[Editor’s Note: At ILTACON 2018 Kevin O’Keefe spoke with Rick Merrill, CEO of Gavelytics, on his company and advice for lawyers looking to start their own startups. Below is their interview. To watch the video, click here or scroll to the bottom of the page.You can follow Gavelytics on Facebook, Twitter, and Linkedin.]
Kevin O’Keefe: Who am I talking with?
Rick Merrill: Hi, I’m Rick Merrill. I’m the CEO and founder of Gavelytics. We are a state court-focused judicial analytics platform. I know that’s a mouthful, but basically what that means is we tell lawyers in advance what judges do and why.
Kevin O’Keefe: Which is cool, because as a trial lawyer for 17 years, you just go on gut feels, and a lot of it would be totally anecdotal. It’d even get down into the rudimentary level of calling the clerk, getting to know the clerk, knowing bailiffs, knowing all that type of stuff. How did you come up with this idea? I mean, what made you one day say, “that’s what I’m doing.”
Rick Merrill: I’m a former litigator, also. I spent seven years litigating at Greenberg Traurig. I was a real estate litigator, and I was primarily in state court as opposed to federal court.
Kevin O’Keefe: Which is a major, major law firm.
Rick Merrill: Yeah, it’s one of the biggest in the world, certainly. We had 2,000 lawyers in 30 plus offices. Great firm, elite firm, and Greenberg was not unique in the sense that we didn’t know anything about the judges we were in front of. That’s an industry wide problem, and that always used to bother me because there we were, a billion dollar operation, representing the biggest businesses in the world, you know, very sophisticated litigation and it’s total guesswork about the judge, and that makes no sense. In no other area of our lives do we tolerate information black holes, right? Nowadays we would not go to a restaurant without checking Yelp. You wouldn’t go on a date without looking at Facebook or Twitter or Tinder, excuse me, whatever the different data sources are, but yet at high Stakes Litigation you litigate as if Judge Bob is the same as Judge Wendy ,even though they’re not; they’re not the same. So that always used to bother me and I, honest to God, I would wake up the middle of the night and say, “how can this be?” It used to make me mad. And so we would send emails around the office like all firms do. “Hey, Judge Kevin’s assigned to the new case for IBM, who knows, Judge Kevin?” If you’re lucky, you get a couple of anecdotes, and they’re useless. If the guy getting the email, has won in front of Judge Kevin they’ll say, “oh, you’re lucky you got Kevin.” If the guy has lost in front of Judge Kevin, “Oh watch out, he’s a bum.” And that’s not useful actionable data. You can’t do anything or not doing anything as a result of that. So that used to really annoy me. And we had two cases in particular go to trial where we were not successful at the trial court level. And we were surprised by this. We felt we were the better lawyers, the better facts, better law. And we felt that it was perhaps the judge’s preferences that led us astray. Maybe he just doesn’t grant summary judgment, maybe he just doesn’t like real estate developers. And so I used to think, well, why didn’t we know that in advance? Could we know that? What could we have done differently if we’d had that information? And so that really was the impetus behind the business. And so I first had concept probably in 2011, then sat on it for a couple of years, and then left Greenberg in 2015 to start the business. We raised money, put out the product, about two years later it came out, in September of last year. It took a few years, and we’re state court focused. We don’t do federal courts.
Kevin O’Keefe: I don’t need to get into all the details of how much and everything, but what was the process in your mind during that period of time? You’re getting ready or thinking about it. Saving money in case you need to have savings. What was going on?
Rick Merrill: A lot goes on, you know, it’s not a small thing to leave a great job.
Kevin O’Keefe: Did you have a family?
Rick Merrill: Yeah, I have a wife and kids. And so you started it home. You have to convince your spouse that it’s a good move, and fortunately my wife is a superstar and she’s a CPA, at an accounting firm, so we didn’t starve, which is good, but you know, it’s not a small task. It’s not a small risk. And there’s big players in the space. I mean here, here we are, and we could have been creamed early on, but it hasn’t happened and I think we’ve done a number of things right. And one of the few things we’ve been fortunate to do right is we started with a really good team, and we’ve built a really excellent team of people, software developers, lawyers, the whole thing. And without that we’d be finished and there’s no question. But to answer your question more specifically, first you have to figure out if there’s a demand. Does anybody really want this information? Maybe I’m strange, maybe I’m the only one in the world who wants to know about the judge. Turned out that that wasn’t true. Then the next step is, okay, well how do you get the information? Can you get enough enough of this litigation data at a low enough price? At a low enough friction point? The answer turned out to be yes, and we developed some really interesting methodology and approaches to get different types of data from different jurisdictions. And then you had to get to work and fix the data, because it’s a big problem.
Kevin O’Keefe: Where are you getting some of this data? Were you getting some on open source? Even just open sourcing from information that was coming in from various lawyers?
Rick Merrill: No, we don’t get anything open source just coming from data from. Every piece of raw data we get comes directly from the court system. And an interesting, unique issue in state courts is that they’re divided by counties. So in California there’s 58 counties, so imagine if there were 58 pacers in the federal system. Different data structures and different levels of willingness to even give you the data, and County A might have some problem with the data, but then County B’s got a different problem and one of the things that we’ve discovered, and part of what makes our business unique compared to some of the other analytics providers that have come out is that there are two problems you have to solve with the data. One is you have to have enough. If you have bad data going in, it doesn’t matter how good your AI is, it doesn’t matter how good the team is, you simply can’t determine what the judge does in bench trials for personal injury cases if that data is not in the underlying source. So it doesn’t matter what incredible code you can create.
Kevin O’Keefe: What are the documents you’re collecting from the court? Or are you getting a raw feed of everything from the courts? What are you trying to get your hands on?
Rick Merrill: So it varies on a per county basis, but docket briefs and rulings is what you get. I mean there’s only a finite universe of litigation documents out there. And so those are the primary documents.
Kevin O’Keefe: And then what you’re doing is – I don’t want to put words in your mouth, but I’m just trying to imagine – you’re monitoring behaviors. Motions for summary judgments in particular types of cases and, like you said, bench trials. What are the different data points that you wanted to look at, when you were getting angry that they didn’t have? What did you want to have available to you?
Rick Merrill: Yeah, so for us we would have loved to have known that the judge, the two judges in our cases, did not grant, or did not tend to grant, summary judgment in real estate cases. That would have been very useful to know. It would have been useful to have been able to research their actual trial court decisions on summary judgment motions. And by the way, we have hundreds of thousands of them in the product that are tied to the judge, so we can say, “look, you can search through, look for case law and say, ‘Hey, show me all the, all the summary judgment rulings where it was denied by Judge Kevin, in a real estate matter, in the last two years.'” So we have that. It’s in the product right now. That would have been extraordinarily useful for case law research and motion drafting, and also just understanding if we even like the judge. One thing that’s unique in California: there is a section of the civil procedure code called 170.6, which allows you, in the early stages of the case, to ding the judge. You automatically get rid of them, no questions asked, and you get a new judge. And so back to the anecdotal thing we were talking about earlier, the way things work now in California is at the start of a case, part of the reason you send that email to the office is to figure out if you keep the judge or not. And you’re now making that crucial decision on terrible information. On nothing. Like, one person in my office says they like them, okay, we’ll keep them. It’s terrible. You would make no other business decision or life decision on the basis of such poor information. So if we had known in advance that this was a judge who’s granting summary judgement motions in cases like ours materially less often than the county average, you’d get rid of the judge. And then if you’re stuck with them, well now you can make different strategic decisions. You can write the brief a little differently, you can see what motions were successful in front of them, what case law they cited on issues relevant to us. There’s a lot you can do.
Kevin O’Keefe: And I’m intrigued by this stuff, even more than just the story. I mean, I can envision the product today – just barely, because obviously I haven’t looked at it – but I’m going in and doing research into all this data that you’ve put together in a workable, searchable form. At some point you have to envision this thing being automated to some extent, and being able to tell you “Here’s this red flag right here.” You know, real estate, Judge Smith, boom, red, you might want to look at this.
Rick Merrill: One thing we try to not do is opine on judges. We don’t say Good Judge, or Bad Judge, because Judge Kevin might be good for the plaintiff, but bad for the defense and vice versa. So we try to be neutral. It’s sort of like baseball statistics. It’s just a fact. The guy hits .220 against left-handed pitching. There’s no value judgment, you’re not making a normative statement. It’s just, those are the numbers.
Kevin O’Keefe: You get to decide whether you want them.
Rick Merrill: Exactly. So that’s one thing that we do, or, I should say, don’t do. But there is, as you can imagine, like any other tech company, we have a product development roadmap and there are a lot of features on it that, that cover some of what you’re saying.
Kevin O’Keefe: You were a litigation lawyer, so you weren’t going out there putting together business deals and raising funding as part of your daily practice as a lawyer.
Rick Merrill: Correct.
Kevin O’Keefe: So how did you get to a point where you said, I’m going to do this. I’m going to figure out how to put together a team, and the team is going to be important in raising money, too, because they’re going to want to look at the team, the team might be more important than me. I’ve got this idea, I’ve got some information on the market, now I’ve got to put together a team. How did you pull this all together
Rick Merrill: Yeah, good question. So of course a lot of time was spent on writing the deke, to raise the first round, and I have no partners in the business. It’s just me that founded it, and so I had to convince investors that we know in LA to fund it based really just on me. You know, okay, give us the money and then I’ll go hire some people. And that was obviously a leap, a big risk, a big execution risk, certainly. And so it was a challenge to find our CTO, who is guy named Juan Carlos Moreno. Total animal in the best possible way – I mean that as a compliment. We would not have a business without him. He’s great. He’s hired the team, he does the product end to end, he manages most of our 18 employees and does a great job. And I actually had to interview I think 16 or 17 people before I got to him. And so that decision really changed everything.
Kevin O’Keefe: But it’s not easy to be in a position like you or me, because we’re not coders, we’re not going to sit down and talk code. I’ve got other friends that have hired people based on sitting down and watching them code, and then talking about code situations. Instead it goes based on passion, instincts, leadership capabilities.
Rick Merrill: Yeah, so for us I have to be a high trust management, because I have no value to add for coding. If somebody is coding something wrong, I have no way of knowing. It’s beyond my understanding, so I have to trust him. I have no choice. I couldn’t micromanage if I wanted to and fortunately that’s worked well for us. But in that environment, if we didn’t have the right person, it wouldn’t.
Kevin O’Keefe: Since you’ve been out there, public, for a relatively short time, have there been any points where you go, “I wonder if this is gonna work?” Or was there a low point?
Rick Merrill: What’s interesting, when I was raising money the first time – we’ve done two different rounds of all private investing, we have no institutional money – and one of our investors, who I can’t name, because he’s a pretty well known guy, a famous businessman, said to me that my biggest challenge would be managing my emotions, which did not resonate with me immediately. I thought he was crazy. I’m like, “listen, I’m not a particularly emotional guy, I don’t see how that advice fits with me.” He could not have been more right. When you run a business of any size, let alone a brand new startup. It’s hard, and you can have very violent, rapid highs and lows in the same hour, let alone the same day. And so that has been a challenge certainly. But to answer your other question, when did we know we made it? I’m not sure we’ve made it yet, so to speak. I mean, we’ve signed up a bunch of AmLaw 100 firms, people like our product, it’s getting good reviews, people know about it, people want it, we don’t have really any true direct competitor at the moment. So things are good there, but you never know.
Kevin O’Keefe: You never know. I mean, I’ve been doing this for 14 years and you’re scared. Like, is something going to happen, that’s going to knock us out of business? And my COO will have to say, “probably not.” But it’s tough at times. What would you tell someone who maybe is a lawyer, because there are lawyers who just want to get out of the business, and want to be in business and hear about all the legal tech stuff today, and how can I get from behind this chair and out there, which seems like leaping across the Grand Canyon. What do you tell a lawyer who called you up, and asked you how you pulled that off? What would you tell them?
Rick Merrill: Ideas are easy, okay? The execution is hard. Lawyers are generally intelligent people, and it’s not hard for intelligent people to come up with ideas, it’s what they do, so I’m probably not the only lawyer in the world who ever said, “Oh, let’s study judges.” It’s sort of an obvious idea, but the execution of it is hard. So what I would caution any lawyer, or any person, about a new business is that you really have to understand your go to market strategy. Who are you trying to sell to? Who are the buyers? What does the market look like competitively? If there’s 25 other e-discovery companies, and you want to start your own e-discovery company, look around – not to pick on e-discovery. You need a really compelling story about what you’re going to do differently from those other people, and why they can’t just come do the same thing. People copy things in technology. Look at Facebook, look at Microsoft, and many, many others, so if you’re going to raise money, or invest your own money, you really need to have a very well thought out idea. It still doesn’t guarantee success, but at least you’re not going to get destroyed in the first 30 seconds. You know, if you launch this product and then, oh look, 75 other companies have the same thing and yours is actually worse, and more expensive. You don’t want that.
Kevin O’Keefe: You don’t need to have that conversation over dinner with your spouse. You know, “didn’t you know there were this many companies?” “Oh, I didn’t really thing about it.”
Rick Merrill: Or, for us, one of the biggest hurdles was if it was even legal to do this. Can we get this data? Can we opine on it? And of course it is perfectly legal. But imagine if it wasn’t for some reason, you know, if there was some ethical bar that lawyers are not allowed to study judges or something, and that I didn’t know in advance. You can’t make those kinds of mistakes, and the good news is those answers are out there. You can study this and lawyers, like I said, they’re intelligent people, generally, and they’re trained how to study things and the resources are out there, so you can go make use of those resources and really study things. And then if your plan still holds up and if 10 people you talk to also think that it holds up, then you might have something.
Kevin O’Keefe: I mean, like your company, make a data-driven decision based on everything you can get your hands on.
Rick Merrill: No question. No question. Yeah. If there was a startup focused on helping other startups, like Gavelytics for startups, that would make sense.
Kevin O’Keefe: Thank you.