LeanLaw: From Seed to Series A
by Sharon Fisher
Though it’s been around for a while, Boise-based LeanLaw last month became one of Idaho’s latest Series A startups when it received $4 million from FINTOP Capital.
The company – formally named UserFirst Software Inc. – was founded in 2016 by Givens Pursley attorney Gary Allen, CEO Jonathon Fishman and CTO Fred Willerup – both startup veterans -- to develop software to help law firms with their business.
Currently, the company has 15 full-time equivalent employees. “We are a hybrid virtual company with staff all over the United States, and a development team outside the U.S.,” Fishman said. It has about 600 customers, but doesn’t reveal who they are.
“We don’t pay attention to the AM Law 100 or other known super firms,” Fishman said. “Our clients seek to run smart businesses and operate in a lean mindset. They are high producers that don’t want a lot of overhead. LeanLaw clients have a clear mindset that they want to do more with less.”
Hence the name.
What LeanLaw does
“We have always been a software-as-a-service company helping law firms operate better businesses,” Fishman said. The software helps law firms manage their financial operations, including onboarding clients, tracking time, delivering invoices, collecting, and reporting.
LeanLaw CEO Jonathon Fishman. Image courtesy LeanLaw.
“The sophistication of how we do that has evolved,” Fishman said. “First, we have moved up-market, focusing on smaller mid-sized law firms with 10-50 users. We still service smaller firms, but LeanLaw’s value is to package enterprise-like features and make them accessible to smaller organizations that don’t want a classic enterprise tool.”
The company has also been working to add features to the product, Fishman said. “We integrate with embedded financial services – think e-payments, banking, and payroll – and create smart workflow tailored to the law firm’s needs.”
The point is to mitigate manual work, allowing for a more refined user experience, Fishman said. “It also allows LeanLaw to earn more revenue from our existing customers, creating efficacies on their already established work,” he said.
Next steps
Now, LeanLaw is looking into adding more functionality. The company launched LeanPayment late last year, and expects to launch LeanBanking and LeanPayroll in the future, Fishman said. Two other areas of focus are client onboarding and integration, he said.
“We believe many issues specific to accounts receivable, cash flow, and realization are rooted in client onboarding,” Fishman said. Today’s tools focus on (customer relationship management) and document exchange. While these are important, they miss a critical aspect of engagement: financial alignment. LeanLaw users will have tools to financial align around budget, communication preferences, and payment upon engagement. This will have significant downstream improvements when an invoice is ready to be delivered and paid. If we financially align up-front, we won’t be surprised when the invoice arrives.”
LeanLaw has partnered with QuickBooks for several years and said it is currently the #1 highest-ranked legal software in the QuickBooks Online App Store, with a 99% customer retention rate, and the company is looking at other methods of integration. Integrations allow LeanLaw clients to more easily manage their client work, Fishman said. “This will include document management, Microsoft 365, Google Apps for Work, and other legal-specific tools,” he said.
Adding artificial intelligence
Hitting the latest trendy buzzword, LeanLaw is looking into artificial intelligence as well. “We have always had in our roadmap opportunities for machine learning and AI,” Fishman said. “Our platform generates so much valuable data. It’s only been in recent months that AI as a service has proven to be a viable solution for LeanLaw.”
It’s starting with generating invoice summaries. “Legal bills are awful,” Fishman said. “They don’t communicate value and are extremely hard for the law firm’s client to decipher what got done. Using ChatGPT, we have enabled an AI-generated invoice summary based on the narration of time entries.”
There’s more coming down the pike. “We will see more instances of AI used in real-time client summaries, staff productivity, and practice area efficiency,” Fishman said. We’re super excited about the next generation of LeanLaw insights and reporting. We’re investing heavily in this area of the product.”
Financing
Up until now, the company has been funded by seed and late-seed investment from Idaho-based investors, Fishman said. “The first investment came from the Angel Alliance,” he said. “As the company matured, later seed investors, such as Capital Eleven, invested.”
So why decide, after seven years, to go Series A? “We wanted to ensure that we had strong product-market fit and traction before seeking out additional funding,” Fishman said. “By waiting until now, we were able to build a solid foundation and demonstrate to potential investors that our business model is viable and has a clear growth path.
With the $4 million, the company intends to invest in areas such as product development, marketing, and hiring, Fishman said. “Given how the capital markets have changed, we will use these funds to drive the company to break-even,” he said. “As a CEO, you’re never not raising money, but we’re 100% focused on driving LeanLaw so that its future is in the hands of its current shareholders.”
Admittedly, waiting until now to go Series A resulted in its own set of challenges due to the volatile state of the capital markets, Fishman said. “The markets changed considerably in 2022,” he said. “This caused investors to slow down and, in some cases, to stop funding. If I had made the same effort starting in 2021, we would have completed the process sooner.”
That said, fundraising is always a grind, Fishman said. “It completely takes you out of your business and distracts you from completing work,” he said. “Our success came with relentless tenacity and critical support from our existing investors. We kept pitching and growing the businesses.”
And of course the process was another opportunity for growth, Fishman said. “I met with so many investors and was rejected by many,” he said. “We took key learnings along the way and incorporated them into our process,” he said. “I always dug into the ‘why’ when a pitch didn’t go well, or we were rejected. I leveraged those key learnings into the presentation deck and my pitch.”
LeanLaw made a point of looking for a company specifically in the financial technology space, Fishman said. “FINTOP Capital was always top on my list,” he said. “While we liked other legal-focused funds, FINTOP’s financial tech focus was of more value relative to our aspirations to develop products beyond the legal niche.”
“Seeking an investment partner is seeking a long-term relationship,” Fishman added. “VCs can be very transactional, and LeanLaw sought an investor that believed in the team, the vision, and the product. From the first meeting, they were intentional, transparent, and honest. As important, their investment thesis aligned well with LeanLaw, both in the investment amount, the area of focus, and the exit expectations. They were the best fit for LeanLaw.”
Is LeanLaw done fundraising? “We might raise again, but we would do so with explicit intentionality around a new initiative, not to expand the current business,” he said.
And what’s LeanLaw’s exit strategy? “This may sound cliché, but we don’t have an exit strategy,” Fishman said. “We’re building a sound, scalable, and valuable business. What’s most important is building an amazing company that adds real value to all stakeholders: our clients, our team, our investors, and our community.”
Sharon Fisher is a digital nomad who writes about entrepreneurship.