Legal AI: The Winner-Takes-All Race for Enterprise Dominance
Explore Lagora's aggressive strategy in legal AI, focusing on platformization, dynamic model selection, and the future of law firms.
Key Insights
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Insight
The enterprise AI software market operates on a 'winner takes all' principle, where the top performer captures the vast majority of market share.
Impact
This necessitates aggressive growth strategies, a relentless focus on product superiority, and the ability to out-execute competitors to achieve dominant market positions and investor returns.
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Insight
Prioritizing the application layer and user experience over costly, proprietary model fine-tuning proved to be a superior strategy in the rapidly evolving LLM landscape of 2023.
Impact
AI companies can achieve faster development cycles and greater agility by leveraging improving general models and focusing resources on building robust, user-centric software applications.
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Insight
A 'promiscuous' approach to AI model selection, continuously evaluating and switching to the best-performing and cost-effective models, is crucial for delivering optimal client outcomes in enterprise AI.
Impact
This strategy allows companies to stay at the cutting edge of AI capabilities, avoid vendor lock-in, and provide superior value, even if it means frequently changing underlying tech stacks.
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Insight
The integration of AI will drive significant consolidation in professional services, such as the legal industry, transforming the competitive landscape and firm structures.
Impact
Law firms that leverage AI effectively will gain substantial competitive advantages, potentially leading to a smaller number of dominant firms and a shift in demand for junior legal professionals.
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Insight
A strategic, phased approach to international expansion, such as proving market fit with marquee clients from a distance before full-scale entry, can de-risk growth for European companies entering the US market.
Impact
This minimizes upfront investment while building credibility and client relationships, enabling more confident and effective scaling once direct market presence is established.
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Insight
For transformative enterprise technologies, a Forward Deployed Engineering (FDE) model, focused on implementation and client success, is essential for adoption and long-term retention.
Impact
This deep engagement helps overcome change management challenges within large organizations, ensures high utilization rates, and secures ongoing client partnerships for complex solutions.
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Insight
AI's impact on legal pricing will eventually shift from seat-based to consumption-based models, although the timing depends on client readiness rather than immediate provider preference.
Impact
This shift could better align pricing with value and resource utilization but requires clients to adapt to new billing structures, indicating a slower evolution for certain entrenched industry practices.
Key Quotes
"It doesn't really matter who was first. It matters who's best. It's totally a winner takes all. Number one will grab 90%. And number two to number 10 will share the remaining 10%."
"I think our job, frankly, if you think about the pyramid of value, is you sort of have the underlying models and the and the frameworks. Then Lagora's responsibility is to build the legal interpretation of those models. So how do we make them the most useful in a legal setting? And a lot of that comes from the models, but 80% comes from building normal software, right? Like enterprise grade software around the models."
"The technology lever will be one of the, if not the most important lever, to utilize in competing against other firms."
Summary
The AI Battle for Legal Dominance: Lagora's Ascent
The legal technology landscape is undergoing a profound transformation, driven by the rapid advancements in artificial intelligence. At the forefront of this shift is the fierce competition for market dominance, where, as one industry leader puts it, "Number one will grab 90%. And number two to number 10 will share the remaining 10%." This winner-takes-all dynamic is shaping strategies for companies like Lagora, a legal AI platform experiencing explosive growth and challenging established perceptions.
Strategic Growth and Market Penetration
Lagora's journey highlights a relentless focus on being the 'best,' not necessarily the 'first.' With 750 of the world's biggest law firms as customers and over 300 employees in just two years, the company's trajectory is remarkable. A standout achievement includes adding an astounding 7 million ARR in a single day in December 2025, surpassing its combined ARR for 2023 and 2024.
Go-to-Market Evolution
Lagora's enterprise go-to-market strategy emphasizes a "partner of choice" approach. This involves deeply embedding "legal engineers" – ex-practicing lawyers – to ensure client success and manage significant change within large law firms. This forward-deployed engineering (FDE) model is critical for complex enterprise deployments, mirroring the substantial undertaking of adopting new architectural software like CAD in the past.
Product Philosophy and AI Model Strategy
Central to Lagora's success is its product philosophy, which prioritizes the application layer over model fine-tuning. Early on, the company bet against spending heavily on fine-tuning proprietary models, anticipating the rapid improvement of general-purpose LLMs. This foresight allowed them to focus resources on building robust, enterprise-grade software around these evolving models.
The Promiscuity of Models
Lagora maintains a "promiscuous" approach to AI model selection, constantly evaluating and switching to the best-performing and most cost-effective underlying models. Initially an OpenAI exclusive user, the company now primarily leverages Anthropic's models (like Claude), viewing them as better suited for enterprise needs, while keeping an eye on Gemini as a future contender. This agile strategy ensures optimal outcomes for clients, demonstrating a commitment to leading with technology, not loyalty.
The Future of Law Firms in an AI-Powered Era
The integration of AI is not merely optimizing current workflows; it's fundamentally reshaping the legal industry. Lagora predicts a significant consolidation of law firms, envisioning an "AM Law 20" instead of 200, as technology becomes the primary lever for competitive differentiation. While this will likely lead to fewer junior lawyers for routine tasks, it empowers the remaining workforce to handle more complex cases and larger transaction volumes. The long-term shift towards consumption-based pricing models, rather than traditional seat-based, is also anticipated as clients become more accustomed to AI's capabilities.
Sustaining Hyper-Growth and Culture
Scaling from 30 to 300, and aiming for 600 employees in the near future, presents immense challenges. Lagora emphasizes maintaining a high-ambition, high-grit culture, fostering "missionaries, not mercenaries." This involves rigorous hiring, promoting internal competition, and, crucially, celebrating wins to fuel momentum.
US Expansion Strategy
Lagora's measured entry into the US market—proving success with top US law firms from Europe before establishing a physical presence—demonstrates a prudent approach to international scaling. The rapid expansion in the US, with New York now an electric hub, underscores the effectiveness of this strategy, leveraging the faster hiring cycles in the US to accelerate growth.
Conclusion
Lagora's journey illustrates the relentless drive and strategic acumen required to win in the highly competitive AI enterprise software market. By prioritizing client success, adapting dynamically to technological advancements, and cultivating an unyielding culture, Lagora is not just participating in the legal AI revolution but actively leading its charge towards a consolidated, AI-powered future for the legal industry.
Action Items
Founders building AI products should prioritize significant investment in the application layer and user experience, rather than extensive fine-tuning of base models.
Impact: This strategy optimizes resource allocation, allows for faster product iteration, and leverages the rapid advancements of foundation models, creating more agile and user-centric solutions.
Implement a dynamic AI model evaluation and integration strategy, remaining flexible to switch between providers (e.g., Anthropic, OpenAI, Gemini) based on performance and cost.
Impact: Ensures the product always uses the most advanced and efficient AI capabilities available, maintaining a competitive edge and delivering optimal results for enterprise clients.
For enterprise-focused AI solutions, adopt a Forward Deployed Engineering (FDE) or 'legal engineer' model to deeply support client implementation and change management.
Impact: This hands-on approach directly addresses client adoption challenges, increases product stickiness, and is crucial for achieving high retention and success with complex, transformative technologies.
Focus on building a comprehensive platform or suite of interconnected AI tools rather than narrow point solutions, anticipating market consolidation and client demand for integrated workflows.
Impact: Positions the company for long-term dominance by offering a 'best basket' solution that surpasses fragmented offerings, driving greater value and centralizing client operations.
European tech companies eyeing US expansion should first secure and demonstrate success with top-tier US clients from their home base before making substantial on-the-ground investments.
Impact: Reduces risk, builds essential credibility, and provides a strong foundation for recruiting local talent and accelerating growth upon physical market entry.
Mentioned Companies
Lagora
5The entire transcript details Lagora's rapid growth, strategic decisions, and success in the legal AI market.
Key early investor, chosen for the partner's expertise despite a lower valuation, strong positive sentiment for partner Chaithan.
Highlighted as a significant law firm customer, demonstrating successful enterprise adoption of Lagora's platform.
Cited as a top-tier US law firm customer, validating Lagora's strategic US market entry.
Cited as a top-tier US law firm customer, further validating Lagora's US market entry strategy.
Figma
4Used as an aspirational benchmark for market dominance, suggesting Lagora aims for similar ubiquitous adoption in legal AI.
Lagora's current preferred and majority model provider, viewed as stronger for enterprise use cases.
Used as an example of a company that became synonymous with a category despite not being first, illustrating a 'winner takes all' market dynamic.
Solve AI
3Mentioned positively as a portfolio company and an example of successful verticalization in legal AI for patent lawyers.
Early accelerator, provided key advice and influenced hiring, generally positive sentiment despite a humorous remark about 'deletion'.
Redpoint
3Early investor, part of solidifying interest in Lagora stock, though the CEO was initially 'nervous' about the dilution.
Listed as an investor, implying a positive relationship as part of Lagora's funding rounds.
Iconic
3Listed as an investor, implying a positive relationship as part of Lagora's funding rounds.
Gemini
2Identified as a strong potential future competitor or alternative to Anthropic for top-tier models.
Harvey
1Lagora's primary competitor in legal AI; the discussion is framed around Lagora's ability to 'win back ground' and differentiate.
OpenAI
1Discussed as a past and current model provider, with a perception of shifting towards B2C focus, leading Lagora to prioritize Anthropic for enterprise.
Mentioned as an example of a company using a Forward Deployed Engineering (FDE) model, without specific positive or negative sentiment about Invisible itself.
Revolut
0Mentioned as an example of a company building complete vertical software, without specific positive or negative sentiment.
Deal
0Mentioned as an example of a company building complete vertical software, without specific positive or negative sentiment.
Hebia
0Mentioned as a competitor in a specific product area (tabular review), illustrating Lagora's broader platform strategy against point solutions.
Klarna
-1Used as an example of a European company that initially struggled with US expansion, providing context for Lagora's cautious approach.
Alta Vista
-1Used as a historical example of a former market leader that was eventually overtaken, reinforcing the 'winner takes all' theme and the importance of being 'best'.
Grok
-2Explicitly dismissed by the CEO as irrelevant for enterprise needs.