AI Legal Firm Manifest OS Raises Funds at $750 Million Value

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1:27Carol Massar:Bloomberg Audio Studios. Podcasts, radio, news. You're listening to Bloomberg Business Week with Carol Masser and Tim Stenevek on Bloomberg Radio. Sandwiched in between there, we talked a lot about AI. We did. That was my point. Oh, okay. I was also thinking if we think about AI and that press conference that we just had from the Department of Justice that involved many lawyers standing up there. Ah, nicely done. There is a connection to Manifest OS. It's a startup that sells AI software to lawyers. It's sealed$60 million Series A funding round valued at$750 million. We've got Dan Mishan with us, the founder and CEO of Manifest OS.

2:08He joins us here in the Bloomberg Interactive Brokers Studio. You have a really interesting story. You've started many companies. You started your first one at the age of 11. But it was you trying to navigate the immigration system here in the United States, spending tens of thousands of dollars from Ukraine trying to navigate that, that really got you to start this company. Tell us about that. Well, thanks for having me. I was trying to come up with a better segue. I totally failed. But look, I've been a buyer of legal services as an entrepreneur building companies in the U.S. and as an immigrant going through all one visa, then a green card, and then becoming a citizen.

2:46And every time it was the same thing. It was like you commit to a certain billable hourly rate and you only know how much you spend about a month after the service was completed. And like that level of uncertainty is the standard in the industry. And then you're chasing your lawyer to get updates on your case over email and you're left in the dark. And I got very curious about why is that the status quo and why have we accepted that 90 percent of all legal services is billable hourly rate. And the insight that we had is that one of the main reasons is that two-thirds of lawyers who work at small law firms, which is majority of the market, spend vast majority of their time doing non-legal work.

3:21Administrative work, business development, getting clients running the business. And we realized that we can separate the two. So what Manifesto OS does is we help individual exceptional attorneys that have many years of experience launch their new practice from scratch and grow it into a market leader by becoming fully AI native. So the whole law firm is AI native from day one. and we provide them with software like a full AI native software suite so attorneys are managing AI agents instead of doing the work themselves the AI

3:48Carol Massar:agents are preparing that so it's kind of like Microsoft Office for lawyers um it's something you know you know like a bunch of tools it's tools it's centralized back office with centralized paralegal centralized support centralized accounting and it's also one unified brand so in order for Microsoft co-pilot perhaps for lawyers no no but go ahead yeah it's much more than that You have to have like fully full software layer where lawyers practice cases and prepare cases as well as that back office and as well as a centralized brand. You're now hiring lawyers to essentially put lawyers out of business.

4:20We are partnering with lawyers and we help them launch their practice from scratch. But their practice at the end of the day, like if your mission is to end the billable hour, then you won't need it. There won't be as much of a demand for lawyers. Right. Eighty percent of Americans today don't have access to legal representation. So you're saying it's more of a... Democratization? Yeah, and the supply issue, increasing the supply. If we look at those different AI use cases that you guys were talking about in the prior episode, there are great use cases and maybe there are not so great use cases.

4:50This is a clear use case where 80 % of people who can't afford to hire a lawyer will be able to do so because each lawyer can now process more cases because you can streamline a lot of the inefficiencies in the business itself. So now each lawyer can only focus on doing one thing and one thing only, which is practice of law and helping their client.

5:05Carol Massar:So you're saying all the back office, the administrative is really take care of. It's not about actually, you know, figuring out the case, figuring out the specifics of, let's say, in an immigration law case or something. It's not about that. It's all the other stuff. Correct. So it's the two thirds of the time that lawyers spend on non-legal work. And they only, lawyers are focused on doing one thing and one thing only, which is practice of law. We handle everything else. And that level of partnership is really interesting because it unlock so much productivity that each lawyer can handle more cases and help more people.

5:35And also lawyers are happier because they're doing more meaningful work. Would this, I mean, your example of the immigration system here in the US and navigating that with an attorney is an example. But what about when it comes to complex business litigation or complex prosecution and defense? Would this tool work for those types of attorneys too? I would say that AI is more applicable to some practice areas and less applicable to others. something that's high stakes, very complex, like multi-hundred million dollar litigation, probably not so much. Something that's, you know, everyday Americans use, like the family law, like immigration law, like employment law.

6:14All of those matters, there is a lot of leverage that comes from using technology and unlocking lawyers' productivity. And just to be clear, you're not eliminating lawyers' judgment. You're providing lawyers with all the support infrastructure so the lawyer can practice law better than they could before manifest.

6:27Carol Massar:So it doesn't impact something. I keep thinking about, you know, graduates coming out and who are pre-law or I'm thinking about paralegals. It doesn't get rid of that. Or does it? We always keep a human in the loop because reality is attorneys have to have the final say over any document produced by AI. We've all seen those court records where AI hallucinates and then an attorney files a case and then the judge just slams them. That's not the case. You always need a human in the loop because even if it's 99 % accurate, that 1%, that's an unacceptable level of risk. So have you actually put this to work?

6:59Carol Massar:Give us an idea of real use cases. Because, again, I'm thinking about all the conversation we just had about AI and the return on investment. Tell us about that. So we launched, so we incubated the first manifest OS powered law firm 18 months ago, starting with just legal immigration, visas and green cards for people that are pursuing a legal journey inside America. And in the first 18 months, we have 100 manifest OS powered lawyers operating in this AI native environment. They have serviced over 3000 clients, and they have a 15 % higher approval rate than the national average by using technology.

7:35So it drives, and three times faster response time.

7:38Carol Massar:Higher approval in terms of citizenship for their, or whatever the benefit they're applying for. And three times faster response time. Because one of the biggest complaints about lawyers is you email them and you never hear back. I don't know if you guys have ever experienced that, but that's a very common complaint. I always get the bill, though. What's that? I always get the bill. On time. Yeah, so I just want to end talking a little bit about the environment of raising money right now. Kleiner Perkins, Menlo Ventures, First Round Capital, Quiet Capital, I mean some very, some big Sand Hill Road names.

8:09What was it like to raise money right now for an AI startup? I think there is a lot of excitement about two types of businesses right now, the foundational models themselves, and then the AI native services businesses, which is a completely new category that never existed before. And we fall in that AI native services business category. And people are just like excited about solving this specific problem and they see a huge market. It's a$1 trillion market globally of legal services and huge levels of inefficiency. So the opportunity is real.

8:40Carol Massar:All right. Well, stay in touch because it's really fascinating and it would be interesting to hear as the story continues and to see where it goes. Thank you so much. Thanks for your patience on a crazy day. Dan Mishin, he's Manifest OS founder and CEO joining us right here in our Bloomberg Interactive Broker Studio.

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