Charles Brecque featured on the Startups of London Podcast to discuss the impact of his past experiences whilst becoming an entrepreneur, pinpoint what people need when it comes to legal matters and develop technology according to current market demand, Legislate's growth story, and how his investment journey differs from the norm. The podcast can be listened to and the transcript read below:
Ozan Dağdeviren: Hello and welcome to the Startups of London podcast. I'm your host, Ozan, and the founder of Startups of London. Today I'm joined by Charles Brecque, CEO of legislate.tech. I've done some research on them and from what I could gather Legislate provides lawyer approved contracts on a budget, they offer a monthly subscription, and you can create contracts starting from 10 pounds, which is amazing, you can create and electronically sign your documents from a single place. Welcome Charles.
Charles Brecque: Thank you, Ozan, for having me.
Ozan Dağdeviren: Is there really a market for this specific product? And how do you know it?
Charles Brecque: So, maybe to give a bit of background about how I know there's a market or why there's demand for this product, in my previous role I was doing business development at a startup and although I wasn't the lawyer or part of the legal team I was the middle man for legal communication between our team and our clients and I really spent maybe 50 per cent of my time waiting for contracts to be reviewed by both ends. The changes were always the same and in many occasions we were either losing opportunities or delaying opportunities and really what I wanted to do with Legislate is make it possible for me, the business user, to create those contracts, make those changes myself without necessarily getting legal involved, but all within a safe and robust framework which would give confidence to legal teams to delegate that responsibility to business users. And I think, I spoke with many business users, business people, who were in similar situations, contracts by definition create friction and really what we're trying to do is take that friction away. So a lot of people are not lawyers, a lot of people have to create contracts, and a lot of people and businesses experience that friction. So yes, there is demand for Legislate.
Ozan Dağdeviren: There is DocuSign, which I've used and I'm a subscriber for about 2 and a half years now, I don't know if you've used that personally. But it's been very useful as something I use to sign my documents and so on. There are also a lot of templates out there, and on the other hand there are these expensive legal services, very usually people charge by the hour and then the costs can ramp up pretty quickly there. But there's a reason why they're expensive right? Because a legal professional has to spend their working hours on it. So my question is, how do you deliver the same value, or a similar value, without a lawyer spending this type of time, how does the system work exactly?
Charles Brecque: So you rightly said DocuSign and there are various other e-signing platforms. They're all great if you have lawyer approved template but even once you've got that template you very often have to make amendments or tailor those templates so if you use a legal firm you'll pay that one off fee and then have to do those template amendments yourself, which isn't ideal, and if you're using an e-signature platform then ultimately you will have spent that budget on a template before that anyway, so in both cases it's kind of prohibitive for a lot of small businesses and a lot of entrepreneurs, and really what we're trying to do at Legislate is take a step back and really offer an end to end contract, creation, signing, and management experience. So we have a whole suite of templates which are lawyer approved and we maintain them and we keep them up to date, but more importantly we offer, thanks to our technology, a whole lot more flexibility in terms of how you configure the contracts and how you tailor them to your specific requirements, and those requirements we identified them based on our initial research but also based on customer feedback, so the idea is that when you're creating a contract you don't ever need to insert your own clause, you don't ever need to make any edits, you just simply need to change your answers in a form and the form will update the contract in Legislate automatically and in a way which is safe and robust so that you don't need to worry about something not being enforceable or something being inconsistent, so that's how we create our contracts. But then post-signature, you sign in I won't touch on it because it is just what you'd expect, but post-signature we really make it easy to track the data in your contracts, we can help you search for any type of contract where you've created based on any contractual term, so you can answer questions like "how many of my employees are on a 30 day notice period" or "how many employees report to a certain line manager", you can answer those questions in 2 clicks and for any type of contract that you've created on Legislate, so we really offer a full end to end experience and our focus is a lot more on the data in your contracts, how you track them, and in the future we want to make that data exchangeable with the other systems that you work with so that ultimately we're really taking the friction out of contracts.
Ozan Dağdeviren: Okay, so as far as I understand the lawyer approval happens before I come into the picture as a user and do any customisation, is that the case?
Charles Brecque: Yes, that's right. And because we've mapped out the possible customisation options we can guarantee that those options are correct and that they'll also be assembled consistently. So we've got rules in place for each contract type, to ensure that there are certain combinations of parameters that can't happen because otherwise they would be unenforceable or illegal.
Ozan Dağdeviren: Okay, so I think the next question that makes me think about how this works is, if my use case as a potential user of your platform is a path well trodden, a lot of people have walked on it, it's a similar type of a template, then I can see how this would work and I can see how this would save time. But if the contract that I am trying to put in place is somewhat of a black sheep, is more different than the industry standard, let's say I'm offering a service whereby I would like a certain percentage as an affiliate fee, a certain percentage as a success fee, and the service that I'm offering is a mixture of recruitment and consultancy services, so it's not your very stereotypical contract, in that case how would that work? Can you walk me through that? Because that's the bit that I don't fully understand yet.
Charles Brecque: Yes. So because we guarantee that our contracts are lawyer approved we provide the template, so we don't currently offer the option for you to provide your own template because we don't want to review everyone's contracts, at least that's not our business model today, and the only times where we do allow our users to provide their own templates are if they, for example, have their own legal counsel and they waive us from that responsibility. But in terms of our approach to dealing with specific contracts, it's on a case by case basis. If, for example, a specific customer needs a type of contract where they might be creating many many versions of that on a monthly basis then we can definitely go through a legal process to add it but it will never be, in that case, the client's raw contract, we take the requirements and I first of all look at what contracts do we currently offer, which of those contracts can be tailored to that specific situation first, and if it can't then we would go through a legal process if it makes sense. But I'd say that the real use case for Legislate today is for high volume, low value contracts, where you are maybe changing a couple of parameters each time but it takes time and there is also value in tracking that data. So, another use case that we, in terms of our customer base, 50 per cent is in business, so mainly employers, they'll be using Legislate to track the data in their employment contracts and understand what is their total payroll when you factor in the pay increases, when are the notice periods, how long are the restriction periods, you can even do very granular gender pay gap reporting because yes we can report automatically on the differences in salaries between genders but also we could also go deeper and understand if actually the restriction periods are the same or if the terms are fair. So that's the type of reporting that we do for employers but another part of the business is focused on property and we have a lot of landlords, letting agents, property managers, again using us to track their total rental income, track break clauses, when they might be coming and what risk that presents for their annual income, and then finally making that data exportable in spreadsheets so that they don't need to go to their finance department to get answers to those questions, they are empowered to answer those questions themselves because they have control over the data. So that's really the focus.
Ozan Dağdeviren: I'm actually a big fan of what you just said, the data collection and insight generation part through a contract is something I've actually never heard of, and I've spoken with a lot of businesses, so I think that's a very unique and a very valuable piece of information that is generated automatically, where you don't need to do anything else other than people are already working on their contracts, so that seems like a very good idea from where I'm sitting. Also, in my previous question, if I'm getting this right, the use case, I can imagine this working very well for a business owner and this is their platform for employee contracts, as you said also for letting agents and for people who have a recurring structure, a recurring theme to their business, I think this would work well. On the other hand, if someone is looking to really personalise their contract for a very specific case, let me give an example, for instance last year, or perhaps a year and a half ago, I worked with a company where I was acting kind of like a fractional chief people officer for some of the key issues they had and I had a contract that defined the scope of the work, what happens if things work out, and in my experience I think I've signed upwards of 30 or 40 contracts in the last I would say 7 years, the most important thing that a contract does is it describes what happens when things don't go according to plan. I don't know if you would agree with that as a legal professional but that's my business perspective on the matter. For those cases, those are not your target market, am I getting this right? At least right now.
Charles Brecque: Sure. Just to confirm, I'm also not a legal professional, I actually studied engineering, but we have a legal team, of course, who are qualified. But you're right, what's wrong with contracts is often what's not in the contract and also, as you said, contracts you only really go back to them if something goes wrong, maybe you need to end the contact, maybe you need to check the payment terms, etcetera. So that's absolutely right, so really what we're trying to do is we're trying to provide the same gold standard quality of contract templates that you'd source from a law firm or a lawyer so that you have all that protection and we've done it in a way so that you can adapt it to your specific requirements, but the templates that we provide are standard, we do simplify the language and we do standardise so that there shouldn't really be any negotiation or any talking points because it's fair and it's standard, which means that by default that tends to be applicable to low value high volume contracts like employment, tenancy agreements. We do also offer recruitment agency terms of business agreements, letting agent terms of business agreements, which there might be some more specifics around fees etcetera but if someone came to us asking for a very bespoke contract then you're right, that's not necessarily a good fit for Legislate today, but maybe in the future we'll definitely want to address those because at the end of the day what we're trying to do is make it so that anyone can have all their contracts in one place, because there's a lot of value in having all your contracts in one place for the data, but even just you don't want to have 2, 3, 4 different systems to keep track of your contracts so in the long term that's definitely where we want to go.
Ozan Dağdeviren: This brings me on to my next question. Your prices seem unbelievably low I would say for at least a legal service such as a contract writer because they're usually costly because the risk is high and the services are expensive. So I'm assuming you'll need to hit a certain scale for profitability. Where is that break-even point for you?
Charles Brecque: Yes, so you're right they're unbelievably low and in the future, they probably will be free. The reason why is because in the long-term, today we don't see the value of what we provide as being the template. The value that we provide is around the data, the analytics, tracking. And what we're working on now is building our public API because we've had a lot of third-party platforms want to integrate with us, so that their users can create contracts from their platforms. So on the one hand, we'll be gaining scale and volume through those third-party platforms that already have hundreds and thousands of users that want to be able to create contracts in a very flexible way via APIs. What we're doing today is we're effectively making contracts machine-readable, so we're making the data in that contract usable, both for the users, but tomorrow what we want to do is make that data usable to the systems they interact with. Because the contract is just a piece of a workflow, maybe before an employment contract there's an offer letter, after the employment contract maybe you need to set up pensions, payroll, all these services which are connected to the contract. Today, they currently require someone to manually do that, extract the data and manually set up those systems and manually input the data. It takes a lot of time but also leads to errors, discrepancies, etc. So really what we're doing is we're creating this new market that we call open contracts, where the value comes from the data analytics and the creation of services around that data. So I'd say our business model today is really just to determine if there is demand for our services and if people are willing to pay but it's discounted so that we can also learn from these customers what it is they like about the product, what do they find intuitive, what do they not find intuitive. And in the long-term when we have those new revenue channels then that's how we will monetize our business.
Ozan Dağdeviren: I honestly think that's a brilliant direction but it makes me think, how do you fund the business in that case?
Charles Brecque: Yes, so we've raised venture capital funding and I agree that it's kind of a requirement for this type of approach. But yes, we do have customers who are on both subscriptions and pay-as-you-go models and I'd say a lot of those customers have been finding us organically through search engines. Even if we stayed with our current business model, I do reckon that in the long-term, as our search engine optimization gets better, as we become more established, I do think that we could-, maybe that would be enough to keep the business going but I also find it maybe less exciting than creating these new services that are connected to contracts. So yes, that's the situation.
Ozan Dağdeviren: Charles, there are a lot of people in our audience who are trying to raise funds for their business usually, what's your perspective on this? In your case, what were the things that were most helpful to you? Or if you're going to take a retrospective overview of the moment of your funding and what led up to it, what would you say are the biggest contributors?
Charles Brecque: Yes so, before starting Legislate I had only ever worked at that start-up so I didn't necessarily have a long career or much experience. So I definitely had to tap into my network to try and secure some initial angel funding and when I say network, it was really going to be angel investors of that start-up, who'd followed my progress and seen what I've achieved. And they were willing to support the idea with £150,000 in angel funding which was enough to get started, build the first version, and acquire some early customers. But when we did get that initial traction, we raised 1 million pounds last year from a fund called Parkwalk Advisors. But again, I was able to tap into them because they were a big shareholder of that previous start-up. So I didn't necessarily do the classic route of pitching lots of VCs because of the investors. Also, because I knew it wouldn't work because I was a nobody and I'm still a nobody today but-,
Ozan Dağdeviren: You're somebody.
Charles Brecque: Yes. But I feel it's really important to build a relationship with investors who, over time, can see what you can achieve so that ultimately they can trust you with their capital. Because this might be capital that they've earned or that their LPs would have earned, so I always treat capital with respect and try to allocate it very efficiently. And I'd say as our business grows, we build the team, we've definitely scaled our product and revenue. And going forward really what we're looking for is inflection points that will help us bring the next round of investors on board. And those inflection points I think change, based on the investors but also based on the situation of the product, the team, and the market. And I definitely feel like today, given the macro environment, there's a lot more of a focus on customer attraction. It's something that you need to be focused on from day 1 when you build your start-up because you can't build and expect customers to arrive but I'd say when you've really got customers and you're building that customer based, I'd say for me, there's still a lot of uncertainty around, 'When do we reach that inflection point? What does it take?' And I guess that's what we're working for, to kind of get to that next level to justify another round.
Ozan Dağdeviren: The time of 'build it and they should come' has been over for quite a while now.
Charles Brecque: Yes, absolutely and especially now, given the market conditions. But I'd say where Legislate is well positioned is we offer very cost-effective legal contracts. So in a downturn, when consumers or customers have less budget then they'll be saving a lot anyway by using us. So at least that's one positive in the situation.
Ozan Dağdeviren: How long have you been going by the way? And in other words, how long does it take in your experience for a business to take off?
Charles Brecque: Yes so, we've been going for 2 years but the team as it is today and the product and all of that has really been around for 1 year. Because when I started 2 years ago, it was only with 150 in angel funding, and it took us a couple of months to build a first version, so myself and some consultants. But you can only go so far when there are 2 and a half of you, compared to being 12 today. So I'd say it took us a good year to get to where we are with the whole team, with building a robust scaleable product which is user-friendly, and with a decent client base which is growing 30% month over month. But our trajectory, it was also kind of tied to the funding that we received. So I think had we taken on more funding earlier on, maybe we would have got to where we are faster. But on the other hand, I do feel that I'm a first-time founder and starting with smaller amounts of capital at the different steps has also allowed us to not make mistakes, or at least if we make a mistake, it's less costly than if you have all that funding and you do allocate quickly.
Ozan Dağdeviren: I agree with that. People usually underestimate by quite a distance, how difficult it is to build a business. Unfortunately, those pink-tinted glasses of the early years of the 2000s, the very early days of the internet where basically it was a land grab, right? Anything you built, you would start with a huge volume of customers. And I think that is still the case in some specific niches, for example, when TikTok had just launched there was an imbalance I would say, an extreme imbalance, of content. Consumers versus content creators favouring the consumer side. So if you were to jump in as a creator, you would get a huge volume of traffic there. And that kind of a dynamic usually plays out in different parts of the internet, people are chasing Web 3.0 alone. But when it comes to building a start-up and a business, it seems some of the energy and enthusiasm and, for lack of a better term, the greed of building and making a huge income through a business has shifted more towards things like Web 3.0, the NFT space. To a certain extent, cryptocurrencies. And people are chasing different dragons, I guess, now. Would you agree with that in your observation? What do you think?
Charles Brecque: Yes, I mean I definitely feel like there are certain software solutions which can be sold to anyone, anywhere in the world. And obviously, those are great solutions because it means the markets are huge but it also means that you can start selling to anyone anywhere from day 1. And that really applies to vertical-specific software solutions. A very basic example would be a video editing tool that can be sold to anyone, whereas in our case at Legislate, we offer a contract creation platform. So, we obviously believe that we are servicing a huge market but today, right now, we're only focused on England and Wales and we can't actually go beyond England and Wales because our legal team right now is only qualified in those 2 jurisdictions. And we could obviously choose to scale internationally by purchasing templates or maybe even outsourcing some of our legal but we're just not ready for that yet. And so I feel like no, you're right, there's a feeling of hype around certain niches and those are areas where you can go fast, go quickly, with funding. Whether it's paying for ads, whether it's just knocking up very quick software but when you're really trying to do something which is a bit deeper, like what we're doing, even with the data and how we manage the data, we're using knowledge wealth technology which is very niche. It takes time but it's really powerful. Yes, I think it's just a reality but in the longer term, these businesses that take longer to build, they can grow. They can become much bigger than anything which is just very focused, very short-term etc.
Ozan Dağdeviren: Indeed. Are you hiring for any roles for the people listening out there?
Charles Brecque: So we will be hiring. We'll be expanding our knowledge wealth team, which is basically just a branch of AI which does the opposite of what machine learning does. We're also growing our software development team and we'll also be growing our legal team so that we can add more documents to our platform.
Ozan Dağdeviren: Charles, thank you very much for joining in this chat. It's legislate.tech, for the audience out there if you'd like to visit their website. In my next contract, I'll definitely take a look at your website and see if there's anything that matches good with what you have in terms of our needs and we'll give that a go. I love the business model and there's a good twist, I think. It's not about selling contracts but it's about generating insights and creating more data to turn into insight, I think that's a brilliant, unique approach. So good luck with the business, I hope this scales incredibly well and we have you as a guest in the coming years to talk about how well you've grown.
Charles Brecque: Well, thank you very much and definitely let me know when you are ready to create contracts with Legislate.