Spellbook is a legal software company that launched the first generative AI contract drafting tool in September 2022. The company’s technology is powered by large language models like OpenAI’s GPT-4 and is optimized using legal datasets for superior contracting performance. Over 600 customers across the legal industry use Spellbook to support their lawyers with the resources to make more accurate and efficient legal decisions when drafting contracts and supporting documents. Pulse 2.0 interviewed Spellbook co-founder and CEO Scott Stevenson to learn more.
Scott Stevenson’s Background
Stevenson has been building technology products for over 15 years. “I have an education in computer engineering, but I have always loved being entrepreneurial and making things. I grew up making music and video games and websites in Newfoundland, Canada,” said Stevenson.
Formation Of Spellbook
How did the idea for Spellbook come together? “The inspiration was two-fold. I founded a startup previously and was able to raise an initial $20K check to get the company off the ground. It seemed great, but in reality, I spent easily half of that, if not more, on legal fees just to set up the company and deal with some initial legal matters. Meanwhile, my co-founder and COO, Daniel Di Maria, who attended law school, was unsatisfied with the reality of the job, which consists of an immense amount of tedious document editing. Together, we set out to make lawyer’s working lives easier and more enjoyable through the use of technology,” Stevenson shared.
Favorite Memory
What has been Stevenson’s favorite memory working for Spellbook so far? “Hitting incredible growth and raising our $10.9 million round was a recent highlight. But my favorite moments have been those where inspiration struck, and we let it carry us–often in unexpected directions. I think the most magical moments in business are extremely hard to plan, so constantly being open-minded, we call it ‘beginner’s mind,’ is really important,” Stevenson reflected.
Challenges Faced
What are some of the challenges Stevenson faced in building the company? “One challenge we anticipated was pushback from lawyers in accepting and integrating new technology into their daily workflows. To make the transition easy, Spellbook is committed to providing live onboarding sessions to ensure lawyers are set up for success,” Stevenson acknowledged. “We also focused on empowering lawyers with AI tools that assist them throughout their normal course of work. Spellbook goes beyond the ChatGPT-style interface and gives real-time suggestions to lawyers as they work on contracts in Microsoft Word. This augmentation of existing lawyer workflows helps meet lawyers where they are at and can enable them to move up to 4x faster.”
Core Products
What are Spellbook’s core products and features? “Spellbook is an AI copilot for lawyers – the tech integrates seamlessly with Microsoft Word, meeting lawyers where they’re already working,” Stevenson explained. “Today, Spellbook can support a range of tasks, including automatically suggesting improvements to contract clauses, drafting net-new clauses, and automatically finding relevant documents. We are releasing new features every month and are excited about some of the integrations and multi-document workflows we have coming down the pipe.”
Evolution Of Spellbook’s Technology
“The evolution of our technology really tells the story of our company. We founded Rally Legal in 2018 to help automate tedious legal tasks and were successful – we raised funding and grew quickly. In the fall of 2022, as GPT-3 was released, it became clear to us that large language models represented a step change in terms of the value we could bring to customers. Fairly quickly, we released Spellbook, initially as a generative AI-powered feature to help customers with contract drafting – we became the first to market with that kind of technology in September 2022,” Stevenson commented. “The demand was immense, far higher than we’d initially anticipated, and we’ve spent the ensuing months building out the product and improving our models – today, Spellbook is a full-fledged AI copilot for lawyers.”
Significant Milestones
What have been some of Spellbook’s most significant milestones? “We just announced $10.9 million in new funding led by Moxxie Ventures with participation from Thomson Reuters, Inovia Capital, Bling Capital, and others, and rebranded from Rally to Spellbook – this comes after seeing incredible demand and growth since launching our Spellbook tool in September. In just a few months, we’ve seen over 60,000 people join our waitlist, and we’re supporting around 700 customers,” Stevenson highlighted.
Customer Success Stories
When I asked Stevenson about customer success stories, he cited: “We have hundreds of customers using the tech – interestingly, a majority of our customers are from small or solo law firms, which highlights the disparity between them and the large global firms. With Spellbook, lawyers draft and review contracts up to four times faster – that efficiency lets them serve 30% more clients while providing better, faster results.”
Company Growth
When asked about revenue and company growth, Stevenson pointed out: “Today, more than 700 legal teams are actively utilizing Spellbook, and an additional 53,000 customers have signed up for the waitlist globally. This demand has resulted in 122% revenue growth in Q1 2023 (and is on track to quadruple revenue in the first two quarters of 2023). We are gradually onboarding users that sign up for our waitlist because we always ensure quality in our product for a wide variety of use cases and to ensure we have the capacity to service everyone.”
Total Addressable Market
What total addressable market (TAM) size is Spellbook pursuing? “We work with law firms and law practices of all sizes, focusing on smaller boutique firms. Boutique business law firms are resource constrained and increasingly held to flat-rate billing rather than hourly billing. Their lawyers are increasingly looking for every edge they can get to increase their margins and to price their services competitively to their customers. AI is that edge and Spellbook is being adopted by them like wildfire. Spellbook’s waitlist is growing by 2,000 lawyers per week,” Stevenson assessed.
The worldwide numbers below:
Differentiation From The Competition
What differentiates Spellbook from its competition? “Spellbook was the first AI copilot for lawyers using large language model technology and was launched prior to ChatGPT. Unlike others, Spellbook goes beyond a chat interface or template-based automation to empower lawyers with AI tools that assist them throughout their normal course of work. We believe the chat interface is only scratching the surface of what generative AI can do. Additionally, while template-based automation is helpful, it’s not always sufficient to meet the day-to-day needs for lawyers’ nuanced reviews and edits. Lawyers are also tired of jumping between different applications,” Stevenson revealed. “We think the best way to apply generative AI right now is to naturally augment the workflows folks are already doing. Spellbook’s approach has caught on because it requires almost no habit change from lawyers. They just do what they’ve always done and have an AI tailwind to help them think and write faster.”
Future Company Goals
What are some of Spellbook’s future company goals? Stevenson concluded:
Our most recent funding will propel Spellbook forward rapidly. We will be doubling the size of our team this year, hiring engineers, AI experts, lawyers, and product specialists to help onboard our waitlist. Most importantly, this will mean speeding innovation and the development of extensive new functionality for our customers.
We also recently changed our name from Rally to Spellbook. In the coming months we will be merging the Rally platform with Spellbook to create unprecedented new AI features for our customers. We are also excited to have the #1 legal technology provider in the world onboard, Thomson Reuters. Their products are used by 97 percent of Law100 firms. Their libraries, Westlaw and PracticalLaw, are the gold standard. We can’t say much more about our plans now, but one reason we chose to work with TR on this financing is the potential synergy between our products.
Overall, our approach will be continuing to develop what we call Assistive AI. We are not replacing lawyers, nor do we allow users to “delegate” full legal tasks to Spellbook. We are helping lawyers do what they are already doing, only faster, smoother, and easier. And that will remain core to our approach.
