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Legal tech companies, listen up. Big Law wants “containerization.”

By Roy Strom | October 04, 2018 at 10:00 AM

Reynen Court website (Photo: Courtesy photo)

Litigators at Latham & Watkins are used to duking it out with their peers at Clifford Chance, Paul, Weiss, Rifkind, Wharton & Garrison, Cravath, Swaine & Moore and Skadden, Arps, Slate Meagher & Flom.

But those firms’ chief information officers are now banding together.

A group of 12 of the world’s most elite law firms have teamed up to nudge legal technology vendors toward adopting an infrastructure that sounds arcane, but could be a key development in unleashing a digital revolution in the practice of law.

Legal tech companies, listen up. It’s called “containerization.”

The 12 law firms have joined a consortium to support a legal tech startup called Reynen Court LLC, which is creating a platform to allow law firms to more quickly deploy legal tech tools such as contract analysis, discovery and practice management. In short, the effort is akin to creating an App Store that will allow law firms to quickly and more securely fire up third-party software.

The group is asking tech companies to, pardon the jargon, deploy containerized apps into firms’ private cloud environments or their own data centers. Applied to the legal world, the benefits of this new technology infrastructure pioneered by companies like Inc., Google LLC and Microsoft Corp. could include safer, less expensive storage of client data. But it could also supercharge the impact of disparate legal tech solutions by allowing them to work together.

If legal tech vendors adopt Reynen Court’s platform, products that, for instance, analyze contracts, conduct decision-tree reasoning and draft documents could interact with each other.

“If you could join those things together you could conceive of a much more automated production line: Find the right clauses, figure out the logic to apply and write the new legal document,” said Paul Greenwood, chief information officer at Clifford Chance. “That is where, ultimately, we’d like to get to. And the idea of the consortium is to say to the legal startup industry and the legal tech industry: We see great value in your solutions. You have great ability to really transform the way we work, but having standards is really important to us.”

For legal tech vendors, working with Reynen Court’s platform would give them access to a broader swathe of law firms without having the expense of configuring their products to individual firms’ on premise tech infrastructure.

The consortium of law firms is co-chaired by Latham and Clifford Chance and vice-chaired by Paul Weiss. It also includes Covington & Burling; Cravath; Freshfields Bruckhaus Deringer; Gibson, Dunn & Crutcher; Linklaters; Orrick, Herrington Sutcliffe; Ropes & Gray; Skadden; and White & Case.

Andrew Klein

Reynen Court, which the firms are working with to develop a strategy as to what products should first be brought onto the platform, is run by Andrew Klein, a serial entrepreneur who before embarking on a series of business endeavors began his career as an associate at Cravath.

If Klein’s past success in launching new businesses—he is a co-founder of the hedge fund SkyBridge Capital, which is perhaps best-known for its other co-founder, fellow Harvard Law School graduate Anthony Scaramucci—is any indication, Reynen Court could be a first-mover in an area that is set to grow.

Klein left Cravath in 1993 with the financial backing of 13 of the firm’s partners to start a craft beer company, Spring Street Brewing Co., which he eventually brought into the public markets via one of the first internet-enabled initial public offerings. He then launched an internet-based investment bank, Wit Capital, which The Goldman Sachs Group Inc. bought a 25 percent stake in before that company also went public. Wit had $400 million in revenue by 2001.

After being early to the craft beer and internet-based investment worlds, in 2006 Klein founded a digital marketing company, Spotzer Media Group BV, where he served as CEO until last year.

“When you start a company, you are looking for big waves in technology, and you gather up smart people and you try to make something happen,” Klein said. “That pattern, in the beginning was accidental. And it became a way of thinking about how you start companies.”

Klein brought that process to bear as he began thinking about his next project about 18 months ago. He had become interested in the prospect of artificial intelligence and found himself thinking of ways it could be applied to the legal world. Klein also thought of his experience in the digital marketing world and how his platform had proliferated with the help of a service automation platform, which is what Reynen Court is.

“I could see the logic of all these new [artificial intelligence] applications beginning to make sense, and I also saw this explosion of vendors making applications targeted at the legal sector were focused on narrow, edge applications that do one thing very well that are very specific,” Klein said.

The problem for law firms, as Klein sees it, is that the various software providers keep their information in the cloud. Law firms, for security reasons, have long required that their software providers integrate with their on-site servers.

“We have a real challenge because everything is going on the cloud,” said Latham’s deputy CIO Rene Mendoza. “Many applications are not allowing you to be on premise anymore, and if they do, it’s very expensive.”

The cloud, Klein said, presents a huge challenge for law firms.

“[They] want to use these new offerings, because that requires them to take content and trust it up into a black box under the control of a vendor,“ he said. “So we could build a common platform and basically orchestrate bringing each application down into the chosen computing environment of a given law firm and give them complete control over the data.”

That last process is the so-called “containerization” of those software-as-a-service offerings. It is a process that allows the logic or code of the product to be hosted on the secure networks or private cloud environment of law firms.

Paul Greenwood

Clifford Chance’s Greenwood said the containerization of software could be similar to the revolution brought about by shipping containers. Whereas shipping used to be an intricate and expensive dance that required fitting different sized items onto ships or trains, the container universalized the size of things that could be shipped and also, thanks to hooks being placed in standard spots, how things were moved.

“That’s the idea behind this: To not have everything different shapes and sizes, but to have everything have the same size and hooks so we can all move together,” Greenwood said.

One early believer and financial supporter of the project is Tom Glocer, a former Davis Polk & Wardwell associate and ex-CEO of Thomson Reuters Corp. who met Klein while he was at Cravath. Glocer has invested in a number of Klein’s ventures, including Spotzer.

“The trends he has identified in computing is essentially the story of how do you go to the cloud without sacrificing privacy and security,” Glocer said. “And that has broad applicability beyond legal. But the legal world cares about it almost more than any other industry. So I said, ‘Sure I’ll invest my own money and I’m happy to sign on as an adviser and share whatever I’ve got.’”

Kenneth Heaps, the CIO at Latham, said the group is realistic that the transition to a containerized legal tech world will likely take years. But he said there is an incentive for current leading tech companies to engage with Reynen Court, which has offices in Amsterdam and near San Francisco in Piedmont, California.

“Because as competing offerings start to enter the marketplace, those that come into a Reynen Court environment may be more attractive for a law firm,” Heaps said.

Klein, who named Reynen after the street he grew up on in Ridgewood, New Jersey, said the timing issue will be one of the trickier aspects of the company’s rollout. But he is still convinced that artificial intelligence will have a significant impact on the legal market.

“It’s a little bit distant. It’s not tomorrow,” Klein said. “But if we’re half right about the significance these technologies will have in the practice of law, then a platform like we’re trying to build will be an essential piece of plumbing to help firms accelerate the use and adoption of those technologies. We might be a little bit early, but I think this is going to come in a pretty significant wave.”