Startup legal is broken, so we built a new kind of law firm

By Emad ELShawa

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I spent years in fintech- at Fundbox, Counterpart and Capstack- watching startups grow from scrappy ideas into real companies. And in every single one, legal costs were the conversation nobody wanted to have.

Not because legal didn't matter. It mattered enormously. But because the experience of working with traditional law firms was so consistently painful that founders just... avoided it. 

They'd sign contracts they shouldn't sign. They'd delay fundraising paperwork. They'd wing it on employment policies and hope nothing blew up.

I get it. I did the same thing.

What Working With BigLaw Currently Looks Like

At all my previous startups, I experienced the pain of working with traditional law firms as we scaled. The pattern was always the same: expensive bills, slow turnaround, black box billing, and bait-and-switch service where you pay partner rates but get associate-level work.

You meet the partner. They're impressive. They say they understand startups. Then the work starts, and suddenly you're dealing with junior associates you've never met. Your "quick contract review" takes a week. And when the invoice arrives, it's a wall of cryptic line items that nobody can explain.

This is how the legal industry has operated for decades. 

Rates that run $900 to $1,500 an hour. No transparency on what you're actually paying for. And the kicker? The incentives are completely backwards. The longer something takes, the more money the firm makes. Efficiency is literally bad for their business model.

34 Million Businesses Left Behind

I'm not the only one who's frustrated. 

According to the SBA, there are over 34 million founders, startups, and small businesses in the United States.[1] A recent LegalShield study found that 60% avoid hiring lawyers entirely due to cost and complexity. Nearly one in five lost $5,000 or more last year to legal problems they could have prevented with proper counsel. And almost a quarter have considered closing their businesses because of legal obstacles they couldn't afford to navigate.[2]

Think about that. 

A quarter of founders, startups, and small business owners have thought about giving up- not because their product failed or their market disappeared, but because they couldn't access legal help.

Meanwhile, 83% of these same business owners/operators say affordable legal services are "very" or "extremely" important to them.[2] The demand is there. The need is desperate. 

The traditional legal industry just doesn't care, because serving startups at $900/hour doesn't work when you're a pre-seed company with $200K in the bank.

The AI Moment- And Why Most Firms Will Miss It

Here's the thing that finally pushed me to start Shepherd: AI is about to completely break the legal industry's business model.

When AI can reduce the time required for routine legal work by 50 to 90%, what happens to firms that bill by the hour? They face an impossible choice. Adopt the technology and watch revenue collapse. Or resist it and lose clients to faster competitors.

Most BigLaw firms are choosing a third option: use AI internally to boost margins while keeping prices exactly where they are. The efficiency gains go to the partners, not the clients. This is already happening. It's not a prediction.

And the legal tech startups that were supposed to democratize access? 

Companies like Harvey and others are pivoting hard toward enterprise clients, because that's where the money is. They're building tools for law firms, not for founders. The 34 million founders, startups, and small businesses that need help the most are being left behind again.

I saw a gap. A big one.

What We're Building at Shepherd

Shepherd is a law firm- a real law firm, with real attorneys- but built differently from the ground up.

We're AI-native, meaning we don't bolt new technology onto old processes. 

Our systems are designed from day one to use AI for what it's good at: document review, contract drafting, research, repetitive analysis. The stuff that used to eat up billable hours and cost you thousands of dollars for work that didn't require human judgment.

But here's what sets us apart from other  legal tech platforms: you still work with an actual attorney. A dedicated one who knows your business, understands your risk tolerance, and gives you strategic advice when you need it. The AI handles the grunt work. The lawyer handles the thinking.

We call this the hybrid model. AI-powered. Attorney-guided. Startup-focused.

And instead of hourly billing, we charge fixed prices. You know what you're paying before you sign. No surprises. No black box invoices. No wondering whether that "internal conference" was really necessary.

Our rates typically run 50-70% below traditional BigLaw rates. Not because we're cutting corners on quality- because we've eliminated the inefficiency that inflates everyone else's bills.

The Practices That Matter Most

We focus on three areas where startups get hit hardest:

Commercial contracts. Once you're up and running, you're constantly signing agreements- customers, vendors, partners. Most startups handle 4 or 5 contracts a month. At $1,200/hour, that adds up fast.

Fundraising. This is where BigLaw really extracts value. A Series A can easily run $150K or more in legal fees through traditional firms. That's money coming straight out of your runway, often at the moment when you need it most.

Employment law. Hiring, firing, HR policies, employee handbooks. Getting this wrong can destroy a company. Most founders know they need help here, but can't justify the cost.

We handle all three. Fixed prices. Hours, not days, for turnaround. Attorneys who are there for you at a moment's notice.

Why "Shepherd"?

People ask about the name. A shepherd guides you through unfamiliar terrain, helps you avoid the pitfalls, and gets you where you're going safely. That's what a lawyer is supposed to be- a trusted guide through complicated situations.

Somewhere along the way, the legal industry forgot that. Lawyers became gatekeepers and billable-hour machines instead of guides and counselors. Shepherd is bringing that back.

At a moment of incredible AI disruption, when tools keep getting more powerful and information becomes increasingly accessible, human guidance matters more than ever. Not less. 

The question is whether that guidance is available to everyone who needs it, or just to companies with seven-figure legal budgets.

The Honest Truth

I'm not going to pretend we've solved everything. We're a new firm. We're still building. We're focused on early-stage companies right now, which means we're not the right fit for later-stage work or complex litigation.

But I've seen what happens when founders can't access legal help. They make avoidable mistakes. They sign bad deals. They get sued for problems they didn't know existed. And sometimes they give up entirely on businesses that deserved to exist.

The legal industry is a trillion-dollar market globally, about $400 billion in the US alone.[3] The opportunity to serve the underserved segment- quality legal work at prices that make sense- is estimated at $72 billion.[4] That's not a niche. That's a massive, obvious need that the incumbents have ignored because it doesn't fit their model.

We're not trying to kill BigLaw. Fortune 500 companies with bet-the-company litigation need those resources. What we're trying to do is to democratize legal services for every founder- the 36 million small businesses, the first-time founders, the people who've been priced out of professional counsel their entire entrepreneurial lives.

If you've ever stared at a legal invoice wondering what you actually paid for, or delayed important legal work because you couldn't stomach the cost, or signed something you weren't sure about because getting it reviewed felt like too much hassle- we built Shepherd for you.

Emad ElShawa is the founder of Shepherd, an AI-native law firm serving startups and small businesses. Previously, he held senior executive roles at Fundbox, Counterpart and Capstack Technologies. Learn more at yourshepherd.ai.

References

[1] U.S. Small Business Administration, Office of Advocacy. "New Advocacy Report Shows the Number of Small Businesses in the U.S. Exceeds 36 Million." June 2025. https://advocacy.sba.gov/2025/06/30/

[2] LegalShield/Business Wire. "New Study: Legal Pitfalls Dent Small Business Owners' Bottom Line, Yet Most Forgo Counsel." May 2025. https://www.businesswire.com/news/home/20250519395084/en/

[3] Thomson Reuters. "State of the U.S. Legal Market Report 2025." January 2025. https://www.thomsonreuters.com/en-us/posts/wp-content/uploads/sites/20/2025/01/State-of-the-US-Legal-Market-Report-2025.pdf

[4] Shepherd internal market analysis based on SBA small business data and average legal services spend.

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