Nils Tracy’s Blog

I've been having this conversation quite often in investor discussions, and given the growing interest in legal tech and AI, it's worth taking a deeper dive into this topic. The legal tech market is a unique beast. Business models that thrive in other industries often falter in this one. But why is that?

Law: A Profession of Skeptics

First, it's essential to understand that law is inherently a profession of skeptics. Attorneys serve as their clients' rational minds and sober advisors. Their role is to think through every possible way a situation could go wrong and then work to mitigate potential losses. This mindset doesn't just apply to their legal work; it permeates their entire approach to practice. Lawyers don't want to know everything your product can do—they want to know what your product *won't* do. Their first filter is determining which software has the least potential to harm their practice. Only after that do they consider which tool offers the most potential benefit. In a profession where profit is derived from minimizing risk, the focus is inevitably on what could go wrong.

A Decentralized Market: Grandma and the Big Bad Wolf

The second aspect that sets the legal market apart is its surprising decentralization. For those outside the industry, this can be hard to grasp. You see the big white-shoe law firms and the legal departments of mega-corporations and assume they operate like other large organizations—like investment banks, for instance. A large group of high-paid professionals, all with common goals and a well-defined hierarchical structure, right? Wrong.

There's a reason why grandmothers around the world tell their grandchildren to become doctors or lawyers, but never bankers. These professions are fundamentally different. A doctor or a lawyer carries ultimate responsibility and authority for their actions. In a large firm or corporate legal department, each attorney is, in essence, a lone wolf within a pack (for the uninitiated, that’s a Hangover reference). Each lawyer holds their own license, carries their own malpractice insurance, and, most importantly, risks their individual career with every legal decision they make and every software tool they use.

This reality creates a unique challenge: it's not enough to "sell a firm" or "sell a legal department" on your product. You have to convince each individual attorney that your solution won't jeopardize their personal practice or career. And this challenge scales with the number of attorneys involved.

Building Trust in a Market of Product Champions

In the legal market, every attorney is a potential product champion. But to earn their trust, you need to go beyond just selling the product—you need to make the state bar, their peers, partners, judges, courts, and clients comfortable with your solution. If you can achieve this, the legal market becomes scalable in a way few others can match. If you can't, your product won’t gain traction.

Consider this: would you use DocuSign if your attorney advised against it? Probably not. Attorneys wield significant influence over the tools their clients use, and this extends into the realm of AI. The potential for AI in the legal market is enormous, but that potential will only be realized if trust is built first.

Why Legal AI Will Boom

This brings us to why the legal AI market is poised for a massive boom. At the heart of AI's promise is its ability to generate and process language quickly and with remarkable accuracy. Large Language Models (LLMs) and Generative AI represent a breakthrough in language technology, and they are a perfect fit for the legal industry, where words are the core commodity. No other field places as much value on words, measured in dollars per word, as the legal industry does. And within law, intellectual property (IP) law stands out as the pinnacle—where the most valuable words are carefully crafted, protected, and litigated. The efficiency and precision that AI brings to handling these words can dramatically increase productivity, reduce costs, and open up new possibilities for managing and monetizing legal content. The alignment of AI’s strengths with the needs of the legal profession is why we’re on the cusp of a legal tech revolution.

The legal tech market is vast, but it requires a deep understanding of the profession's inherent skepticism and decentralization. Success here depends on more than just a great product—it depends on building trust with a pack of lone wolves, each guarding their practice with an eye for risk. The opportunity is enormous, but so is the challenge. And with the rise of legal AI, the potential rewards have never been greater.

I once worked with a sales guy who had a habit of cutting through the fluff with a single word: "Missouri." Whenever I'd get too deep into the technical weeds during a pitch, he'd chime in with that one word. Confused, I'd ask, "What do you mean?" He'd simply reply, "Show me." Annoying? Yes. Effective? Absolutely.

That's exactly where the AI market stands today. Technically-minded folks are dazzled by what AI can do. Spend enough time on Hugging Face, fine-tuning models, and it's easy to believe the value proposition is self-evident. But for most people, it's not. To them, it's all hype—another ApeCoin or Pets.com. We're doing a lot of talking, but not nearly enough showing.

This issue is partly due to hype culture, but the SaaS model is also to blame. We're emerging from the Golden Age of SaaS, where tools like Salesforce and Slack reshaped our perception of how to sell technology. But the assumption in enterprise SaaS sales is that the software is something buyers already want—enough to sign a substantial contract. That implies real demand, where the software either makes or saves money, plain and simple.

Enterprise buyers aren't investors. They don't care if your technology will be amazing someday. They need it to deliver value now. They need to see it work, see the ROI, and pay for it accordingly. No hype, no zombie ARR that collapses in a year—just real, enduring revenue.

Frankly, AI isn't there yet. It's still a research-driven field with breakthroughs happening weekly. Your $500k enterprise contract could be undermined by a 10x better competitor emerging before the ink is dry. That's why enterprise buyers are cautious.

The truth is, most people don't see the value in AI yet. At Blinder, we sell to law firms and legal departments, and when I ask decision-makers if they personally use AI, the answer is almost always "No." If they do, it's usually free ChatGPT. Why? They don't trust the output—especially in law, where a hallucinated case could mean malpractice. They worry about security. They don't see the added value. They don't know how to use it and are wary of IP concerns.

These are the conversations we have 99% of the time with enterprise buyers. Ignoring this context and pushing a SaaS agreement is a recipe for failure. We're not SaaS doomers, but the reality is that AI isn't ready for the traditional SaaS model.

The Blinder Approach: "Show Me" Sales

• Training: We don't just onboard and leave. We train users not only on our tool but on AI best practices. We provide them with the prompts, teach prompt engineering, highlight data and IP risks, show them how to mitigate those risks, and—most importantly—demonstrate how AI and Blinder can increase their revenue.

• Transparency: Blinder is all about transparency. We offer a middle ground where you get the benefits of GenAI while protecting your data. One of our core features is a no-code audit trail that tracks every aspect of AI usage—who, what, where, when, and how much. For IP management, we go a step further and publish notices of IP ownership, not just in crisis but as a standard procedure, like a receipt after a purchase.

• Transactional Pricing: Instead of forcing buyers to pay upfront and hope they find value, we've made everything transactional. Every team member gets a free seat and initial training. They only pay when they run a call through an LLM or use our AI copyright agent. Ongoing training and support are also transactional. We trust our product and believe users will see its value, plain and simple.

For lawyers, our approach isn't just preferable—it's essential. Malpractice risk is a constant concern, and the associated insurance costs are sky-high. This risk goes up with AI usage. One wrong case citation due to AI model hallucination or client data leak to an AI model, and the attorney could be facing liability for their whole firm. 

By offering transparency and detailed audit trails, we're not just selling a tool; we're helping firms potentially lower those insurance premiums. Every AI interaction logged, every decision traced—it's a safety net that insurers can't ignore. We like to think of this feature of Blinder as the "safe driver" function, just plug into our API or app and get instant reassurance on how your practice is using AI. Its the same thing for their clients, in-house counsel can monitor that IP is being registered and track how AI is using it.

But risk mitigation is just the beginning. Our transactional pricing model opens a new revenue stream for attorney. They can offer our tools to their clients, adding their legal fee on top of our transactional cost. Clients benefit from cutting-edge AI assistance, while lawyers position themselves as key players in the AI revolution, not passive observers. This doesn't cannibalize billable hours; it creates a scalable income source. And those transparency trails? They’re not just for internal peace of mind. In an era where clients demand accountability, they become a powerful tool for building trust and showcasing value.

We're not just selling AI; we're providing a way for lawyers to future-proof their practice and strengthen client relationships. That's the kind of proposition that turns skeptics into champions.