As legal tech headlines focus on large firms and new tools, much of the real change is happening below the surface. In this episode of the AAAi Podcast, Bridget McCormack and Zach Abramowitz are joined by Lawsites founder Bob Ambrogi and Cosmonauts founder Timo Karakashev to unpack what’s actually shifting: AI-native workflows, platformization, consolidation, and what all of it means for courts, dispute resolution, and parts of the legal system that have long been overlooked.
For lawyers, this shift points to a different future: one where technology increasingly handles the groundwork, and professionals focus less on operating tools and more on strategy, nuance, judgment, and oversight.
Key Takeaways
- Legal Infrastructure Is Getting Platformized: Legal services are moving away from fragmented tools toward integrated platforms that combine data, workflows, and operations in one place. Management service organizations and platform-style infrastructure are centralizing functions like staffing, compliance, technology, and service delivery. This allows law firms and ALSPs to scale without rebuilding the same systems repeatedly. Private capital is accelerating this shift by enabling coordination and experimentation that the industry has historically lacked.
- AI-Native Law Firms Are Emerging. This Time, Proudly: A new generation of AI-native law firms is launching with funding and openly embracing AI as a core capability. Unlike earlier attempts that moved too early or too cautiously, these firms are targeting a much larger opportunity: global demand for legal services that has long been inaccessible. By lowering costs and expanding reach, they aim to serve underserved markets without sacrificing quality. The goal is scale and access, not just efficiency.
- M&A: Bigger Bets, Better Outcomes?: Mergers and acquisitions are increasing, but not as distressed exits. Companies with complementary products and customers are choosing to combine earlier to build larger, more capable platforms. For many teams, joining forces now offers a better path forward than trying to grow independently or chase outsized valuations. The focus has shifted toward alignment, efficiency, and long-term impact.
- AI Isn’t Just a Tool, It’s Becoming a Decision Maker: AI is widely accepted as a research and drafting tool, but discomfort rises as it approaches decision-making in areas like adjudication and dispute resolution. Despite this hesitation, AI is already being tested in roles that influence outcomes, driven by overloaded courts, burned-out lawyers, and underserved clients. The challenge is not whether the technology works, but how institutions establish oversight, accountability, and trust when outcomes are at stake.
- The Iceberg Is Under the Surface: The most meaningful opportunity in legal tech is not in high-profile tools or large firms, but in everyday disputes that never get resolved. Cost and delay cause people to abandon claims in areas like family law, criminal defense, personal injury, and small civil cases. Technology-driven dispute resolution has already proven effective in high-volume, necessity-driven environments. This is where scale, access, and real system-level impact are most achievable.
Final Thought
2026 is the moment this shift stops being theoretical. It will not be about hype, but depth. Legal technology’s future lies in systems that scale, models that expand access, and products that earn trust by changing how lawyers and clients experience the law.
Transcript
Zach Abramowitz: Well, Bridget, we have reached the end of the year and, beginning to start looking forward to 2026, but also thinking about the year that was,you and I talk of all the time about how fast AI is moving and making, making predictions, even one or two months out has, has gotten difficult at this point.
Zach Abramowitz: If any of you thought we would be here. A few months ago, thinking about the potential collapse of Open AI, then you're better at prediction than I am. But since we are here at the end of the year, we decided to invite Bob Ambrogi, the OG legal tech writer himself, Law Next podcast, Law sites.com. We also have with us Timo Karkashev, founder of Cosmonauts. Timo runs the uber successful future lawyer and legal innovators series and Timo how many legal tech events will you be running in 2026.
Timo Karakashev: We've got. 23 legal tech conferences globally with over 13,000 attendees, Zach. We very much look forward to 2026 because we've got a lot of stuff coming up, not just in the Western Hemisphere, but also in APAC going as far as Tokyo.
Zach Abramowitz: So we've got the right people who've got the right intel. The way today's podcast is going to work is each of us came to this conversation with a prediction or a major theme that we're going to be following in 2026 And so we want to kick it off. Bob, with you, as you look forward to 2026, what trend are you following closely? What prediction are you ready to get behind?
Bob Ambrogi: I hate predictions, but I'm happy to talk about trends, and thanks for having me here. It's a real honor to be in such esteemed company here this morning on this, on this call. After listening to Timo, I feel like I should say that the trend is the explosion in the number of legal tech conferences, but that's not what I'm going to talk about. Even though there is an explosion of the number of legal tech conferences, I think what's really interesting to me right now is what could be described as the rise in the AI native legal workflow. I think ever since generative AI came on the scene late 2022, early 2023, the CoCounsel that came out in February, March, 2023. We've been kind of looking at a lot of products that have been trying to figure out how to tack on AI in some way to what they've already built. And it's been nice in some ways there have been some handy little tools that have come out around that. But I think what's really fascinating is really the development of AI first, AI native legal technology tools that is essentially built on AI as the core kind of fundamental component of the software, of the platform. I think some of the ones that have been talked a lot about these days are things like Harvey and Legora, which, obviously are really kind of transforming workflows at large law firms. But I feel like in a way this most struck home for me, when I was at the ClioCon conference this fall. When Jack Newton got up on stage there and laid out his vision, having with them, having acquired VLex and all the data, all the case law data and, docket data how they're going to be building this platform that integrates all of your matter information, all of your law firm, business information, all of this legal data, docket data, case law, data, all of these capabilities to generate documents to help you analyze legal matters. It really is essentially, I think as he's put it, the transforming legal software from systems of record to systems of action. I think that's really critical. Lawyers become almost supervisors of the software rather than just users of the software. It kind of transforms the whole relationship between legal professionals and the products they're using. We're seeing that across the board, e-discovery companies like Relativity are talking about this. Practice management, companies like Filevine, Clio. The big companies like Harvey, Legora CoCounsel with Thomson Reuters. Really integrating AI native workflows. Building products that are constructed around this.
Bob Ambrogi: So I think it's really going to transform law practice over the next couple of years. I think it has implications, something that I know is near and dear to Bridget's hearts for access to justice, because I think it can really begin to have implications for legal services offices for smaller firm lawyers to be able to be much more productive, get much more done and serve that many more clients. So, I'll stop there, but that's what I think is the big trend.
Zach Abramowitz: Bridget, AI native I know is something that you've thought about quite a bit at, at the AAA. So, maybe jump in here.
Bridget McCormack: Yes, and what I'm watching trend-wise kind of builds on Bob's or maybe intersects with Bob's, or maybe it's the same, you tell me. I think AI native legal workflows are the future, and we're just starting to see them and they're significantly different than tacking AI to what you've always done. You all probably have seen that we built an AI native case management platform and an AI arbitrator on top of it. It's just a completely different ball game for resolving disputes. I agree with Bob, we're likely to see just more and more of that across the industry. I don't know about all of you, but the incoming I have from, PE firms interested in legal generally, and a DR as well and what we're seeing with MSOs, with roll-ups. I think we're going to start to see an even bigger platformization of legal services. I can imagine capital funding, a large enterprise sort of MSO ALSP platform that law firms can then plug into. And, you know, the MSOs become the infrastructure layer, like the backbone of, of delivery like we've seen in other industries and they can centralize all kinds of workflows. Compliance engines and staffing, logistics and knowledge management, data analytics. They run the systems that make scaled legal services possible. Then the ALSPs are like the production layer and they stop competing on price and instead are competing on capability.
They're building specialized AI service units for discovery, contracting, dispute, analytics, document workflows, and that's where the sort of AI native workflows that everybody starts to do differently happen at that layer. And capital can fuel all of this in a way that I don't think we've ever seen before in legal, at least not to the extent I'm seeing it now.
Bridget McCormack: And I think that capital is seeing that opportunity to consolidate what's kind of a fragmented ecosystem and, and, and build a, build these like conglomerates that would integrate all of those pieces. And I can see then one of these like large platforms can then have one contract with Harvey, Legora or Clio or all of the above, like one big enterprise contract, and then law firms can plug in along the way and take advantage of all of that. So maybe we're not quite there yet, but I think we're starting to see the beginning of not only AI native workflows, but AI native legal platforms, like ecosystems.
Zach Abramowitz: Yes. And before, before I jump in and, and go to Timo because I know Timo's going to talk a little bit about M&A as one of the trends that's following some of this directly connects, but just for the listening audience who heard that term, MSO, this is becoming a hotly discussed term. It means a management services organization. And effectively the reason it's become relevant to the conversation about artificial intelligence and the law is that up until now, typically law firms were not owned by anyone other than lawyers. Non-lawyers couldn't have a stake, which meant that private capital would not flow to law firms. There was an attempt to start thinking about using. Arizona law firms as a kind of workaround, but that has its own limitations. And now one of the things that you're hearing from private equity firms is exactly that, Can we potentially fund law firms? Can we invest in law firms as an alternative asset class through investing essentially in this kind of back office?
Zach Abramowitz: And I assume this is going to get challenged in some of the bar associations and it probably should be discussed by bar associations. But I think the reason this now relates back to AI is there's a renewed interest from private equity to invest in law firms and legal services service providers, like a dispute resolution platform, quite specifically because of AI. Because the thinking goes, wait a minute, we can run a law firm, maybe we can strip it down or we can make it run more. If you know a cynical version, maybe a more optimistic version of that as we can create lean AI native workflows and processes, but effectively we can take a firm that maybe wasn't running as efficiently as it should have been beforehand. We can flip the switch. And now with AI, there's a really strong possibility. And I think this also sort of gets into what you're seeing in this new partnership. Between Open AI and Thrive Capital is exactly that, taking organizations that were not AI first and thinking about transforming them. And Bridget, I appreciate your point in addition to just the AI native software, which was what Bob was describing, is the AI native organization or the AI native law firm, AI native dispute resolution. Before I jump over to Timo. Bob or Bridget did, one of you, want to respond or add on to that?
Bob Ambrogi: I just wanted to mention we may all remember Atrium, which kind of crashed and burned colossally, which was essentially that model. Yeah, it was the, the, the, the, the, the back office side as a, as a separate vehicle that could be invested in, uh, and then the law firm and, and it failed phenomenally. And before that, there's another one called ClearSpire that had the same fate. But I think you nailed it, Zach, in saying, the time is right. Right now because of AI, because of technology. I was just at the TLTF summit, the Legal Tech Fund conference where a lot of investors were there and this was the talk of that conference, the MSOs. It was a major theme there.
Zach Abramowitz: Timo, we were in New York when everyone was talking about McDermott and their plans to take on capital, maybe through an MSO. What are your thoughts? And, then I think we should lead into your trend.
Timo Karakashev: Let me ask you guys, why do you guys think that legal services are so expensive? Why? Why do you guys think that legal services are so expensive?
Zach Abramowitz: Cue the Jeopardy! theme music
Bridget McCormack: Yes because lawyers still think they have to be bespoke, right? Lawyers haven't figured out how to scale legal services and it can be scaled.It's not quite that legal services are not in every instance, quite as special as lawyers sometimes think they are.
Timo Karakashev: It's a simple supply and demand game. Yes, there is a huge amount of demand and you have supply that has been for many, many centuries, governed by a very small group of individuals. Yes. a lot of that can be channeled into expertise,into legislation and why people that are not lawyers cannot perform legal services. But Bob, to your point, yes. Atrium, you know, crushed and burned. Robin AI crushed and burned. You know, for me, Robin AI was an AI enabled law firm. Maybe they were too ashamed to say that publicly and I think that that maybe was one of their errors. But over the last eight weeks alone, I have seen at least six AI native law firms being launched with funding behind them. And, and the truth is that there is so much demand for legal services globally, both on the consumer end and on the business end.
Timo Karakashev: But because they have been kept so inaccessible for many centuries, a lot of that demand has been untapped and, and the truth is that for me in 2026, we're going to see, apart from the explosion of legal tech conferences, which will happen inevitably just because there are budgets to be spent there is a lot of enthusiasm. There is a lot of venture capital money that needs to be thrown at marketing so that the growth is being achieved. We are going to see the explosion of AI native law firms that will be able to service the masses, and maybe some of those AI native law firms will be integrated into traditional legal practices for which there will always be a market, because as the market grows, that top end of the market will remain. Busy and you continue growing. I don't think anyone will eat the pie of the big firms because there is a type of legal work that will always require that white glove expertise. But for the masses, I think we're going to see an explosion of those firms that will be able to really provide legal services that are still at 90% the quality that a traditional, historically, proven itself, law firm will be able to provide. And I'm excited for that future because Bridget, the big passion for you is access to justice. You know, this is where the access to justice gap will be filled. It's not going to be done by traditional legal practitioners. It can only be done by technology. Take any country around the world. India. Right now, if India stops filing any criminal or civil cases, it'll take them 300 years to process the backlog that they've got in their courts. And I wish to see more of that innovation actually adopted into the court system, actually adopted into the schools.
I was at the League of Innovators event that we hosted Zach, in New York. And, I stayed because we collaborated with, New York legal tech meetup with Christian and he actually put on a phenomenal panel on educational institutions. And how educational institutions are starting to integrate some of that technology into their curriculum. My question was, when are we going to see a change in the way that we grade our lawyers? Because the way that we grade our lawyers of the future is the same way that we've been grading our lawyers in the 19th century, in the 20th century. The tools at disposal of those future lawyers are very different from the tools of disposal that their predecessors have had. So, I'm very optimistic about the future. I don't think that we are in a bubble. I feel that yes, there will be the mother of all churns coming up at one point over the next few years where a lot of those solutions have been both in parallel and tested in parallel. And, you know, some firms will have to choose the Harvey, Legora, Vincent or Cocounsel. I think that the real excitement and opportunity here is down the food chain. And I've been telling you Zach before that for me, the biggest opportunity in legal tech is not in legal. And I think that the more firms we see, actually taking that leap down the food chain. This is where not $8 billion companies are. This is where your $80 billion company of the future is. I think that maybe Atrium and Robin, maybe they're a little bit too early. There are loads of people that are having the advantage of the second movers into this market, but in theory, it made sense, right?
Zach Abramowitz: So it's so interesting that you say that because, you know, I, tend to describe innovation and progress similar to one of those coin machines you might have seen at a Dave and Buster's where you drop in coins and all the client coins sort of move to the very edge. They all look like they're going to fall off and then they don't. You have to put in another coin and eventually what you find out is like some of those coins then do fall, but then you're sort of back to where you were and the cycle tends to always look like, we're going to get this massive progress now. And then there's kind of a shrug of disappointment. And, then we tend to see the breakthrough. So the analogy because Bob, you mentioned Atrium and ClearSpire. I think that that was a lot like the first work in thinking about what a new kind of law firm would look like over the past five or 10 years. And I think you can even highlight some of the more successful versions like Rimon Law or FisherBroyles. So you do have these different models. I think to your point, Timo, Robin, and I think maybe even Ontra as well, had they launched today in their current format, they would've proudly said, we are an AI first law firm. We're a new paradigm for a service provider. But it just wasn't cool to say that you want to be building products, you want to be raising money. I think that this is where a lot of companies sort of got caught between being a product and being a service, not because they. didn't want, they, they, they didn't have a good, meaning they didn't have a good product or, but because they didn't even realize it was a category. So they, it wasn't a good story to
Timo Karakashev: At the time. It wasn't a good story to tell for venture capital investment. It wasn't a traditional SaaS play that venture capitalists expect.
Zach Abramowitz: Right. So you I would go farther and say
Bob Ambrogi: It wasn't, they were afraid to say it. There were a lot of progressive companies that were worried about the regulatory structure and the possible implications if they portrayed themselves as in any way delivering legal services, what would happen? Would they face litigation? Would investors be scared off? So it wasn't just that it wasn't cool. There was a fear factor there too.
Bridget McCormack: I think that's exactly right. I think not only were they afraid, they were correct to be afraid. The position bar associations have taken right until like maybe sort of recently, although I'm not sure what we'll see from Bar Associations. We'll definitely see some fighting back in the next couple of years. Even though I agree with Timo about where it's all headed. I think it wasn't just not cool. It was well placed fear about what would happen. I couldn't agree more.
Zach Abramowitz: And I think what's really interesting is just to tie the bow on this piece as we start to think about where we are today that we weren't at the end of 2024. I would say the quote unquote, vertically integrated or AI native or AI first law firm. That is the thing that is really pushing decision makers at the incumbent law firms to move. Tell them about Harvey and Legora. That's easy. Right? And, I just mentioned those two. I mentioned those two because it's, it seems like that's, that's as sophisticated as the conversation has gotten in some firms. Like what, which of these tools are you're choosing maybe a few months ago is Harvey and Cocounsel that doesn't really get them to move. That feels manageable. Oh, so you're selling us, there's another productivity suite that we need to buy for our attorneys. Okay. But when you start talking to them about the AI first firm and the idea that. Maybe some of their star attorneys are going to leave to start their own AI first firms. This is what gets the attention of senior decision makers at law firms, and I think what we're going to see, again towards that AI first play to build on Bob's original trend and prediction, we're going to get a lot of other firms who are incumbents who say, we need to go AI first, and this is going to be really interesting. I'm sure there'll be plenty of clumsiness. Plenty of humor, but also there are going to be some firms that get this right, and we may look back a couple of years from now and say, wow, do you remember when such and such firm was, you know, not that big a name, but now five and six years later, we're seeing, the returns of that move that they made. I think that's happening in real time right now and it's super exciting.
Timo Karakashev: I feel that for me personally, you have two categories of tools out there. You've got the tools that are there to service the practice of law. And then you've got the tools that are servicing the business of law. And a lot of the tools that have been servicing the business of law, especially the ones which are quote unquote efficiency gain. These types of tools have been somewhat less attractive to traditional law because let's be open and honest about it. Traditional law is not a business model that is engineered to be efficient. However, now that we've got the rise of AI native law firms, where I would say you see very much fixed fee models or alternatives, fee structures that are done, where efficiency for me would be an important element of what those firms will have to deal with in order to be shown as competitive in the market, but also different, not just in the way that utilize technology, but also in the way that they run business compared to traditional, traditional law firms. So I do feel that we'll see the rise of more of those business of law tools.
I think that we'll see the rise of business development tools, more of those. Targeted and built for law firms who see the rise of marketing tools in the space who'll see the rise of administrative tools that can support the needs and the requirement for better efficiencies in the way that the business of law is being run. So I do think that for me at least, whether that's going to be in the next 12 months or the next 24 months, for me, the winners and the ones that will attract capital will be less. How many Harvey and Legora can you have? Right? You know, you've already called Cocounsel Vincent Harvey and Legora, you know, Libra got acquired by Wolters Kluwer for 90 mil.
Timo Karakashev: You know, there are so many solutions, which yes, they're a little bit different from each other, but they're the same thing, right? So at the end of the day. There will be a huge requirement for, and I know that a lot of people are kind of scratching their head and they are thinking, Hey, why the, why the heck is Laurel raising a hundred million? A hundred million for timekeeping. But it's not just the timekeeping, it's data, it's analytics, it's the thing that allows you to make better business decisions in the way that your practice is being run. That's why that company is raising a hundred million. It's not because they have sold you a glorified spreadsheet for you to track your time that you are already probably overstating better. So I do think that we'll see more of this coming to the market from a product standpoint, but I do look forward to seeing more of those AI native law firms trickling down in servicing consumers, for example. It's a little bit the invention of the plane, the Wright brothers had something that was barely flying and then, 60, 70 years down, down the line it is the most utilized transport in the world. So for, for me that's where the excitement really lays.
Zach Abramowitz: Timo, let's stay with you for a minute. I know you're building on this trend that Bob mentioned, but in addition to AI native. What are you looking at as 2026 approaches? I mentioned M&A before, so I sort of gave it away. But talk to us about what you think we're going to see with, M&A in the legal AI space and why it's a trend you're following.
Timo Karakashev: Well, I'll tell you what I hope I'm going to see is more firms taking a braver leap of faith in each other and genuinely merging and trying to build exciting products together. I just mentioned Libra. You can call it a success story out of Germany, right? It's an AI two similar to Harvey and Legora, very quickly accelerated from zero to 3 million annual recurring revenue from pretty much bootstrap little to no funding. Got acquired by WK Wolters Kluwer a couple of months ago, or even a month ago for about 30x that revenue. In the surface, great success. I'm sure that everyone involved made a fair amount of change. Having said that, if you look at one of the founders of that firm, you know, he was also a co-founder in midpage. Which I think, Zach, you are familiar with midpage is building a quote unquote accessible equivalent to Westlaw and to VLex. So, we license a bunch of stuff in our company.
Timo Karakashev: Westlaw with CoCounsel. It's not a cheap product. And I can talk about that now. because they publish their pricing. Your starting point is 12 grand a year just to touch it. and I think that, again, this is quite, you know, it's quite inaccessible for most of the markets in the Western Hemisphere let alone how inaccessible it can be for the global market. So, I would like to see more companies looking at these opportunities and thinking, Hey, you know what? We've got two or three complementing solutions here.
We've got complementing customers. Why don't we come together and try to integrate those tools and try to be, build something significant,and big as opposed to keep them being swept by Litera, by WK .You guys have been in this industry for longer than I am, like half of the time those are catch and kill, type of interactions. I regret so much that Casetext got sold so early. I would've loved to see a world where we've got Harvey, Legora, Casetext, Vincent, more competition is so good for any market and the more that you add to that competition, you're driving costs down. You're also improving on the experience of the user because obviously people need to be better than the one next to them. So, I regret that some of those acquisitions for me have happened too early. I would've liked to see them live on for a little longer. And I would like to see, and I hope I would predict to see some more solutions, not just from that latest wave of innovation coming together. That prior wave of innovation that happened between 2018, 2000,and 2021 where loads of companies raised a bit of money here in the UK and in the US not the amount of money being raised today, but they've raised 10, 20, 30 million and kind of have really not lived up to that.
Hockey stick type of growth that investors are hoping for, but still are very healthy businesses. They're still growing at a 20% -30% rate, maybe not at a point where they can raise a lot of money, but still they're healthy businesses with a healthy customer base, with people enjoying those products.
I have so many solutions where I look at them having seen hundreds of demos. And I'm thinking you are selling to the exact same people. You have a fraction of the process, figured out why k don't you come together and make this a bigger business than it is and make it a more exciting business. And this is happening in other industries, but I think our industry is still a lot more in its infancy than we like to think.
Zach Abramowitz: So Bridget and I, interviewed recently Farah Gasmi, one of the founders of Dioptra. There are a lot of interviews that we've done over the past few years I think really have been excellent. And this conversation's turning out to be great as well. But from the interview with Dioptra, I actually quote her line on one of my slides, and I think it's one of the most important things that's been said, she understood that when you're selling AI. You can't just sell it in terms of cost savings.
This might be a way to get a conversation started, but ultimately what lawyers care deeply about is the experience. And if you have not transformed their work experience where they now feel like, wow, I'm able to, to get deeply into my work in a way that I wasn't able previously, the product's not going to stick. And, the reason I mentioned it, Bridgette and I were, both fixated on her insights. Dioptra, which is a very early stage company was acquired just last, last week or the week before by Icertis. And to me I thought, wow, she was really a smart founder and she just made the right move. For a lot of companies, you are better off not just in terms of wealth to the founders, but also in terms of the product that you can build.
You might be better off attaching to a bigger company right now. And Bridget, one of the companies that you and I have been obsessed about over the past year has been Base 44, which was acquired recently by Wix, not a legal tech product, a vibe coding product acquired by Wix.com. And since the acquisition, they have already done over a hundred mil.
The acquisition price is 80 million. They've already done over 100 million ARR since joining Wix. So these aren't rescues. I think this is where I think M&A today is more interesting than it was 5- 10 years ago when you talked about the legal technology space. Today you can build and launch a product with very little funding. We've mentioned Harvey and Legora, Newcode is a company that is entirely bootstrapped and is competing head to head with both of those companies. And I think that the play of saying, Hey, listen, I know we're going to have compute costs, we're going to have to hire talented developers and talented teams.
But if we can run lean and build a fantastic product, we might be able to be more easily acquirable because we don't have a ton of VCs on our board. We don't have tons of mouths to feed from an investor's perspective. We can just focus on building. And, I think this is going to be a super important trend moving forward.
Zach Abramowitz: Bob, I see you shaking your head. I'd love your feedback and I want to hear from Bridget on this as well.
Bob Ambrogi: Well, I'm nodding in agreement with a lot of what you said, but I think the other, follow up I wanted to make, Timo talked about a kind of technology better serving the masses and, I think. What we're also seeing right now in terms of M&A. I've always complained about so much of the M&A money goes to tech that only serves big law or only serves big corporations. And now we are seeing more money going into sectors of legal tech that serve. Broader categories, at least of legal services and not so much not getting to the legal aid sector yet. I'd like to see that as well. But I'm thinking about, for instance, about the personal injury space. We've got Eve, EvenUp, Supio, companies like that, that were historically poorly served by legal tech. That now, a number of companies are raising a whole lot of money to build AI native workflows for personal injury lawyers to be able to better serve people who've been injured, and injured at work or who have employment issues or any number of other matters. I think there are other sectors like that where we're seeing investment, looking at broader sectors of the legal market than they historically have.
Timo Karakashev: We are also finally seeing some tools being deployed into the criminal justice system as well. I mean, TRIALKIT is a tool that is making waves and you know, this is where mistakes really mean not you losing a deal, but you going to prison unlawfully. We're talking about human lives here and I also look forward to seeing more tools being deployed in family law as well, in criminal justice because this is where real lives are being put on hold and sometimes are being affected wrongfully. Because it's such an unsexy corner of the legal world, just because of how little funding there is. It has been under service from a technology standpoint, but I do think that there will be more, and even some of those big companies, you know, I do envision a world where the Harvey’s of the world and the Legoras of the world will be deploying some of those technologies to this type of practices at fraction of the cost or even at no cost. It would be their way of giving back or at least I hope we could see some of that. And obviously with the reduction of cost of LLMs eventually,those solutions should be more accessible,financially by the masses of lawyers. There is so much tech, big law can buy, you know, big law is that part of the industry. And then you have everything else.
Bridget McCormack: Yes, the whole iceberg is below the water, right? Like it's the tip where capital has focused and therefore where builders have built is pretty small. The iceberg is below. And I think that one of the most exciting trends we're seeing is people building for these practices that never got any attention from, uh, legal tech builders before. I mean, PE in particular PE firms. And Bob, you know, the funding it takes to just get a case filed, means that even in a case where there are certain damages, but they're low, say $70K and no question about liability. Most lawyers can't afford to file that case, but for most people. $75,000 is maybe the difference between staying in your house or not, right? The opportunity to close that justice gap is really exciting and Timo couldn't agree more. Builders like TRIALKIT, building for criminal defense. When I first heard of it, I said to Zach, nobody can buy, the criminal defense lawyers don't have any money. I know them. They have no money. but it turns out there are like models to make that market work as well. And so that is what excites me the most about everything we're seeing. Zach, I want to go back to your point. The the story of small lean teams, being acquired so that they can actually get more done within a bigger company is kind of an old story, right?
It's like, it's what, it's what Des has and Deep did in 2014, right? I mean, if you, if you listen to. What Demis says about that. I mean, there, by the way, can you um, can you believe they were required for like $400 million? Like $400 million?
Zach Abramowitz: The deal of the deal of the century.
Bridget McCormack: The deal of the century, exactly. But at the time, I mean, Demis was like: I have one life. I think I can fix a lot of problems, but I need a whole lot more compute and a whole lot more infrastructure. So let’s go do it right now. He could have held out for a lot more money, and obviously would’ve gotten it eventually.But that’s part of the story. And if that gets us to the part of the iceberg that’s under the water faster, then I’m okay with that.
Zach Abramowitz: Yeah. I think just to add to Timo’s point, I could not agree more that the most exciting, sort of unpredictable feature of AI has been the kind of underrepresented markets that it's been selling to. The joke in legal tech forever was, any sort of newcomer to legal tech would say, the best plan is to sell to small and solo law firms or to mid-size law firms because they're less bureaucratic.
Zach Abramowitz: They're easier to get into. And, and this was like a big joke because it turned out that the reason they were less bureaucratic is they typically didn't have budgets. They didn't have someone who is purchasing technology on behalf of the organization. And so if you were looking at really sophisticated technology, you didn't have a great way of evaluating it, but AI is so powerful and so obvious and kind of just magical. I read Harry Potter with my, youngest daughter, and it's interesting when we're going through and I'm thinking, wow, a lot of this feels like AI to me now, right? What's being described at Hogwarts feels like it is magical. And I think what happens is lawyers see that and they say, well, I don't need a Chief Information Officer or a Chief Procurement Officer, or a Chief Innovation Officer to buy this product. It's so obvious to me that it's going to be a game changer. So they're buying products like Spellbook, whereas, I think we all kind of used to fall into this trap like Timo said, just focusing on the big law firms because that's what would attract venture capital and that's what attracted glam and the sort of undying proposition that it's always a good business to sell to the rich. Actually with AI the budgets are not what's creating rocket ship growth, what's creating rocket ship growth is the need and like TRIALKIT we mentioned. I think selling to the greatest need and the greatest unlock is going to be very exciting. And I think, we always used to talk about the quote unquote access to justice startups. I think that category goes away. In AI because it no longer has to be, you know, the other startups are just in it for the money. These are in it for the social good, but they never kind of really had the impact. Today, I think that you don't necessarily need to define yourself as an access to justice startup. You can just create real value and ultimately that should create its kind of downstream better access to justice. I wanted to mention one,other trend, since we all, we all came with one,, that I think is going to be really important. I think it actually relates quite a bit to the AAA, so I want to make sure to get Bridget's feedback on this one.
Zach Abramowitz: I think the role of AI has up until now been the role of a kind of personal AI assistant. I think we’re going to see a move in 2026, slowly toward AI as a decision maker. Now, the statistic I love to quote, or the survey data, is White & Case did a survey showing that even lawyers who are comfortable with AI being used in the practice of law, when you shift over to decision making like a judge or an arbitrator, they become very uncomfortable with it.
Zach Abramowitz: And that's not to say I don't think there's going to be adoption, but I sort of note that kind of double standard, the EU AI Act doesn't regulate the practice of law, but does list as like high risk, anything involving a decision made by a judge, or by an arbitrator. I think we're going to see a shift here moving forward.
Zach Abramowitz: I think the AAA is going to influence quite a few people on this because of the launch of the AI arbitrator that you mentioned before, Bridget, but I think we're also going to start to see AI more in the courts. I just recently interviewed Gabe Pereyra. The Harvey co-founder. He talked about the fact that Harvey is doing some work with some international courts. Bridget, our friend, Shlomo Klapper from Learned Hand is working with some state trial courts. So I think we're going to start to see the role of AI not just as a judge, but in general, lawyers getting more confidence with AI as a decision maker. And let's start with the question then.
Timo Karakashev: We have, but we have no choice. We have no choice but to do that.
Bridget McCormack: Yep.
Timo Karakashev: I think that it's not a matter of whether we see this. As an option. It's the only way, I was just saying, I've been suing a company since 2021. Someone that didn't pay me, I've been suing them since 2021.I'm getting to 2026 and it's, not because of them. Don't get me started with them. But it's been the courts that have been so. inadequately run. So slow to actually process. it's like a $50,000 claim. It's not a big claim, because of COVID, I had so many unpaid bills. I'm talking north, north of $750,000 that was unpaid to me. I started with this one bill to see how it goes, and now I'm not going to process any of them. Because it has taken four years and it's still pending.
Timo Karakashev: And the amount of time, money, and attention, this one claim has taken me, has deterred me to go and file the other $700,000 of claim. And I'm not alone. This is the standard. This is not the exception. This is civil cases we're talking about. We're talking about people, we're talking about women being abused at home and not being able to claim custody of their children. We're talking about actual problems that people are experiencing. We have no option but to allow AI to start unlocking our systems. And,believe me, it probably, it'll end up, it'll end up in most cases, making a fair decision. Then the decision we'll make.
Zach Abramowitz: You've been looking at Bridget's notes. Bridget, you want to jump in here?
Bridget McCormack: No, I feel like Timo just made my case for me. There's so much we can do with AI for resolving disputes. So right now, most people give up on them at great cost to them, to their families, to their futures and frankly to our communities, society and economies at large, better dispute resolution, more dispute resolution is just good for peace in the world and growing economies. And that Timo, is what I wake up and go to bed thinking about every day. And I do think, there's all kinds of upside potential there and, and, we're working on it. We're just getting started.
Timo Karakashev: Well, I do appreciate you doing that, Bridgette, and I'll tell you that in some of my contracts for the United States, I have actually completely removed any possibility for litigation. I have included that if there is any dispute, it needs to be resolved by the AAA in New York City.
Zach Abramowitz: and all of its associated AI products.
Timo Karakashev: I, I do see that to become the standard for t smaller contracts, because it doesn't make sense after a contract is below a certain size to even consider the possibility of the litigation because it would just be too expensive and too laborious for either side to fight over this. And, and let's not forget that disputes are highly emotionally charged. Legal work, you know? So often it's not even a matter of people making the sound decision, should I be pursuing this or not? You want to pursue it because you want to hurt the other side because of what they did.Alot of the time if you are able through technology to resolve whatever that dispute might be, everyone is going to move on get closure and get on to the next more productive thing.
Bob Ambrogi: It's worth thinking about the fact [ that one of the most successful dispute resolution systems ever developed was eBay.
Bridget McCormack: Yes.
Bob Ambrogi: And that's entirely the reason they developed it was because all of their disputes were too small to go through any kind of traditional dispute resolution process, and so they came up with one of their own that was basically a technology driven before AI, but a technology driven dispute resolution process, and hugely successful.
Bridget McCormack: Yep. Amen. Amen to all the above.
Zach Abramowitz: Bob and Timo,] thanks for joining us here. We really appreciate it. And, we look forward, to our upcoming season, Bridget of the AAA AI podcast, kicking off, freshly in the new year. So thanks for joining us. Thanks so much. Thank you guys.
Bridget McCormack: Thank you.