your clients are very different things.