Startup Athena raises $2.5 million in pre-seed funding to overhaul legal AI revenue model

Athena Circle Corp., an artificial intelligence-powered legal technology startup that automates the core of commercial real estate transactions, today announced that it has raised $2.5 million in pre-financing funding.

The round was led by Andreessen Horowitz’s a16z Speedrun accelerator program. No other investors were named.

Legal AI technology is nothing new, but its introduction into the industry has been somewhat haphazard because the technology has exposed a thorny problem: Most law firms still bill clients by the hour, and that makes automation less lucrative. If a law firm can use AI agents to complete a 10-hour contract review in just a few minutes, they will be missing out on a lot of billable revenue, eliminating any incentive to use them.

Athena co-founders Cem Ucan (pictured left) and Kieran John Keenan (right), as well as founding engineer José Braz, all cut their teeth at pioneering legal AI technology startup Legora AB, where they quickly realized how AI was at odds with the industry’s standard business model. To convince law firms of the benefits of automation, they developed a completely different business model. Instead of selling software tools directly, the company offers legal services through its affiliated law firm, charging a fixed fee per transaction that is typically 30 to 50% below standard rates. This ensures that sales are better aligned with efficiency.

“Most legal AI companies sell tools to traditional law firms, but we took a different approach,” Ucan said. “Our AI works hand-in-hand with a law firm that is designed from day one to actually move deals forward, with experienced attorneys focused on the verdict and negotiations.”

The startup focuses on automating the intricacies of acquiring, selling, and financing commercial real estate. Its AI agents are designed to automate the creation and review of sales contracts and loan documents. They handle all due diligence and administrative closing hurdles required to close deals, while ensuring that human lawyers remain fully informed to make all final legal decisions.

In this way, Athena essentially does the heavy lifting and gives commercial real estate companies much more flexibility. This is a real advantage because speed is everything in the commercial real estate industry: the faster a law firm gets the job done, the more likely they are to actually get the deal, which is the end result everyone wants. Since investors often place dozens of bids on each property listing, the ability to complete the paperwork in hours rather than weeks or days means buyers can close a deal before their competitors know what happened.

Keenan, who serves as the startup’s chief technology officer, explained that each new workflow begins with an incoming agreement that is ingested by its AI agents. They compare contract terms with their standard contract sheets to identify inconsistencies, prepare redlines, and draft customer communications.

This work is based on historical transactions, allowing agents to adapt to each client’s negotiating style, Keenan said. Human lawyers then review this work, make strategic decisions when necessary, and approve all deliverables before sending them to clients.

“I measure our progress by how quickly a lawyer can review the work of an AI agent and confidently stand behind it,” Keenan said. “A draft created in a few minutes can still result in hours of work for a lawyer. By reviewing this review more efficiently, our platform allows us to deliver legal services more quickly at the quality our clients expect.”

Athena’s agents are already proving what they can do: the startup has already signed up 22 law firms as customers, just two months after launching its service. By continually learning from attorney changes and client preferences, agents have reduced review times by an average of 70%.

L. Miguel Arce, managing director of Texas-based multifamily real estate and property management company Mox Living, said Athena was able to deliver a complete purchase agreement in less than 48 hours, the fastest turnaround he has ever experienced. “Many companies in our industry have an AI task force in name only,” he said. “What’s special about Athena is that the system learns from every deal, from what the lawyers change to what we prefer. Speed ​​only matters when it’s quality work, and Athena gives us both.”

Keenan said Athene was prepared to strike while the iron was hot. He said the industry is preparing for a wave of new commercial deals as properties financed by short-term loans reach their refinancing deadlines in 2021 and 2022, and he hopes the startup can capture a significant portion of that business. In any case, growth is on the horizon, as Athena also plans to expand into new markets and property classes and even new jurisdictions.

Troy Kirwin of A16z Speedrun said AI automation is all well and good, but customers still demand to speak to a human who can take responsibility for the work being done. “Athena addresses this need with a system that can be improved through real legal work and a team that is obsessed with scaling quickly,” he said.

Photo: Athena