Legal Startup Atrium Restructures, Laying Off Most of Its Legal Staff

Legal startup Atrium is laying off most of its legal staff, including attorneys and paralegals. The company will refocus on the technology tools it created for lawyers and law firms, rather than providing legal services directly. It will also expand into new areas. Atrium will focus on “growth into new business services through our existing professional services network.” Only a small number of lawyers will remain at the company to work with customers on complicated issues, such as financing, mergers, and acquisitions. It will also continue to work with its network of law firms for client referral and general corporate legal services. The dismissed lawyers will have the chance to join this network of outside lawyers. 

Atrium’s founding said it would “revolutionize legal services.” Previously, Atrium functioned like a law firm, providing legal services to founders and startups while simultaneously providing technology and back-end services. Atrium seems to be narrowing its vision; it “will focus on its software for startups navigating fundraising, hiring and collaborating with lawyers.”

“We’ve made the tough decision to restructure the company to accommodate growth into new business services through our existing professional services network,” Justin Kan, Co-founder and CEO of Atrium wrote in a company blog post.

Although the company will no longer directly provide legal services, it intends to remain in the legal industry, instead focusing on technology. It will also expand into other areas, such as services and advice on fundraising. Atrium also “plan[s] to continue to deliver startup solutions through our client-centric platform solving the hardest founder problems through customized mentorship, technology, and a concierge program of expert advisors.”

“When we started Atrium two and a half years ago, our idea was to transform the legal industry to become better for both lawyers and founders,” Kan said. “For the entrepreneurial lawyers who joined us on this mission, we strived to be a workplace that offered the lifestyle and control missing in big law. For founders, we redefined the relationship they have with their legal counsel by providing fast, transparent, and price-predictable services managed through the most client-centric platform for legal applications.”

While these changes will reduce costs for Atrium, the pivot to a focus on technology services, as opposed to legal services, could alienate its clientele. Some are uncertain of this move, claiming the cheaper legal services attracted clients, not the technology. TechCrunch reported, “[o]ne Atrium client said they weren’t surprised by the changes because they got so much legal advice for just $500 per month, which they suspected meant Atrium was losing money on the lawyers’ time as it was so much less expensive than competitors. They also said these cheap legal services rather than the software platform were the main draw of Atrium, and they’re unsure if the tech on its own is valuable enough.”

Atrium was founded in 2017 and headed by Justin Kan, the co-founder of streaming platform Twitch. In his post announcing the changes to Atrium, he drew a parallel to Twitch, illustrating how Twitch zeroed in on the gaming audience after initially taking a broader approach. 

Atrium has raised about $75 million in venture capital funding from firms such as Andreessen Horowitz, General Catalyst, and Y Combinator. The company combined technology and lawyers to give clients quicker and cheaper legal services. The small number of lawyers still on staff will help with existing clients and projects, however, the membership model may change to encourage clients to seek legal services through its professional network, instead of through Atrium.

It is unclear how many employees are impacted by the layoffs and when the restructuring will be complete.